Welcome to 2014! Wow, that sounds a bit crazy, but we cannot stop time. I can think of no better time to get started buying within the liquidation industry. If you’ve been researching wholesale companies for your eBay or Amazon business, why not take a close look at buying customer returns? Customer returns are just that—Merchandise that was purchased at a retail store or online, and then returned back for exchange or store credit. Some returned items are damaged, but you can typically turn a handsome profit by reselling those items that were returned simply due to buyers remorse. Keep in mind a lot of name brand clothing is returned simply due to purchasing the wrong size!
Customer Returns – Reader Questions
I receive several questions per week. If you want me to tackle your questions, please send them to me here. Here are a couple I received this past week:
Question – “Hey Robert, Hope you had a good holiday season. I have been studying some of these companies such as [found in guide]. Can you tell me what they typically mark up their pallets and truckloads? For example, let’s say they were selling a truckload at 30k. How much of that is their cost, typically.”
Answer – That is a tough question to answer without actually being behind the scenes of that company you mentioned. Having said that, I go back to the principle of profiting by volume, meaning, earning a good profit by selling lots of truckloads each with a small percentage markup. Let’s think about this logically. If they are selling loads ranging from $10,0000 up to $30,000, a few percentages points translates to a generous profit for the selling liquidator. Example:
Lets say 24 pallets cost the liquidator $12,000.00. If they add 3 percent to their cost, they would realize a profit of $720.00 after they sold the load to their customer. This might not seem like a lot of markup, but again, if they are selling 50 to 75 loads per day, that is comes out to a minimum of $36,000.00 in profit per day. Just think about what they would make if they added a 5-7 percent markup! In my opinion, I would say the company you mentioned is probably adding no more that 7-10% to their cost.
Question – “Hello, I am getting ready to start selling on Ebay again after a long layoff. I have 680 positive feedbacks and have a perfect rating. My background is in technology but I am open to selling anything. I’m currently looking for suppliers and browsing the liquidation websites like [found in guide]. Because my funds are limited I need to nail this first purchase. Can you recommend any liquidation websites or suppliers that have consistent quality goods that I can sell on EBay? I really appreciate any insight that you can provide me. David”
Answer – Hello David, thanks for emailing. I get a lot of questions about what to purchase and resell, and I’m glad to hear you are open to suggestions. Even with your tech background, I would probably recommend starting with general merchandise or clothing before buying customer returned electronics. This is especially good advice of you need to “nail” your first purchase. I’m not sure how much you intend to spend on your first liquidation purchase, but here are a few sites to take a look at:
Countryside Closeouts- Real warehousing liquidator who has a few really good contracts with some major catalog companies. Bill,the owner, is a real straight-shooter. They do not have much in the way of a website, so I would pick up the phone and call them. Call Bill and tell him about your business.I think he may have some good stuff for eBay.
Short of the above, I recommend picking a niche to specialize in and then searching for a supplier. Go direct to the manufacturer and find out if you can purchase in bulk quantities. Maybe they will offer last years designs or models? You can also go direct to catalog companies, distributors, and jobbers to source excess or overstock items. Take your time when researching and don’t let excitement guide your first purchase. I think this is the biggest mistake most people make when souring customer returns or closeout merchandise.
I’m getting more and more people emailing about ways to make money reselling liquidation merchandise on eBay and Amazon. I can tell you that I’ve made a great living centered around liquidation merchandise. I’ve bought and sold customer returns for well over ten years now. There is a learning curve to overcome with customer returns….they are not for the weak or weary. Please do yourself a favor and purchase the Liquidators Guide, you will learn from my mistakes as I guide you through all aspects of buying pallets and truckloads of merchandise.
Our 2017 Liquidators Guide chronicles 12 years of wholesale product sourcing experience and includes my personal black book of direct source contacts! As an industry expert, I'll share the success I've enjoyed along with the mistakes I've made buying and reselling liquidation merchandise.
If you are thinking about buying pallets of liquidation merchandise from a liquidator, broker, or direct from department stores, you need to check out The Liquidators Guide