Liquidation Chatter – How many of you have returned an item back to the store you bought it from? Dumb question I know, we’ve all returned merchandise for an exchange or refund. Do you remember standing in line looking behind the counter only to notice a sorting system of sorts going on? Most of the time customer service areas are a mess with shopping carts full of salvage and returned retail items. Sad.
Well, not so sad for anyone wishing to buy a pallet or two of customer returns! This is how we make our money! If items are deemed salvage most stores will send all unsellable merchandise straight to their in-house liquidation department or a contracted reverse logistic processor for liquidating salvage. So, that coffee pot you bought and returned is probably going to end up in a pallet I buy—thanks!
A Reader Writes – I received an email last week from someone who purchased the Liquidators Guide. This fellow started asking questions about how to start wholesaling liquidation merchandise. Here is a portion of his email:
“I recently bought the guide and I was curious if you had a source for (customer returns and overstock) TVs and also other consumer electronics. I just wanted a second opinion, thanks! I really want to buy my first truckload of electronics but I just am not sure where to invest my money. I mean there is Sears, Walmart, Target, Amazon etc. it gets crazy.”
He went on to say:
“I never bought before but I want to open a liquidation warehouse in Orlando to sell to people who will export/ebay/ flea market /pawn shop etc. Similarly to “overstock trading” please look them up. I love their business model with the electronics!”
I get emails like this all the time from people interested in actually becoming a liquidation wholesaler. I have information about this in our Liquidators Guide and our new Broker’s Guide. Buying large truckloads and breaking down pallets to sell in smaller box lots is totally “do-able,” and can be very a very profitable venture.
There are some major considerations one must consider when starting a liquidation company:
Competition – Be sure to do a little investigating in terms of local competition; check out pricing, selection, and marketing campaigns utilized by other wholesale liquidators in your area. What can you do different to get a piece of the pie?
Location – Select and lease a facility large enough to process incoming liquidation loads, and warehouse/display lots and pallet for sale. Believe me, add at least 5k square feet to whatever size you figure you will need to start; this business can grow quickly, and you may feel a pinch when you run out of room. Go big or go home. I think that’s what they say.
Secure Direct Suppliers – Buy truckloads and pallets direct from major department stores. Buy direct from the source! We list direct source contacts in our Guide for Best Buy, Target, Walmart, Macy’s, and other stores.
Pricing – A liquidator must come up with a formula for marking up pallets and truckloads. Small lots cannot be priced too high because the liquidators customer must be able to make a profit on goods purchased. Remember, a wholesale liquidation company must work for repeat business. If goods are priced too high, customers will not only have a difficult time with the nature of salvage goods, but will also experience a difficult time trying to apply their own markup.
Develop a Business Plan – Just like any other business, a well thought out business plan will provide direction, goal outlines, and possibly a plan if the business hits inevitable rocky spots. Free business plan and other business tools can be found online at the SBA (Small Business Association – Google it)
Start Small – Before running out the gate, plan on specializing in one area of liquidation merchandise like electronics or customer returned clothing. Start small and work your way up!
Phone Call With H & J Liquidators
Flea Market Vendors take note…I was talking with Howie from H & J Liquidators and he was telling me his warehouse is busting at the seams. Howie made it clear to me that he needs to move tons of case and less than case-pack quantities of merchandise immediately. One way H & J does this is by offering a mixed pallet deal. Here is what H & J says about this deal:
“We have taken full and mixed cases of various great products and combined them randomly onto pallets. Our customers are easily making two, three, four or even greater times their money!”
Click here to view this H & J deal, and please take some time to review the entire website. I’ve known Howie for years, and he is a stand-up guy within the wholesale closeout industry. Bookmark this site for future reference.
Here are your Liquidation Sources for this week:
RJ’s Discount Sales – Topeka, Kansas (800) 597-2522
The Bargain Warehouse – Myrtle Beach, South Carolina (866) 372-6950
Midwest Service & Sales – (260) 750-3029 (contact Russ Lee) – New Haven, Indiana. They do not have a website with product listing, call and find out what they have. I know they stock clothing, makeup, and they are an authorized reseller of Wolfgang Puck cookware. This seller also sells small lots of closeout items perfect for flea market sellers. I noticed box lots of makeup, as well as fishing tackle on eBay
