Liquidation Sales
Liquidation sales can be a good source of products for your online business. Whoever owns the product wants to get rid of them. If fact, they are willing to accept very little profit or even a financial loss to get rid of them. This can provide a great opportunity for your business.
You need to pay close attention to the condition of any items acquired through a liquidation sale. The items may be new or used. According to World Wide Brands, brand new products that are still in the box, never having been opened, are more the except than the rule. The items are being liquidated because the owners did not want them.
Before you buy any liquidated item make sure you understand why they are being liquidated. Possible reason are:
- The manufacturer made too many. They over estimated the market or some manufacturing problem occurred.
- The wholesaler purchased too many units. They over estimated the market, the item did not sell well, or someone order 10,000 units instead of 1,000.
- Left over from last season. Product demand has dropped to virtually nothing because everyone wants the latest and greatest item instead of last years.
- Item was returned to the manufacturer or wholesaler. Returned items that are in good shape may be thrown into a liquidation lot that gets sold off at the end of every season.
- Items may be purchased from a company close out sale. I’ve worked for 2 companies that went out of business. All company assets ended up being sold to liquidators for pennies. The liquidators junked everything they thought they could not sell and sold everything else. The first company even sold 35 computers to another company who was looking for a cheap way to set up a new data center. I was lucky enough to earn a little extra income helping this company refurbish those computers.
- The manufacturer or wholesaler are going out of business. Be very careful with this one. If the manufacturer goes out of business then any manufacturer warranties may no longer be valid.
Liquidation is not a renewable source. You may find a great selling product. But once that product is sold out it is gone. You’ll need to find another source if you want to sell any more. These items can be good for up selling, cross selling, and as loss leaders. Use these inexpensive items to bring customers into you store with very low prices. Then display your more expensive, high profit margin items next to the item to encourage your customers to buy the other products. Also, display complementary items and accessories to encourage cross sales.
Liquidators are not drop ship companies. They will not ship product directly to you customers one item at a time. When you purchase a liquidation lot then products are sent to you. Just like with wholesalers you need to store these items and package and ship them to your customers.
Liquidation sales should not be used as the sole product source for you business. But can be a valuable resource to fill out your product line and help draw customers into your store.
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