Tips to Increase Your Profit Margins When Bidding on Liquidation Auctions

When buying for a retail reselling business, whether you sell online or offline, making a profit is always in the forefront of your mind. Buying wholesale items through wholesale suppliers or liquidation auctions can be a fantastic way to get those products at great prices. However, you need to make sure that the items you are buying, particularly through the liquidation auctions, will provide you with the profit margin you need.

While buying through wholesale liquidation auctions is effective, efficient, and easy, there are certain things you will need to keep in mind if you hope to get the products at a low price so you can increase your profit margin. The following tips will help you keep on the right track.

Selling Liquidation Products

If you hope to have any chance of making a profit, and having a good profit margin, you need to be sure you can sell the products you are buying. If you have a niche, rather than selling general merchandise, you need to be sure the items on the pallet are those that your customers will want to buy.

One of the things you need to keep in mind is that you do not only have to sell these items you buy through your brick and mortar store or your own online store. You have plenty of options out there, and you should use them all, including Facebook, Amazon, eBay, Craigslist and Alibaba. By expanding your horizons, it will improve your odds of selling all the items from the pallets you bought at the liquidation auction.

This may require more marketing, and taking a few different angles for marketing on your part in the beginning. Once you have set up those new channels, it will be much easier for you to continue selling through them with future items from the pallets you buy.

The Condition of the Products Affect the Resale Price

One of the other things you need to consider when you are buying through liquidation auctions is the condition of the items that you are buying. When you find items that are in good condition and that are ready for resale immediately, they could end up costing a bit more through the auction. However, since you will not have to make any repairs or do any work on those items, those costs are offset, which generally means paying just a little more for those new and like new items. In addition, it tends to make it easier to find buyers through many of the channels.

Research Your Products Before Selling 

When you are buying wholesale lots through a liquidation auction, the pallets can have quite a few items on them. It is your responsibility to know what those items are and to research them to make sure they will work for your business and to know the value of the items. The liquidation auctions may tell you the overall retail value of those items on the pallet, but you need to consider the resale value to determine a good and firm bidding price that will still provide you with a nice profit margin.

Many different things can affect the value of the products in addition to the condition mentioned earlier. Certain brands might be more popular in your niche than others, for example. Whether you are selling clothing, electronics, automotive, or other items, understand the best and most popular brands, and look for those when you are buying from a liquidation auction. These can often net higher resale prices for you, which helps to increase the profit margin.

Liquidation Auctions

When buying liquidated products at an auction, there is the potential for some people to become too competitive. They have their eyes set on a pallet of goods they know they can sell, and they know the items will be very good for business. It has everything their customers like. Then, someone else starts to bid on the pallet. It can escalate very quickly, and those who are not careful and who do not have a firm budget could end up spending far more on the cost of the pallet than they should.

This will drive down the resale value of the liquidation pallets, and it could reduce the profit margin significantly. In some cases, the buyer might not make a profit at all.

Therefore, you always need to know the top price you can pay for a pallet and still make a good profit, and you must follow your own rules. Get out of the bidding if the pallet goes too high. Let your competitors overspend rather than you.

Consider the Buy Now Option

When you are buying through online liquidation auctions, you will often see a “buy now” option with the pallets when they are first put up. In-person auctions may also have buy now options in some cases.

This could be a good choice for those who find a pallet that they know will be perfect, and they do not want to run the risk of driving up the bidding price. The buy now option is higher than the starting bid would be, but if you run the numbers and find that it is still possible to make a good profit, this choice could be worth considering.

Understanding Liquidation Product Shipping and Fees

Keep in mind that you need to consider other costs when you are buying through a liquidation auction. You need to factor in the shipping costs of getting the pallet and the goods to you, along with any transaction or auction fees. Make sure that the price after those additional costs is still low enough that you will have a nice profit margin when you sell the pallet’s items.

With these simple tips, and expanding to sell in other channels, it should become easier for you to increase your profit margin percentage.

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Henley Johnson

Henley currently works as a sales representative for Direct Liquidation, assisting businesses with product sourcing of liquidated merchandise from the largest retailers in the world. Whether you are looking for a pallet or a truckload Henley is here to help you grow your business.

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