Moving On from Wholesale to Liquidation

You are running an Amazon sales business, and so far, you have sourced your items through wholesale suppliers, buying wholesale pallets of merchandise. However, the profit margin is narrowing, especially with more and more products sold on Amazon priced very close to wholesale.  

You must have wondered how is that possible, and whether there is a better source for your wholesale merchandise. Is there a source that will enable you to buy quality merchandise cheaper, securing a bigger profit margin?

You have already managed to secure flexible payment terms with your wholesaler, you have been buying from the same source for a while and your business relationship has granted you certain perks as loyalty is often rewarded with lower prices and better shipping terms. However, you are still barely able to stay afloat while keeping up with the competition that seems to have an even cheaper source of merchandise than you.

The truth is, yes, liquidators are a source granting better prices that leave space for more profit. However, finding the right one is of great importance as cheaper prices often mean compromised quality. To stay on the safe side it is important to only work with reputable liquidators that can combine lower prices and top quality.

Why Work with Liquidators?

Once you hear the word liquidation you might think of bankrupt companies, returned or refurbished items and very low-quality products. Although the majority of items sold through liquidation companies are customer returns and refurbished products, both manufacturers and liquidators make sure the quality is of the highest level.

This is also backed up by exclusive contracts liquidators have with leading retailers or manufacturers that guarantee the products meet a certain level of quality before they can be sold.

The reasons for products to end up at liquidation sales are many. Maybe the store is closing or moving to another location. The remaining products need to be sold fast so these stores opt to liquidate the merchandise. Sometimes, especially if a retailer is engaged in selling clothing, which is a seasonal type of merchandise, you will see products liquidated to free up shelf space for new collections, specifically during the turn of the season when summer clothing goes out and fall and winter collections move in. The same applies to electronics such as smartphones or laptops, each time a new model is released, older models get discounted or even liquidated as they are often completely removed from the store’s offering. For you as a buyer, it means you are often getting brand new merchandise with store labels still attached.

But another, and probably more important reason why you should opt for liquidation companies as your source of merchandise to sell online is the price. As wholesalers buy products in bulk and sell it on to resellers with a markup, they serve as an intermediary in the distribution channel, charging a premium for their services.  

In comparison, liquidation companies, through their exclusive contracts with manufacturers will offer merchandise at prices below wholesale, allowing you to be even more competitive in the market and still make a significant profit. This is because they don’t buy or own the merchandise, simply acting as a bridge between manufacturers and consumers.

Is Quality Compromised With Refurbished Items?

This is a frequently asked question, and a logical one, having in mind the type of products offered through liquidation companies. The answer you get actually depends on how much preparation work you put into your venture. Buying blind may lead you to buy from a dodgy source, ending up with a pallet of mixed merchandise that is in such a condition you would not be able to repair or sell it anywhere. This means that your goal is to find the right supplier and liquidator that will provide you with quality merchandise appropriate for the market you are operating in without fear of getting broken or damaged products.

Should I Steer Clear of Customer Returns?

The same way there are many reasons products end up being liquidated, there are many reasons why customers return the products they purchase. In most cases, products are returned because the buyer did not have a chance to try the product out or test it. This happens usually when the product is purchased online. In fact, over 30 percent of products bought online get returned to the seller. However, in many cases, these products are returned unopened or with minimal use. Since returned products can’t be resold as new, they fall into a refurbished category. This means that you can get brand new products, even though they were returned and have been labeled as refurbished.  

In addition, both manufacturers and top liquidators will review products and put them through a series of strict tests to ensure they are back to their best condition before putting them back up for sale. This is done because both are looking to build a good reputation with their customers and would not like to have a product return too many times, as this costs them time and money as well as that reputation that they have worked hard to build up.

Working with the right liquidator has another advantage when it comes to securing quality merchandise for your online resale business. Each wholesale pallet is accompanied by a manifest, a list of products within that pallet. This list not only shows what sort of products are there in the pallet but also how many and what their condition is. Top liquidators that are very specific about the condition of the merchandise they work with will provide you with a comprehensive manifest. You should only steer clear from the merchandise, whether it is refurbished or not, if your source is either withholding information about the merchandise they sell or the manifests are missing completely.

Avoid buying merchandise without verifying the content of the wholesale pallet or the condition and the type of merchandise within a pallet. This could only lead to a loss as the chances of receiving damaged or broken products, or even scrap that you would not be able to sell anywhere, are high.

If you would like to make sure you cover all the bases in your road to setting up a successful online resale business, you should check out our Ultimate Guide to Selling on Amazon, which will point you in the right direction.

Share on social networks

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.

View Henley’s Bio on YouTube.