Buying Pallets of Overstock Electronics: the Risks and the Benefits

Last Updated: March 15th, 2020

A lot of preparation goes into starting and running an online resale business. More often than not, doing market research can be the difference between failure and success. Plunging into business head first, without much consideration for market demand and dynamics, and trying to sell a product simply because it is something you like to use is a recipe for disaster.

This is usually the case with inexperienced sellers venturing into the world of online resale. The majority will go for the most attractive market, the electronics market. This will not be much of an issue if the market is approached in the right manner. This is because the electronics market is probably the tightest one with cut-throat competition. Prices of single items are barely above wholesale.

To make it in such a market there are several things one must understand. Starting small in a niche segment of the electronics market before branching out into the big league can bring a lot of good. But, to really stand out, you have to be able to provide high-quality merchandise at the lowest prices possible.

This is where buying pallets of overstock electronics come into play. There are certain risks involved when it comes to purchasing overstock merchandise, but, if managed right, these could bring a lot of benefits.

The Risks of Buying Pallets of Overstock Electronics

With every business comes a certain risk. The majority of risks when it comes to buying pallets of overstock electronics are related to your decisions. The first decision you take is deciding to enter the electronics market. Plunging into the market without a clear plan and knowledge of the demand is a risk that will rarely pay off. The electronics market is touted as the most competitive, especially on global platforms such as Amazon. As mentioned, single items go for prices very close to wholesale, making it impossible for someone who buys retail to resell online make any money. Without a plan and adequate supply channels, venturing into the electronics market is hard.

It has to be said that buying pallets of overstock electronics to resell online brings its own downside. First, the quality of overstock electronics should not be questioned if purchased through the right channel, but it comes with a risk of being outdated. The electronics world is developing incredibly fast and what is in today might not be so interesting tomorrow.

This brings us to the issue with overstock electronics, and overstock merchandise in general. When a retailer orders an excessive amount of merchandise without considering the actual demand, the items that remain unsold are liquidated as overstock, meaning they have been stored somewhere in the storage space as they don’t sell.

Or maybe the product is seasonal like clothing. At the turn of the season, summer to fall, the unsold summer clothing becomes overstock, and retailers will liquidate this merchandise quickly to free up space for the incoming fall season. Something similar happens to overstock electronics. Electronic products become overstock once a new model is brought to the market. The older models are no longer in demand and the remaining products will be liquidated as overstock to free up shelf space for new models coming in, no matter if its tablets, smartphones, laptops or any other electronic gadget. However, while going for 25 to even 50 percent below wholesale, the demand for an older item might be tightening, hence making an investment in pallets of overstock merchandise a risk.

Benefits of Buying Pallets of Overstock Merchandise

The first benefit is the one mentioned briefly above, the price, with a reduction of 25 to 50 percent below wholesale. This means that you are purchasing items that have not been used or opened, that are basically in brand new condition, for pennies on the dollar. This is where your research skills come in handy. Simply buying something because it is cheap should not be the perception one takes. Buying it because there is a demand to cater for is the right reason.

Researching the market is key. Finding a niche segment that could show demand for smartphones that are of high quality but cheap is the way to go, smartphones being the best example. The same goes for laptops. Because there will always be a customer that is looking for a device capable of performing basic tasks, like browsing the internet and that will enable the user simply to check and write emails. For this, you don’t need cutting-edge technology, overstock electronic devices, while old, can still have enough computing power to perform basic tasks easily.

The benefit is that you would be purchasing these products for cheap and selling them for cheap, and the benefit for the end user is that they are getting a brand new device at a significantly lower price. And to stress again, old in the world of electronics nowadays can mean a few months up to a year, due to the pace of the technology development.

The second benefit is the profit you reap. Buying these products cheaply enables you to enter a market confident of being able to match the competition’s prices, and even go below while still making a healthy profit. But to take full advantage of this, you need to know where to purchase pallets of overstock electronics.

Where to Buy Pallets of Overstock Electronics?

We briefly mentioned that overstock electronics get liquidated. This means that you should either look for retailers’ liquidation department or go through closeout liquidation companies or overstock liquidation companies or simply liquidators. The goal is not to find the first liquidator offering pallets of overstock electronics and buy from them. The goal is to find the best liquidator. The best ones will often have top-notch services, great offers as well as rave customer reviews, which is something you should always look for. A happy customer means the business is doing something right.

Top liquidators offer a level of safety for a reseller. This is achieved through deals liquidators have with manufacturers and retailers, serving as a platform to liquidate their merchandise. These deals offer safety for the end customers because they require a certain standard that liquidated products must meet in order for them to be listed on liquidator’s website.

One such liquidation company is Direct Liquidation, who offers a flexibility of delivering truckloads, pallets and smaller lots of overstock merchandise from its Kentucky center. In addition to the ability to decide the quantity of merchandise you want to purchase, you can always make sure you are buying the right products. Top-tier liquidators will always provide manifests for their sorted pallets of overstock electronics showing you exactly the type, the quality and the quantity of the products within each overstock pallet. This means you are able to buy only the products you are looking for.

 So all things considered, buying pallets of overstock merchandise to resell online can be a good business if done right, but the decision to make the first step towards this type of merchandise is solely on you.

Direct Liquidation is a goTRG company.

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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.

View Henley’s Bio on YouTube.