The Differences Between Typical Wholesale Suppliers And Liquidators

At first glance, there seems to be very little difference between typical wholesale suppliers and liquidators. After all, both supply businesses with wholesale merchandise, usually for a lower price than what customers pay retail. While on the surface the two business models may appear to be the same, this is not actually the case. When you look below the surface, you’ll quickly discover there are vast differences between wholesalers and liquidators. That difference can have a very significant impact on a retailers’ profit margin.

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What Are Liquidators?

Top-tier liquidation specialists like Direct Liquidation work directly with some of the biggest names in US retail, providing them with an online space through which the retailers can quickly dispose of their unwanted customer returns, overstock and closeouts, usually via live liquidation auction.

Every year, retailers find themselves in possession of large amounts of unwanted merchandise. The primary source of this unwanted wholesale merchandise is customer returns. Customers return items to retailers for a number of reasons. Faulty items are, of course, returned to stores, but so are items that bear superficial damage or visible damage. In the age where a box can be resold on its own if it once housed a prestige product such as an iPhone Xs, customers won’t hesitate in taking a brand new product back to a store if there’s a tiny dent in the box.

Customers will also return items simply because they’ve changed their minds about their purchase. This ‘buyer’s remorse’ accounts for thousands and thousands of brand-new products being returned to stores. All of these returned items are no longer legally allowed to be classified as new, even when that is exactly what they are. Unable to resell these products for their MSRP value, retailers instead look to dispose of all their unwanted returns as quickly as they can to prevent them taking up valuable storage space.

As well as returns, retailers also have to dispose of large amounts of overstock. Overstock is merchandise that has been over-ordered or is a seasonal product that has failed to sell by the time a particular season such as Easter, Christmas or Halloween has been and gone. Again, these are products that are now surplus-to-requirements and must be disposed of if it is not to take up valuable warehouse space.

Finally, closeouts are usually products coming from one of the big-name retailers’ stores that is either closing or being restructured. Already at stock capacity in their other stores, this product is also surplus-to-requirements and must be disposed of quickly.

This is where liquidators step in. Liquidators operate online liquidation marketplaces through which retailers such as Walmart, Target, Amazon, Best Buy and Lowe’s Hardware can sell their unwanted returns, overstock and closeouts directly to resale businesses via live liquidation auction or for a fixed or negotiated price.

What Are Wholesalers?

Wholesalers operate very differently to liquidators. A typical wholesaler will usually buy a large bulk liquidation lot from a top-tier liquidator and then break that lot up into smaller parcels to sell for a fixed wholesale price to businesses. Often, these broken up parcels are purchased by other, smaller wholesalers who will then add their own costs to the price of the parcel, thus increasing its price again. 

The more this reselling between wholesalers happens, the more expensive the goods become, often finally coming close to retail price when they are eventually sold to a retailer who will then struggle to make a profit from this type of wholesale merchandise.

In short, wholesalers are merely middlemen who sell wholesale merchandise that has been bought cheaply from a top-tier liquidation specialist such as Direct Liquidation and then sold on for a higher price to businesses.

The Differences Between Wholesalers and Liquidators

The differences between these two types of wholesale supplies should now be obvious. Unlike typical wholesalers, top-tier liquidators are not middlemen. They are merely facilitators through which big name retailers can sell their unwanted wholesale merchandise direct to businesses.

Unlike wholesalers, liquidators do not break up lots, and they do not purchase already purchased wholesale merchandise and then add their own premiums on top. Instead, they simply provide the mechanism through which retailers can sell their unwanted customer returns, overstock and closeouts directly to retailers.

Liquidators also don’t cherry pick the boxloads, pallets and truckloads of liquidated goods wholesale that they sell on their retail partners’ behalf. This is a common practice among wholesalers, who will usually buy large liquidation lots in bulk, cherry pick the best stuff to be sold at a higher price separately and then pass off pallets of mainly junk as premium products worthy of buying. Liquidators do not do this, nor do they alter manifests to make boxloads, pallets and truckloads appear more attractive than they actually are – an all too common unscrupulous practice many wholesalers unfortunately engage in.

In the end, the biggest difference between liquidators and wholesalers is a simple matter of cost. If your business buys from a wholesaler, the goods purchased will have already had a price hike imposed upon them by the wholesaler. By cutting out this middleman and going straight to source, your business will be buying wholesale merchandise at the same price wholesalers pay, meaning that buying directly from a liquidator is considerably cheaper than buying from a wholesaler. 

Big-name retailers are willing to take a considerable hit on the prices they can reasonably expect to get for their unwanted wholesale merchandise, and that’s why buying straight from the retailer via their top-tier liquidation partners’ online liquidation auction marketplaces makes much more sense. After all, why pay more than you need when you can go straight to the source and pay much, much less while also avoiding pitfalls such as cherry-picking and manifest manipulation?

By cutting out the wholesaler, your business will be able to take advantage of the much lower prices the wholesalers themselves pay. For any business looking to save money on wholesale merchandise while increasing the chances of making more money, the choice is obvious. Why pay more when you can pay less for the same products? That’s why the smart choice is to cut out the wholesaler and buy direct from the biggest retailers in the land via an online liquidation marketplace.

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.

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