How to Build a Profitable Business with Secondary Market Items

While most liquidation business owners prefer investing in customer returns and surplus inventory, the idea of using the offerings of a secondary market should also be on your list. Most people avoid this type of investment, especially since it can be more complex in comparison with the first two.

However, by avoiding this method of building your liquidation business, you will end up missing out on many profitable opportunities. To understand more on how you can build a profitable business using secondary market merchandise, the following lines are a must-read.

What the Secondary Market Entails

If you had just entered the liquidation market, you will constantly be under the pressure of not only selling the right kind of inventory to your customers, but also to purchase it at a much lower than usual price.

Even though the surplus and wholesale liquidation market is a ‘gold mine’ for anyone who knows how to use it, you must always know how to locate the quality products that your targeted market is looking for. You will find that stores with generous return policies, supply chain inefficiencies, product innovations and regulatory policies are the ones that give a boost to the secondary market.

Therefore, you must understand that any and every corporate or organization that manufactures, distributes or sells wholesale merchandise has to dispose of these items after some time. This means that you will be able to find everything from consumer electronics, sports and athletic clothes, computers and even building tools and jewelry if you start looking for the liquidation merchandise that you wish to sell.

Now if you are wondering why there is such an increase in the secondary market and why you should start considering it as a source of your monthly income, here are a few interesting things you may want to know about.

Increase in Returns

One of the biggest reasons why the secondary market has evolved into such a big business is because several studies have shown that 4-6% of retail merchandise sold per year is returned to the online or physical store after a few days or weeks. In fact, the return rate of merchandise bought online is a lot higher because the customer is not able to touch or see it for real until they buy it. Moreover, the NRF has reported that more than 9% holiday purchases are returned and that there is a surge after the holiday season has ended.

Shorter Life Cycles

Another reason for this increase in secondary market merchandise is because the product life cycles have reduced from years to months or even weeks. Even though branded or higher end products do not fall under this category, low cost and cheaper items do disintegrate within a short time, which is why they are returned to the original seller.

Variety of Options Available

Because there is an increase in the variety of products and items available for sale, studies show that the average customer in the United States will only struggle for 20 minutes to get an electronic device to work before giving up and turning to another option.

Buyer’s Remorse

Among the many reasons why customers are suddenly returning more and more products to the store is of buyer’s remorse. You will find a lot of customers who buy products on a whim and regret it later when they take the merchandise home and realize that they do not like it as much as they originally thought they would.

Searching for Quality Secondary Market Merchandise

Some of the most common contributors to the secondary market are state and local government agencies, department store chains, manufacturers, service and warranty companies, and others. Even though you may only have very limited access to these large sellers, you can always rely on a personal network of industry contacts and auctioneers to locate and evaluate the products that you are interested in buying.

So, during the initial stages of building a profitable business, you must look for sources for you to establish solid relationships with. Because of the development of e-commerce auction marketplaces are targeted toward business purchases, liquidation products sellers like you now have global access to a large volume of assets through professionally managed and maintained marketplaces.

The benefit of these marketplaces is that they are able to help you high-value value relationships with important sellers who can provide you with a continuous flow of merchandise.

Moreover, the use of these online marketplaces creates an efficient and inexpensive sourcing process for liquidators who want to purchase their wholesale merchandise quickly. Here are a few tips that you will find useful when looking for these wholesale liquidation products providers and products.

Look for Experienced Suppliers

First off, look for experienced suppliers and providers who have established strong relationships with large sellers. These are the wholesale merchandise suppliers who will be able to provide you with a consistent flow of quality inventory. If you don’t know where to look for such experienced providers, you can always ask friends or family who are in the same or similar industry.

Assess Providers Based on the Range of Products

When investing in your liquidation business, you must remember that you do not need to have a huge budget to make the most of the marketplaces. The best supplier you can find is one who provides flexibility in package size and offers perfect product conditions. 

These providers will be able to provide you with the best products from a single package to full truckloads and mixed or single lots. Not only will these suppliers provide you with good products, but will also offer flexibility in pricing as well.

Look for Product Information

One of the most important things a wholesale liquidation provider needs to do is to provide you with detailed product information. The products that you are buying must come with detailed product descriptions, digital images, technical information, shipping dimensions, and all other necessary information that will help you in making a more informed decision.

Clear Contact Information

Before you make a purchase from any merchandise provider, you must first understand the terms and conditions for each of the purchases and contact the provider if you have any questions or queries. Therefore, whether your supplier is online or located offline, they must be able to provide you with clear contact information so that you are not left unattended when you need help.

Types of Secondary Merchandise You Can Buy

When you become part of the secondary market, it is important that you understand more than just the type of merchandise flowing into the market. You should know why consumers are no longer interested in the items they bought before and eventually returned. 

Therefore, some questions that you can ask are: did the consumer not like the product and changed their mind? Was the product defective or is the merchandise there because it wasn’t sold at all? In general, most customer returns that you find will have only minor damages like scratches or damage to the packaging. However, the product will still be in a good working condition.

Moreover, if you are able to find products that have been pulled from store shelves, they will be in perfect condition but are being sold because they do not have the latest technology or do not match the current trends.

This type of ‘old school’ merchandise can be found after every three to six months because technology and trends change regularly, making a popular product of yesterday a rejected item today.

As you fill your liquidation business with valuable merchandise that your customers will be interested in, you must also note the condition of the inventory that you are selling. Some of the most common definitions that you should be aware of are:

Brand New

These are the kind of items that are still in their original packaging and have all the characteristics and qualities of the products advertised by the manufacturer. In general, these are the overstock items that were never offered by the retail or manufacturer and so they were never used in any way.

These kinds of products will often include the warranty cards offered by the manufacturer, which means that they can be sold for a considerable profit.

Refurbished

The merchandise which is used but has been inspected, tested and restored back to a fully working condition is known as refurbished products. Refurbished products sometimes come in original packaging and always contain the necessary documentation or additional parts required.

However, because these products are more often than not used before, they may have some noticeable cosmetic defects like scratches, dents or signs of age.

Used

If you decide to buy used liquidation products, you must be ready for lots that have cosmetic defects. Because these items were sold and put to use for at least some time, they will rarely come in their original packaging and will almost never contain any kind of documentation or additional parts.

These items are also only minimally improved to meet the most basic requirements of the functionality of the product. This is why they may not be in the best working conditions and may need additional maintenance and repair if you want to profit from them.

Shelf Pulls

Shelf pulls are defined as the kind of items that were previously made available for sale in a physical store but were never sold. These product pieces are those which were showcased by the manufacturer or store and so they mostly possess one or more price tags or stickers and show signs of being exposed to some customer contact.

Returns

One of the most common types of liquidation merchandise which you will find is returned merchandise. Items of this kind were sold to customers who returned them to the store or manufacturer.

However, even though these products have been returned, they may not have any issues with their usefulness and may be in perfect working condition. These products mostly do not come in original packaging and often do not have the advertised documentation or accessories.

Tips for Selling and Buying Secondary Market Items

Here are a few tips that you can use for both buying and selling your liquidation merchandise. 

Do not buy impulsively. Do not purchase anything only because you think is a great deal as you will end up regretting your decision later. Take your time and only buy the things that you are really interested in and those you think will be valuable for your customers.

Also, avoid buying too deep into any particular category because that will only leave you in a difficult situation when the product is no longer available.

Add Value Before You Sell

If you want to sell your product for the best price and also need your customer to return to you, make sure that you add value to it by cleaning, testing or refurbishing it where needed. You must also take care to package the product in the right way and provide all the instructions or documents necessary for the functionality of the product.

Understand the Competition

In most cases, liquidators who are planning to sell in the market carefully look at their competition because they want to beat them or learn from them. However, the approach that you need to take here is to truly understand your opponents and start selling the products that complement whatever they are selling.

The liquidation business of buying and selling secondary market items can prove to be highly lucrative for you for a number of years. All you need to do is make sure that you are buying the right kind of products from the right vendors and then sell them to your customers properly.

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