Leaving Your Wholesale Suppliers for Liquidation Companies

Since starting up your online resale business you have sourced wholesale merchandise through wholesale suppliers. Buying products in bulk is a good strategy because wholesale suppliers will offer you a lower price per unit, giving you some room for profit when you resell the items individually on eBay or Amazon.

But you have started noticing an emerging trend of single products being priced very close to the prices that you pay to your wholesale suppliers. This means that you are no longer able to stay competitive in the market.  

Over time you have built a network of reliable wholesale suppliers and have earned a reputation as a returning, loyal customer. This has allowed you to negotiate flexible payment terms, even lower prices and better delivery options, but still, this is not giving you that edge and profit margin that will ensure your competitiveness in the market.

As no further reductions are possible, you are looking for a source that will provide you with quality merchandise at lower prices. While searching you have come across liquidation companies, but seeing that there are a lot of refurbished products on offer, you might have thought that the quality is compromised and that these products are not worth your time.  

In reality, these products are probably the reason why you are being left behind by your competition. It is time you left your wholesale suppliers and started buying your wholesale merchandise from liquidators.  

Why Buy from Liquidation Companies?

The first and the most obvious reason is the price. If you wonder how this price discount is achieved you have to understand how wholesalers procure merchandise and how that is different from liquidated merchandise. Wholesale suppliers buy truckloads of merchandise from retailers or manufacturers, break it up into wholesale pallets in order to sell it on to other customers for a profit. Liquidators, on the other hand, act as a bridge between the manufacturers and retailers looking to liquidate overstock merchandise, customer returns or refurbished products, and end consumers. Liquidators don’t own the merchandise but act as a platform for manufacturers and retailers.

But it is not all refurbished merchandise and customer returns. Liquidators have moved on from faulty, used merchandise. Top liquidation companies have exclusive deals in place with top-tier retailers and manufacturers who sell their wholesale merchandise through liquidation companies, avoiding the wholesale suppliers. This is where the price difference is created and your profit margin grows.

In addition to low prices, these contracts guarantee that products listed on the liquidation company’s website meet high-quality standards.  

For you as a small resale business manager, this means you will still be stocked adequately as you will be buying wholesale merchandise by the pallet. The positive side of this is that you will be buying the merchandise at lower prices, enabling you to stay competitive in the market while still making a significant profit.  

Are Refurbished Products Sold as New?

In a word, no. Every top liquidator will state which wholesale lot comprises refurbished merchandise. However, this does not mean you are receiving low-quality products.  

In fact, products that get returned unopened are classified as refurbished and can’t be sold as new. In around 30 percent of cases, products bought online get returned for various reasons. Maybe the seller shipped a product of the wrong color, or the wrong size, or maybe the customer has found a product that suits them better. And although unused and returned in original package, the law forbids retailers to put the item back on sale as new and it falls into the refurbished products category.

But whether returned new or because the product is faulty, manufacturers have their reputation to look after and don’t like it when a product is returned too many times, because, besides their reputation, it costs them time and money.  

For this reason, every returned product gets unpacked, refurbished and submitted to a number of strict tests in order to make sure it is functioning as good as new (for example, if it’s an electronic device).  

These products are also backed up by hefty warranties. Top liquidation companies, who also have their dedicated teams that review the products and refurbish them before selling and shipping them off to the eventual buyer, will offer a 90-day warranty on any refurbished product.  

So, if you plan on staying competitive and continuing to make money from your online resale business, it is time to look for the right liquidation companies and purchase wholesale merchandise there.  

However, you should always be cautious. It is essential to work with top-tier liquidators only. Do your research and strike deals and purchase only from reputable companies, because doing otherwise could lead to you ending up with a wholesale pallet of unusable merchandise that you would not be able to sell anywhere. To stay on the safe side, read the tips on how to find the right supplier. The same rules apply to wholesale suppliers and liquidators. The major rule is to look for the manifest, a list attached to every wholesale pallet or a lot showing you the type, the quantity and the quality of merchandise in the pallet. If your supplier is withholding information or not providing you all the details, you should look elsewhere.

In addition to the guide on finding the right wholesale supplier or a liquidator, we have created a guide that helps you run a successful online resale business. Maybe you have gathered years of experience in the business and know your way around already, but there might be some tips that have previously evaded you. If you are a newcomer, the Ultimate Guide to Selling on Amazon is something you should read and try to follow as closely as possible. While nothing is a guarantee, this guide will give you the best tools to succeed in the business of buying liquidation merchandise to resell online.

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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.