Liquidation Auctions for Stocking Small Businesses

While small businesses have a lot of potential to become successful, they have a limited budget. This means that stocking products can be one of the most complicated tasks for a small business owner. Especially if you are just starting out in business, not a lot of money may be available for your wholesale buying of stock.

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One solution for this is to turn to liquidation companies. This is perhaps the ideal solution for small businesses because you can get your hands on very affordable items that can be sold at profitable prices.

Although liquidation companies have previously been associated with used items, broken, damaged or blemished goods and even scrap, and for a valid reason, things have started changing over the recent years. All this is making liquidated merchandise that much more attractive and better suited for small buyers or small businesses hoping to flip their way to the top.

About Liquidation Companies and Auctions

Liquidation companies often operate as wholesalers, buying merchandise from retailers to resell. They usually liquidate their merchandise through auctions that are similar to any other auction where you bid on items: the highest bidder gets the item. The only difference is that with liquidation auctions, you will find wholesale pallets that have already been liquidated from existing businesses.

However, with more and more businesses moving their trading and dealing online, liquidation companies followed. Those with a vision and reputation have used their name to create online liquidation platforms that can be used by retailers to sell their liquidation merchandise, overstock, customer returns or closeouts directly to the end customer, or a small online resale business. Thus they avoid the wholesale suppliers, the wholesaler’s markup, keeping the prices below wholesale.

What are Liquidated Items?

Typically, liquidation takes place when a company is selling its assets. This means that liquidated items can range from unsold inventory to the office furniture, and any other valuable assets that a business owns. Liquidated wholesale electronics can to be one of the most profitable items for small business owners.

However, with the option of using a liquidation company as a platform to reach a wider customer base, retailers are now selling their overstock or closeouts to end consumers. You are not only able to bid or buy used furniture and office supplies, but basically anything.

An example of this sort of cooperation is the partnership between Direct Liquidation and retailers such as Walmart and Target. These giants of retail are now using Direct Liquidation as a platform to reach a wider audience and sell their overstock and customer returns directly to the customers, avoiding the wholesalers and keeping the prices low.

Why Use Liquidation Auctions?

Of course, these auctions have their benefits as well as their disadvantages. On the one hand, you can get items that you want at low prices, allowing you to sell them at a more attractive price to your customers. This way, you can make significant profits.

On the other hand, any lot you win in a liquidation auction could contain a variety of items. The lot might include refurbished items or untested customer returns. Some lots may just contain old-model stock. However, checking out the description and manifest of the lots before you bid on them will minimize these risks.

Top Tips

When using a liquidation auction for the very first time to stock your small business, following these tips will help you to get the most from the experience.

As mentioned above, you should thoroughly read the manifest that comes with the pallet so that you know the products that you are bidding for as well as their quantity. If a lot comes without any manifest, stay away from it. Not knowing the products you are bidding for is a risk, and selling those items can become a challenge.

As a small business, you shouldn’t take such risks. A reputable company like Direct Liquidation will always provide you with a manifest, even though their name and the name of retailers such as Walmart and Target speak volumes about merchandise quality in their own right. If a liquidation company skimps on the details in the manifest or declines your right to read a manifest, it is not a company you should be working with.

Moreover, before you decide to bid on any lot, do some research online to get an idea of the consumer demand for the products. See if you can identify any niche that is currently undersupplied, and if you have the ability to supply it. Niche markets are a perfect way to start your business. These markets will provide plenty of demand and a lower supply streams. This means the downward pressure on prices is not as high as it would be in an electronics market.

Additionally, you will have the time and space to work under less pressure and get to know the ins and outs of your business. This will also allow you to build a customer base and a reputation. You should aim to form relations with your customer base while having a steady income stream.

Another benefit of this approach is that you build gradually until you reach your desired market. Things will be a lot easier because you will not be coming into a market as a newcomer fighting for the existing buyers, but rather bring your own loyal customer with you and build from there.

Check the locations of the liquidation warehouses. Just because you may be buying through their website, it doesn’t mean that you can’t drive to the location, and pick the stock up – saving you a lot of money on postage. Even driving for a few hours to reach the location can save you a lot more than you lose. Small savings like this can really help a new business get off the ground.

In addition, merchandise liquidated by retailers is often shipped from their warehouses, so check for the proximity of those warehouses. If you have the items available in a warehouse near you, this will certainly keep the delivery costs down.

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.