Top Mistakes to Avoid in Liquidation

The main objective of starting any business, whether big or small, is to make money by selling goods at a higher than purchase price to cover their expenses. One such business that can prove to be quite lucrative for you is that of buying and selling liquidated goods. However, if you want to make money in this business and ensure your success in it, you should be aware of the most common mistakes people in this industry make.

The following lines will discuss some of these mistakes so that you do not end up making them when you start your own liquidation business.

Mistakes While Choosing the Vendor

While starting your liquidation business, one of the first and most important steps that you will need to take is to select the vendors or suppliers of your liquidated goods. Here are a few of the most common mistakes you must avoid while choosing the vendor for your business.

Not Asking Acquaintances

Ask any expert liquidator and they will tell you that your friends and acquaintances are the best sources of information when it comes to finding the best suppliers. Even if you think that none of your friends are involved in the liquidation business, ask because even though they may not know anyone personally, they may guide you towards someone who does.

This is important because no matter how sure you are of your research, you will not have the same reliability. Word of mouth is more reliable and credible in this regard because your friend or acquaintance will have firsthand experience of working with the provider or know someone who has. Besides, they can also warn you about the bad ones.

Lesson: When choosing a vendor, ask at least a couple of people if they know of anyone who provides liquidated goods.

Not Considering Payment Option

Just because you are honest in your business does not necessarily mean that the supplier you buy from will be straightforward with you. There are many inexperienced and fake vendors who want nothing but to rip you off. For this reason, it is crucial that you look for someone who offers you multiple payment options.

The best option would be to opt for someone who takes payments through credit cards. Even if the supplier is not providing you with the goods that you paid for, you can always ask for a chargeback from your credit card company.

Lesson: Always opt for a supplier who accepts credit cards as a payment option.

Not Asking for References

Another common mistake that you may end up making in your liquidation business is not asking vendors for references. No matter how reliable you may think the supplier is, you can never be sure about their authenticity unless they tell you about their references.

If you contact just a few of those on the list the vendor provides you with, you can talk to them and ask them about their overall experience. Remember, testimonials are not the same as references because they are sometimes prewritten, so take these with a grain of salt.

Lesson: Ask the supplier to give you the contact details of at least three to four previous clients.

Not Considering Price or Experience

To avoid any sort of fraud, you must not make the mistake of buying from a vendor who has merchandise that is highly priced or does not have the necessary experience. There are too many suppliers who charge too much and make a very high profit on items which were not even worth half of what you paid.

Price aside, you also need to ensure that the vendor has the necessary experience or else you will not be able to find the quality products that you are searching for.

Lesson: Always ensure that you check out the price of similar items on other websites and ask vendors about their experience.

Opting for Too Many Vendors

Even though it is true that you need to have multiple vendors for your liquidation business, you must avoid opting for too many. If you have more than three to four suppliers providing you with a product, you will get confused and will not be able to carry out a good and positive relationship with each of them.

Approaching too many vendors will also cost you a lot more while opting for only a few will give you an opportunity to make use of discounts.

Lesson: Make sure to pick your vendors after careful consideration and stick to four or less depending on the size of your business.

Not Thinking About Support

The supplier you decide to buy from must always be able to provide at least some sort of support. Unfortunately, since most new liquidators are unaware of this fact, they may end up opting for someone who is inexperienced and does not contact or help their client when needed.

However, if you are successful in finding someone who offers you support even after the merchandise has been shipped to you, you will be able to continue the relationship for a long time.

Lesson: Look for liquidation merchandise providers who do not just promise to dispatch good quality products, but will provide support later as well.

Not Considering Multiple Types of Sources

There are more than a handful of new liquidation business starters who make the mistake of buying from only one or two kinds of vendors or sources. Remember this: even though retail stores and liquidators will be your main source for the merchandise you aim to sell, you can also find a lot of items through online auctions, classified ads and even flea markets. Searching through multiple sources is crucial as it will give you a lot of variety as well as help you find quality products for a lower than usual price.

Lesson: Research is vital when it comes to searching for multiple vendors, so make sure that you spend time looking for these suppliers.

Mistakes While Choosing the Merchandise

In addition to selecting the best and most suitable vendor for your liquidation business, you must also make sure of choosing and buying the right sort of merchandise. Unfortunately, there are quite a lot of mistakes which you may be making in this area as well.

Here are some of the top mistakes new liquidation businesspeople make.

Not Researching What Your Clients Want

One of the biggest mistakes you will make when choosing merchandise for your liquidation business is not performing due diligence to find out the kind of items that your customers are looking for. Opting for random products based on your own whim is a big mistake; unless your items are needed by your customers, they will not be bought.

Researching extensively about your competitors and market will also give you a good idea about the best products that you need to buy from your trusted vendors.

Lesson: Make sure to spend plenty of time researching and do not buy merchandise unless you are sure about its worth for your customers.

Forgoing the Quality Factor of Your Merchandise

When buying any kind of merchandise, you should carefully consider its quality. This will only make you regret your decision later because you will have wasted your time as well as effort. Do not just go for a liquidated product because it is refurbished; there are many vendors who claim that the product is refurbished, but it is actually not.

However, even though checking for the quality is important for every transaction, it should mainly considered be when you are making the first deal because this is your chance to check the supplier’s reliability and credibility.

Lesson: Check the merchandise that you want to buy both before asking for it and after it has arrived as some vendors may provide you with other defected pieces.

Buying Your Future Products at the Right Time

Another mistake that you will find liquidation business owners making is buying your liquidation products at the wrong time. Even though you may not realize it right now, buying at the right time will not only save you a lot of money, but it will make all your efforts go to waste as well. According to experts, the best time to buy liquidation products is after the holidays because stores get a lot of return items after the season.

Lesson: Be prepared to buy your merchandise at the end of January or the start of February and do not make the mistake of buying in the peak season.

Not Knowing What Your Competitors Are Selling

Finally, when you enter the liquidation business and decide to buy merchandise, you must always know what your competitors are selling. This is important not only for your business, but also because it may give you product ideas that you may not be thinking of. For example, if your competitors are selling Apple products or electronics, you can always decide to buy accessories such as chargers and headphones that will complement them.

Lesson: Before buying any product, be sure to know exactly what your competitors are in the market for.

The Benefits of Avoiding Common Mistakes

Now that you are aware of most of the mistakes that liquidators usually make, the first thing you should do is avoid them. To give you even more incentives to avoid these, here are the top three benefits of avoiding these mistakes.

Cheaper Good Quality Products

By carefully choosing the vendor as well as the product, you will be allowing your business to obtain the best quality products for a reduced price. Because your business is all about the liquidated products that you are selling to your customers, this is the best benefit you can hope for.

An Easy to Maintain Business

When you think about each of the steps that you are taking to make your liquidation business a success, you will realize that helping yourself maintain it for the long run. If you are considering all of these mistakes and making an effort not to avoid them, you will not run into trouble, which will help you concentrate on your company even more.

Stronger Relationships

The most successful businesses will always have a few trusted and reliable suppliers. And when you work hard to satisfy your suppliers since they are satisfying you by providing the best quality products, you will be able to build stronger and much more lucrative relationships with them. Once you do that, you will no longer need to look for new vendors because the existing ones will be more than enough for you.

The Bottom Line

To sum things up, here is a look at what we discussed throughout this post.

1. Always ask your acquaintances

2. Opt for vendors that provide multiple payment options

3. Always ask to be provided with references

4. Consider the price of product and experience of vendor

5. Decide on only a few vendors

6. Search for multiple sources

7. Support is a plus point in any vendor

8. Spend time in researching about the products you want to buy

9. Always check for quality of product

10. Think about the time when you are buying the product

11. Know what your competitors are selling to the target market

Whether you have started your new business or not, keeping these common mistakes in mind is an important step for the success of your business. If you do not consider these common errors and fail to correct them, you will end up with a liquidation business that is hardly popular with customer.

In fact, not only will you be dooming your business by not being able to bring in customers, but you will also be losing a lot of your money, time and effort by going for the wrong sort of products. Therefore, if you want to attract customers and keep them interested, you must think about these mistakes carefully.

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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.