How Liquidators Can Benefit Your Business

Karen Axelton
Tue, 12 May 2009 00:00:00 +0000

Also called surplus, overstocks, and closeouts, products sold by liquidators can be a useful part of your overall product mix. What are liquidators? They sell all types of products, from clothing and electronics, to office supplies, home accessories, furniture, and more.

Liquidated goods come from many sources. They may be products from companies going out of business, or products that customers have returned. Products even come from companies that are moving and would rather get rid of inventory than pack and move it. Manufacturers may liquidate products if the customer cancelled an order and the manufacturer wants to get rid of it; retailers may liquidate products that are nearing the end of their season and not moving fast enough. Even the government liquidates products—everything from textiles to aircraft.

Businesses can benefit from liquidators in many ways. Their low-priced products can serve as good loss leaders to get customers to your store or site. If the products are cheap enough, you can give them away as promotional items or gifts-with-purchase. And because they are always changing, liquidated goods are a good way to keep your product mix fresh.

There are business-to-business sites where you can find a wide range of suppliers selling liquidated products. Liquidation.com is one of the most popular, offering a variety of merchandise including clothing and accessories, jewelry, computers and electronics, housewares and more. The site has new, used, and refurbished goods, as well as returns and closeouts. Register for free and you can search, sign up for alerts, and bid on products. You’ll also find products listed by Hot Deals, New Merchandise or Closing Soon.

Even the government can be a liquidation source. Visit the federal government’s GSAAuctions.gov site for more information. Even if you’re not in the market for aircraft or industrial machinery, you can also find household and personal items, jewelry, furniture, and office equipment. Registration is free and you can search or browse through the thousands of items, and then place a bid.

You can also find liquidators at trade shows. ASD Liquidation Expo is a popular event. Finally, in some cases you can make deals with individual retail locations or e-commerce sites to sell their excess inventory. Getting excess merchandise from local sources can be a good way to avoid shipping costs.

As with any type of wholesale source, before doing business with a liquidator, you need to make sure the company is legitimate. (See "How to Find Wholesale Sources of Products" for more information.) The site should have a physical address for the company and a phone number. Ask for references and check them. Ask others in the industry if they have heard of the company and what its reputation is.

Understanding the terms of business is especially important when dealing with liquidators. Be clear about the company’s return, cancellation, and exchange policies; any guarantees on products or delivery times; what type of customer support is available; payment methods; and shipping policies. Another important factor is how much information you can get about what you’re buying. You want as many details as you can obtain, including its condition, where it came from, product photos, and the product’s original price. (Before contacting a supplier, check out "Convincing a Vendor to Do Business with You.")

As with any wholesale purchase, you need to know your cost per unit to figure out if you can make a profit. Many liquidators sell goods on an auction basis, so before you bid, figure out at what price you can sell the items. Be sure to include all costs, such as shipping and any costs to repair or refurbish the goods before reselling them.

You need to be flexible with liquidated items since you can’t rely on them as a regular source of product. Think of them as a way to balance out your other offerings. Before you buy, have a plan for how you’re going to incorporate liquidated goods into your merchandise mix. The key to profiting from liquidations is to turn the product over fast, so you need to have a sales strategy ready to go.

Karen Axelton is Chief Content Officer at GrowBiz Media (growbizmedia.com), a content and consulting company that helps entrepreneurs start and grow their businesses.