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What is liquidation? And why are these products available?

Posted by Zack Kram on

That's a complicated question and reverse logistics is a complex industry. Luckily for you, resellers don't need to understand the inner workings of the industry to make money from pallets of liquidated merchandise, but there are a few basic concepts that are important to understand.

 

Retailers, manufacturers, importers, wholesalers, and anybody else that stocks inventory is always looking to stock their shelves with products that have the highest margins and sell the fastest. Unfortunately, not all products are successful or continue to be successful so when sales or profit margins are not where they need to be then companies are forced to liquidate these products. This usually occurs at a fraction of the retail or wholesale value and may even be sold at a loss to free up the space in the warehouse or in the store for better performing products. The other large category of items that companies need to liquidate are damaged goods. Damage could be caused during shipment or storage or it could be because the item was purchased by a customer and then returned. Either way companies can't sell these products at full retail and may be forced to liquidate them. From the company's point of view regardless of why the product is being liquidated it's usually considered salvage at this point. This is an important concept to understand and is the reason that liquidation pallets are usually referred to by the old saying that, "one man's trash is another man's treasure." Companies are not liquidating product because they are nice and want resellers to make a lot of money. It's purely a profit-driven business decision and the goal of the company liquidating the product is to get as much money as possible for what they consider to be junk or salvage product.
 

So, what does this mean for a reseller?

 

Well, it means that you will be receiving either damaged items or less than desirable items that the company was having a hard time selling or making a profit on.
 

Then why would anyone buy liquidation pallets?

 

Because there is a demand for these products and successful resellers are able to do what the big companies can't. Which is selling those products at a price that provides a healthy profit margin. It's common to purchase these at just a fraction of what the companies originally paid for the product and the overhead expenses of a reseller are usually fairly low so for those reasons it is common for a reseller to be able to offer those products at a very competitive price to drive sales. The other common way that a reseller can turn those products in to cash is by fixing or parting out the damaged items. All successful resellers have one thing in common, they are masters at finding a way to minimize the amount of items that get thrown away and maximizing margins on every item they sell.

 

We supply customers all over the country that range from the average person looking for a side gig who sells a few items on Facebook or Ebay to supplement their income to large multimillion dollar corporations. So, no matter what your goals are in the business we are your local resource for a consistent supply of liquidated inventory.

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