Liquidation Stock

Liquidation stock is an excellent source of products to sell at auction sites or through your online store. The greatest advantage of liquidation products is the price - liquidated stock can be bought at rock bottom prices!

What is liquidation stock

There are lots of reasons products get liquidated. Liquidation stock can include older models, production over-runs, cancelled wholesale orders, out of season products, discontinued promotional items, and used products that a large company no longer needs. Eventually, a certain number of any product ends up being liquidated. Whoever owns these products will need to dump them quickly, which can result in great profit margins if you know what you are doing.

Selling liquidated stock

It is now common practice to advertise a product that you bought at liquidation on your website at a very cheap price. This will draw the eye of your customer. Next to the liquidation product you place the products that you really want to sell that have higher profit margins. By using the liquidated stock item to draw your customers attention you are now increasing the probability of selling your higher profit product lines, thus making you more money. Liquidated items are also ideal to sell on ebay due to their rock bottom prices.

What are the Downside's

It is very important to remember that liquidations are limited. If you buy a box, case or pallet of particular product or range of products it is a one off purchase - once that stock is gone it's gone. It would be extremely difficult to find more of the same product at liquidated prices. So, liquidations are not a substitute for other product sourcing methods such as drop shippers and light bulk wholesale suppliers.

When you buy liquidated stock you need to factor in breakage. On average you should factor in that at least 15% of your products bought in a liquidation stock are broken or damaged in some way. In most cases you will still make a large profit due to the low price paid.

With liquidations, the products are usually shipped 'as is' with no returns allowed. You will also typically need to pay for the products up front before they are shipped to you.

When purchasing liquidated products remember to stay in your product niche. As long as you understand that liquidations are not your main source of profit but are a tool for increasing your sales you should do well with them.

Product condition

Liquidation stock is often sold in single boxes, in case lots or in pallet lots. In either case you will either receive batches of the same product or, more typically, a selection of different types of product.

When you buy liquidations you need to know the condition that your products are in. Liquidation products are sorted into 6 condition categories.

• New products
  These products are new and in their original packaging. They are usually overstocked items from large retail chains. These retail chains need to get rid of the products quickly so that they can make room for new products coming in. New products have never been opened.
• Refurbished products
  Refurbished products are used products but they have been inspected, tested and rebuilt to full working condition. The main issue with these products is that they rarely come in original packaging and seldom contain any documentation. They may be scratched, dented or have some other cosmetic defects.
• Shelf pulls
  These products were previously for sale in a store, but for some reason they were never sold. They usually have price tags and other stickers on them and the boxes can often be worn or damaged.
• Used products
  This category of products have been previously sold and used. They would typically have noticeable signs of use and age including dents, scratches etc. They are rarely in their original packaging and will only go through the most basic testing to make sure they work. They will also often lack any accompanying documentation.
• Returns
  Return products have been previously sold to a customer but the customer has returned them to the store. Most returns are damaged in some way and usually do not come with accessories and user manuals.
• Salvage products
  Salvage products are usually damaged beyond repair, and can only be used for parts.

Supplier Checklist

When you source liquidations you need to be confident that the source is reputable. A scam liquidator can lose you money very quickly. Try doing a google search to see if you can find anything negative about them. Also, check for a customer service number and ensure that they answer the phone when you call them. Another thing you should check is the efficiency of their shipping. You should be able to get total shipping costs before placing your order.

To grow your business you need to use multiple product sourcing methods. Sourcing liquidation stock can be very profitable, but should be seen as just another method to add to your mix.