Why a Successful Liquidation Business
You have a passion. You have a desire. You have a dream to build your own liquidation business. You also have a question. You’re wondering if the liquidation business is profitable. The answer is that it can be when you approach your business with the right strategy. In this article, you will learn the ins and outs and the tips and tricks of how to start your liquidation business.
Before we do a deep dive into the liquidation business, let’s examine some reasons why small companies choose to buy liquidation pallets.
One of the best things about the liquidation business is that you can start small. You don’t have to have previous experience or invest large amounts of capital upfront to be successful. You may wonder: if you don’t need a large amount of capital or experience to start, what do you need? To make your liquidation business profitable, you have to be smart, not move too fast and be willing to put in the work. The liquidation business is one of the industries where someone can outwork their competitor and use free resources to gain knowledge.
How to Be Smart When Buying Liquidation Products
What to Know Before You Buy Your First Liquidation Pallet and Truckload
Before you buy your first liquidation pallet or truckload, there are a few things you need to be aware of. It is VITAL to do your research before you buy. A big part of that is determining how much inventory you can handle and where you will store it.
Part of starting a liquidation business means having the ability to store your product as you work through the selling process. It’s important to first maximize your house or storage bay. This will help you keep your overhead as low as possible when starting out. This will cause you to have less space, which in turn will keep you focused on selling your merchandise. If you don’t have enough space to store your product for long periods, it will be important to sell those items as quickly as possible. The skill of moving product quickly is foundational to your success in the liquidation business.
Depending on whether you buy by the pallet or buy the truckload is also another factor in determining how much storage space you need. Buying by the pallet gives you a smaller quantity of merchandise, so you wouldn’t need a large storage facility or warehouse. Buying by the truckload gives you a larger quantity and will inevitably result in needing more storage space as you work through selling your product.
Also, make sure you can handle the influx of product coming in, whether through individual pallets or by the truckload. Your storage space will determine how much you can purchase, but that isn’t the only factor. How much staff you have will also affect how much inventory you can buy.
Another important area of pre-purchase research is how you’ll sell your product. There are many sales channels available to you. Locally, you can sell out of a storefront or warehouse and/or visit flea markets, fairs and bazaars to get your name and product out to the public while building up your clientele and relationships throughout the community.
Another option is selling in online communities like Facebook. These not only offer you an avenue for sales but also allow you to build relationships and learn more about the business. The people in these groups can help you spot scammers and find the best professional brokers.
You’re in this business to make money, so it stands to reason that you want to buy the product that sells the best. To do that, you need to know what your customers need the most. Once again, it will benefit you to do your research. Look around your community at what others are offering. What niche can you fit into that isn’t already there? If your community is inundated with home decor stores, it might be wise to invest in selling tools to help put up those home decorations.
If you’re unsure about whether or not a specific product type will sell well in your community, you can always start by buying individual pallets of those items to see how things go. If you find that you are selling out quickly, you can move up to buying a full truckload.
Check out this article for some more helpful tips on the best truckload to buy.
Finding a Reputable Liquidation Seller
Once you know what types of product you want to buy, you need to know who you’re going to buy them from. While some retailers have channels for you to buy directly from them, that isn’t always the best choice. Most people who are new in the liquidation business will never be able to buy directly from the retailer. Those that do won’t have the benefit of having someone in their corner who can get them the best deals for the right truck like a broker can. Trying to go directly through a retailer may lead to paying way too much money for a load that is less than ideal.
However, you can buy confidently from a broker like BuyLow Warehouse. Using a broker like BuyLow Warehouse allows you to hand over the reins to someone who’s there specifically to help you do better. They have the connections to find you the right load at the right cost and will be in your corner if problems arise.
You can also buy from a seller in one of the many social media liquidation groups. It’s wise to make sure that you do your research when buying on from social media. Ask questions. Are the same few people giving good reviews for a seller? Read the comments on their posts. Are there multiple people who seem wary of them? If this is the case, proceed with caution.
Just like in social media groups, it’s important to make sure anyone you buy from is properly vetted. If a seller is involved with the BBB, check out their rating. Look at their website and see what they offer. Ask other buyers who have worked with them what they think about their services. Do they offer what you need? It’s good to know upfront how they’d handle a problem should one arise. A good broker should be willing to communicate with you and offer you honest advice about the business. If they don’t, it’s probably wise to move on.
How to Start Selling Your Liquidation Pallets and Truckloads Successfully
Before we go any further, take a moment to read this article on market research. The more you know about what you need to learn about your market and customers, the better your business will be.
As stated above, doing your market research before you begin your liquidation business is vital to your success. Knowing what product is best for your business is essential to making a profit. You’re going to be the most knowledgeable at selecting the right product. You’re the only one who knows your competitors and the characteristics of your local area. Knowing where to sell that perfect product is the final piece for setting the groundwork for a successful business. Throwing money after a product that doesn’t sell or a sales channel that doesn’t work will only cost you money and waste time that could have been saved if the research had been done first.
Also, take a moment to look over the following article to create your business marketing strategy.
Once you’ve conducted your research, create a marketing strategy. Here’s an overview of some questions to answer to help make your business profitable.
- What type of product is best for your business?
- Where will you be selling your product?
- How many sales channels do you want to start with?
- What type of payment methods will you accept?
- Where will you advertise?
Well, you’ve done the research. You know what type of product you want. You know what channels you want to go through to buy the product. Now you’re wondering how to sell your liquidation truckloads. One of the first questions you may ask is how to price and advertise your product.
If you’re interested in products from Walmart, go visit one of their stores.
- How much are they charging for new items?
- Are certain items selling faster than others? Why is that?
- Look up that supplier's commercials or internet ads. What’s the key takeaway that draws you into wanting their product? How can you make your advertisement just as appealing?
- Is the market inundated with the product you want to sell? What can you offer your customer that’s different from everyone else?
Start easy and leverage social media, local flea markets and Facebook Marketplace. TEST EVERYTHING - pictures angle, picture background, pricing model, sales channels, etc. EVERYTHING!
Keep it SIMPLE and minimize the amount of things you have to manage. There are a lot of working cogs that go into making a profitable liquidation business. Start small. Think smart and build that beautiful piece of liquidation machinery slowly.
Where and How to Sell Your Liquidation Truckloads
Now that you have done your marketing research, you need to finalize where you'll sell your liquidation truckloads.
Do you want to sell locally? Internationally? Online or in person? As someone new to the business, it would be wise to start out locally and work up to selling internationally. While it’s good to diversify into new sales channels sooner than later, always do so wisely. You MUST complete the integration of your current sales channel before moving on to another one. This can be a very large undertaking and include marketing, customer service, additional square footage, new software and more staff.
Below is a selection of sales channels for you to utilize when selling your product. Note that this is in no way an exhaustive list:
- Facebook marketplace
- Social Media
- A personal website
- Storefront/ warehouse
- Flea Market
Don’t select a sales channel that’s outside of your basic expertise when getting started. For example, if you don’t know much about computers, don’t start with eBay. Instead, choose something local, like a flea market. Don’t make it harder on yourself than it needs to be at first. You don’t want to over-extend yourself or your resources as soon as you open your doors. Look at this article on avoiding over-extending yourself for some more tips and tricks.
What to Do Once You Start Selling Your Liquidation Products
You can do everything right to ensure that your liquidation business is profitable but still fail if you don’t take care of your customer. It’s a proven fact that keeping a customer is cheaper than having to find a new one. Below are some tips for your liquidation business that will help you stay on track with wonderful customer service.
- Be honest with your customers at all times. If a customer feels like you misled them about what you agreed to provide, they will be wary of working with you in the future.
- From the beginning, let your customer know how you will handle any issues that come up. They’re more likely to work with you if they feel secure in whatever situation may arise.
- Build relationships first, and you will have customers for life.
BuyLow Warehouses Top Insider Tips for Your Liquidation Business
I promised at the beginning of this article that I’d be showing you some of the ins and outs of the liquidation business. I am now going to give you a few more tips for your liquidation business concerning selling on sites like Amazon and eBay.
eBay is the largest second-hand reseller market in the entire world. It’s primarily designed to sell single items, but it can be used to sell bundles and mystery boxes. It can help you move a large amount of volume, but it does have some strings attached.
- Many sellers think eBay has too much oversight with sales transactions.
- eBay has the ultimate say in how a return case is resolved. This may not always go in your favor.
- eBay does allow sellers to define their shipping timelines and return preferences but then requires those guarantees to be delivered upon. If for any reason the seller isn’t able to do so, their account is penalized with the seller’s merchandise receiving less activity/views, which unfortunately correlates to fewer sales.
- If you aren't familiar with selling on an online marketplace, it requires that you add a packing and shipping component to your business.
These are only a few of the aspects of selling on eBay. Now we are going to move on to Amazon.
Amazon demands professional performance out of its sellers.
- They demand strict deadlines and have strict rules for product condition descriptions. Due to their strict guidelines, many resellers only sell products that are in mint condition on the platform.
- One of the featured solutions that Amazon offers is Amazon FBA. It allows a seller to send the item to an Amazon Warehouse and then not participate in any of the remaining processes. It does cost additional fees, but the fees are reasonable for sellers that want to simplify and only focus on certain parts of the online selling process.
- Recently, Amazon rolled out a new program called, “Buy with Prime.” This enables third-party retailers to take advantage of Amazon’s vast shipping and fulfillment network for orders placed on their own site. Prime members can order items on other retailers’ websites using payment and shipping information stored in their Amazon account. This will help sellers maximize buyer conversions on their own websites in addition to on the Amazon platform.
There are several other online sites that you can join to sell your product from, such as Etsy, Mercari, Bonanza and Shopify.
Get more helpful tips with our beginner’s guide to liquidation selling.
Things to Avoid That Can Hurt Your Business’ Success
Below are some mistakes to avoid in liquidation and wholesale:
- Trying to grow too fast
- Not doing any research
- Trying too hard to find a secret source
- Not being flexible
- Not managing your reputation or treating customers poorly
- Over-committing a large portion of your available cash to a single deal
- Being undercapitalized for the way you are managing your business
- Not treating it as a business
BuyLow’s Takeaways for Profitable Liquidation Business
So, as a quick recap from this article, you have learned several things.
- You don’t have to have any previous business experience to do well in this business.
- You don’t have to put up a large amount of capital upfront.
- It’s cheaper to keep a customer than to have to find a new one.
- There are many different sales channels where you can sell your products. While it’s good to diversify where you will sell your product, make sure one sales channel is nailed down before beginning a new one.
- Finally, research is key if you want to have a profitable liquidation business.
This business can be brutal if you don’t think smart, start slow and associate with people who want to help encourage and educate you. BuyLow Warehouse does well when their customers do well. They have your best interest in mind. Not only do they offer fair pricing, industry connection and quality products, but they have tools to help deepen your knowledge about the business and teach you the pitfalls to avoid. Their helpful team is ready to assist you with questions and advice whenever you need it.
You need to come into this business thinking smart. Choose someone to be in your corner who will help you succeed. One of the ways that you can assure your business’s longevity and profitability is to partner with a professional broker like BuyLow Warehouse. As the pieces begin to fall into place, head on over to BuyLow Warehouse to see what the best in the liquidation industry has to offer you.
So, I will leave you with one more piece of advice. Click out of this article and take your new knowledge and buy confidently from BuyLow Warehouse.
Meet the Author
Matt Leavell is the founder and CEO of BuyLow Warehouse. As a passionate business executive with over 20 years of entrepreneurial experience and more than 13 years of operations management experience, Matt's goal is to empower sellers to start and grow their own liquidation businesses the smart way. Matt uses his expertise in business growth, improving efficiency, and liquidation selling to partner with sellers big and small, so they can reach their full potential.
Connect with Matt on LinkedIn.