Having a business in the liquidation industry means you need to know the ins and outs of the truckload liquidation business to begin to make a profit. For the best tips to assess your merchandise properly, we have put together a comprehensive guide for you to better understand this fascinating business, all it entails, and the best way to get it started successfully.
What are Truckload Liquidations?
Let’s make sure we’re covering the foundations. First off, what are truckload liquidations? Truckload liquidations are businesses that sell products that are being sold off by a retailer, storage facility, manufacturer, or brand owner. Sources may be selling these products to make room for new inventory at the start of a season, due to a package change or because they are slow sellers or were returned by customers. These businesses purchase products from manufacturers at a discounted rate and then resell them to consumers. People in the liquidation truckload business typically have a large inventory of products and may sell their merchandise through online auctions, fixed pricing, by the pallet, or by the piece.
For more information about getting started in the truckload liquidation business, you can also download our Beginner’s Guide on How To Sell Liquidation Merchandise.
Getting Your Liquidation Business Started: Finding the Right Liquidation Broker
Now that we have answered the core question of what truckload liquidations are, we can look at how to start making money selling liquidation merchandise. One of the first things you will have to do is decide how to find and purchase your merchandise. Many people, especially those new to the industry, decide to go through a liquidation broker like BuyLow Warehouse. It’s important to use a truly professional broker, so you can be sure to comply with the specific standards within the liquidation business, receive honest advice, and not be scammed.
These are some characteristics to identify a professional broker:
- Brokers have an extensive network of buyers and sellers, which means they can find the best deals for you and generally hear about good deals before you.
- They have years of experience in the industry and know how to navigate the market.
- They stand behind the products that they sell.
- They have good access to multiple types of products.
- They give accurate descriptions of the loads for sale.
- They always communicate in a timely manner.
- They can troubleshoot issues that occur quickly, finding a solution to problems that are beneficial to all.
- Ultimately, a professional broker should be trustworthy.
We've talked about how to spot them; now, let's look at some strategies for picking the best liquidation broker for you.
- Research brokers through their websites.
- Check out their inventory page.
- Determine what they have to offer you as a potential customer.
- Check with the BBB
- Are they a reputable company to work with?
- Join Social Media Liquidation Group
- This strategy will allow you to ask fellow members about the brokers they have used.
- Don’t be afraid to ask questions and more questions!! You must be confident in choosing the best liquidation broker for your business.
Benefits of Hiring a Professional Liquidation Broker
Finding the right partner for your liquidation business can speed up and improve the efficiency of your buying process. Not only are liquidation brokers experienced in the industry's ups and downs, but they will also provide you with several benefits when buying liquidation truckloads. Here are a few ways that professional liquidation brokers can lighten the load of the buying process: They will…
- Vet suppliers and loads for you.
- Coordinate the freight of your load.
- Handle the communication during the shipping process.
- In some circumstances, they will offer better pricing than buying directly from contract holders.
- Have updated feedback on various types of loads to know if a specific type of load has not been real good lately..
- Leverage their volume with the supplier or freight broker to meet timelines and pricing or fix bad loads that you may not otherwise be able to accomplish on your own.
- Help you avoid using risky payment methods with unproven sellers and allow you to do business in a safe way for your peace of mind.
- Will help guide you in your buying process. They are in your corner. Your liquidation broker’s seasoned experience in coordinating truckload liquidation purchases can help avoid you making a costly mistake in the case you did it without them.
Learn the Specifics About Your Liquidation Merchandise
Maximizing the value of the truckload of merchandise you buy is extremely important. Making sure you have purchased the best product for your liquidation business strategy is a key component to a successful liquidation business. Nothing stagnates a liquidation business faster than a product that won't sell.
Picking Out Your Product
There are many types of inventory to choose from when buying merchandise from truckload liquidations. You might sell overstocked inventories, clearance goods, customer returns, damaged packaging, or items that are being discontinued. Back-to-school supplies and holiday stuff, among other seasonal items, are great selling opportunities if purchased at the right time of the year. It is important to choose the right type of inventory at the right time to sell and maximize your profits.
For further information, check out this article on the best truck to buy.
Here is a tip about the liquidation business: always play to your strengths when deciding what type of inventory you will buy. For example, if you know a lot about electronics and where to sell them, then that might be your niche. On the other hand, if you know a lot about home improvement, tools, or property management companies that need home repair items, then the tool liquidation and home improvement liquidation business might be right for you.
How to Assess Your Liquidation Merchandise
You can purchase two types of liquidation truckloads: manifested or unmanifested. If a load is manifested, the buyer can see the exact items that will be on the truck. An unmanifested load will not have that list for the buyer and can contain anything the retailer sells.
Let’s look at some benefits of purchasing a manifested load.
- If you are looking for a specific product type, a manifest can give you an idea of what the truck is made of.
- If you are a smaller buyer that does not buy a huge number of loads, this can help offset your risks.
- Manifested loads are generally in a warehouse where you can go see them if you choose to.
- Manifests offer some psychological comfort of knowing what is inside the load, if nothing else.
Now, let’s do our due diligence and consider some risks of buying a manifested load.
- If a load is received where one or several of the expensive items on the manifest are broken or missing, it will deteriorate the value of the load.
- The manifested retail value could be inflated from what it currently is listed for sale for.
- The percentage of the retail price paid per item is generally higher than with unmanifested truckloads.
- Manifests will rarely be 100% accurate in the liquidation industry. Always assume the manifest may have a 20% variance from what it says will be received and what is actually received. Do not purchase a liquidation truckload for only a single item because it may not be there. Use the manifest for guidance.
- Loads will generally be more expensive because (1) more labor has been used during the processing/manifesting, and (2) the load could have already been shipped once, so more freight costs may have to be covered by the load cost.
- The load will often be cherry-picked by either the seller or the retailer. Whoever is performing the manifesting is doing it for a reason, and it is not for the buyer's convenience.
- Limited upside. With limited risk comes limited upside. Because the load is manifested, you will probably not receive a load that results in a huge upside because the load’s value has already been priced into the load.
An unmanifested load has benefits as well. In fact, many people will only buy unmanifested loads.
- Generally, these are cheaper loads due to the increased risk, less labor, and less freight.
- Billed at a flat cost; no damaged or missing expensive item can hurt the load value.
- Supply volume is better with unmanifested loads. You can often get a higher quantity of these loads faster. Because of this, larger sellers that require more volume can better supply their stores with these loads.
- Buyers that buy larger numbers of these loads can play the averages. A really good load will average out a bad load.
- No one knows what is in the load. It has not been cherry-picked.
While these benefits sound good, buying an unmanifested load still has a few risks.
- You could receive an overload of seasonal or damaged products, or items not nearly as described.
- You could be working with an underhanded seller that lists loads as unmanifested, so they can unload their junk or stick you with a truck not as described.
- You can avoid this risk by researching who you buy from and going through a trustworthy liquidation broker like BuyLow Warehouse.
Here you can dive a little deeper for more information on manifested loads to answer any remaining questions.
Maximize the Value of Your Truckload
Whichever type of load you buy, it is important to be smart about selling your product. Next, I will divulge a few more tips about the liquidation business.
If you sell by the pallet or sometimes by the piece, it would be better to sell the item(s) for less to get the customer to return and tell their friends. It is important to drive your margin up by moving more volume and driving your costs down by gaining efficiency scales.
Learn the Lingo of the Liquidation Business
When purchasing your first liquidation truckloads, it will be important to familiarize yourself with the lingo of the liquidation business. Whether you go through a broker or someone with a contract, things will run much smoother if everyone is on the same page with what is being communicated. We have put together a short yet essential list of terms that are used regularly in the liquidation business.
Condition types - Various terms are used to describe the condition of items, such as:
New: An item that has never been used or opened.
Case-packed or master-packed: The item hasn’t been opened or taken out of its original shipping cases. It hasn’t ever been on retailers’ store shelves.
Overstock: New items that the retailer doesn’t wish to store or sell through their usual channels. This could be for a variety of reasons, such as the packaging changing or the shift to a new season.
Shelf-pulled: Overstock items that were on store shelves at some point. They aren’t in their original shipping cases. The items may have price tags on them and/or show signs of wear and tear from customers handling them.
Opened box: The item is in excellent, new condition but its packaging has been unsealed. There may be packaging or protective wrapping missing from the packaging.
Undeliverable or not picked up: These items are new and unopened. This condition type means that the buyer never received the goods when it was shipped to them due to an error, a bad address, a miscommunication, or simply not picking it up.
Warehouse damage: The items were damaged in some way while in storage in the warehouse or during the shipping process. Often, only the packaging is affected, but there is a risk that the items are also affected.
Customer returns: The items were purchased by a customer and then taken back to the retailer. There is a chance that the packaging is open, the item or packaging is damaged, or pieces or accessories are missing.
Salvage: These items failed testing or never had testing done to determine if they worked properly. The items most likely are missing parts or have significant physical or functional damage.
FOB- This is a shipping term that stands for “Freight on Board'' and it determines who is liable for any damage to the product. Many sellers use it to mean the location from which your load will be shipped, but it actually means that you, the buyer, takes over responsibility for the product at that point. Make sure you are properly insured!
It is a factor in determining the origin and freight cost for your load.
- BOL- Bill of Lading The document the driver will give you to sign to show that you received your load.
If there are any issues with your load, you will write them on the BOL and make sure that you and the driver both sign it.
Tips about the Liquidation Business
One cog you need to keep well-oiled in this business is how well you manage your records and data. Nothing breeds stress and chaos in a business more than disorganization and uncertainty. Having the right software and systems to know what items you have and how well you are selling those items will make your life and your liquidation business run much more smoothly.
However, there may come a time when data and processes don't matter; if you are so focused on the data that you lose a sale, you have truly missed the point of this business. When push comes to shove, the ultimate way to tell if your business is doing well is whether or not your bank account is growing. Sometimes you just have to put aside the data and concentrate on selling.
If I had to narrow my tips about the liquidation business into just one category, this would be Customer Care Counts! Without customers, there is no liquidation business. It is cheaper to keep a customer than to find a new one. As you start, building those relationships may mean the difference between a profitable liquidation business and one that fails.
You may buy your best load from the best broker; you may determine that unmanifested loads are what you will buy from here on out; you may even learn the lingo. However, if your customers aren’t happy, you have missed the mark.
Not only do your customers need to be happy, but they need to be excited about what you are offering them. They must be so excited that they go and tell others about your amazing liquidation business. If you offer your customers a much-needed product and care about their concerns, they will share your vision with others. It is a win-win situation.
Finally, my last tip is not to overextend yourself or your business. Rome wasn’t built in a day, and neither is a long-term profitable liquidation business. So start slow, work smart, and remember to enjoy the journey.
BuyLow Warehouse is Your Liquidation Business Partner
The truckload liquidation business truly can be exciting, rewarding, and profitable. It just takes determination, commitment, and the ability to be honest with yourself and others. To help you on this journey, I recommend using a liquidation broker. They, too, are committed and determined to do what is best for your business.
They think of themselves as your partners in this industry. You don’t need to take my word for it. Check out BuyLow Warehouse and see it for yourself. It is up to you to do the research, but you will also reap the rewards.
Once you have done your research, head over to BuyLow Warehouse to find a truckload today!
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.