Do’s and Don’ts of Liquidation

For the savvy small business owner, the world of liquidation and returns can be a very lucrative one. When big businesses accept returns that they have no intention of restocking and reselling, or when businesses of all sizes quickly liquidate their assets at low prices in order to pay off creditors, they create opportunities for resellers to snap up those goods at rock-bottom prices and resell them for a big a profit.

A good liquidation and returns business can net big bucks for its owner, but there are always ways to streamline your business and improve your odds of making a great living. Here are the dos and don’ts that you should keep in mind as you guide your liquidation and returns business toward the biggest profits possible.

Do know who you’re buying from

Big companies like Target and Walmart are able to unload return pallets at low prices because the scale at which they operate makes that the most efficient thing to do. But not all companies are created equal. You want to buy lightly used and reliable goods, and you’re more likely to get those from certain trusted brands.

Be careful when you consider liquidation stock from companies you’re less familiar with. Make sure you know where your products are coming from, so that you can confidently say that you’re getting authentic brand name returns, and not the latest products from a knock-off factory somewhere. Always, always know who you’re actually buying from!

Don’t buy from just anyone

When big companies like Amazon, Target, and Walmart liquidate their stock, they work with certain reputable resellers. No, we’re not talking about individual resellers like you—we’re talking about online auction houses that turn the stock over in bulk, still at very low prices.

It’s important to turn to a trustworthy auction site for your purchases. Consider this a corollary to the rule that you should always know who you’re buying from. After all, you need to work with a reputable auction site if you’re going to be confident that the goods you’re reselling are really coming from the big companies that you think they are. Working with a trusted supplier means you’ll know for sure that your Target liquidation stock is really Target liquidation stock.

Do develop a specialty

The key to buying and reselling at a profit is knowing the value of what you’re buying and selling. Follow prices closely, and familiarize yourself with the market for your products. That’s easy enough to do, as long as you focus.

Working with one product or type of product will help you here. You’ll be better equipped to make fast and wise decisions about purchases and selling prices if you’re really immersed in a given market segment. Trying to track the prices and sales trends of a bunch of different products is going to get complicated fast. And flying blind by just buying and selling whatever you can get your hands on will be very inefficient because you’ll constantly find yourself being ripped off by savvy buyers who know about pricing trends that you don’t.

Don’t spread yourself too thin

Trying to focus on too many types of products at once is one way to get yourself confused and make your business inefficient. But it’s not the only way to spread yourself too thin, so be careful!

Make sure that you operation grows at the same pace as your acquisitions and sales. Remember, you’ll need room to safely and securely store your stock before you resell it. You may need help to post products on marketplaces and fulfill orders, and you may need funding. Bring in employees and partners as necessary, and make sure that your eyes don’t get bigger than your stomach. In other words, if your ambitions grow too much faster than your business, you’ll make mistakes and could end up losing money.

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