Archive for November, 2007
How to Use Product Liquidation for Your Online Business
Author: ColetteThe idea of sourcing liquidated goods for resale makes most online sellers extremely nervous. But the best way to allay those fears is to get a better understanding of liquidation; its upsides and downsides, and how to use it profitably. Liquidation is just a term that describes manufacturers and retailers converting unwanted inventory into cash.
Know Your Products
The first step in profitable liquidation sourcing is to know your products. You want to know why the items you’re looking at are being liquidated. There are plenty of reasons a company might be liquidating inventory:
- They may have over-anticipated demand and bought or made too much of a product.
- They may have had order cancellations and gotten stuck with extra goods.
- Sometimes, growing companies need to liquidate their assets to help offset expansion costs.
- Companies that are relocating will often liquidate inventory, rather than investing the time, effort, and money into moving it.
The bottom line is, there may be a completely legitimate reason why goods are being liquidated, but you need to find out because you don’t want to get stuck with merchandise you can’t move.
Know Your Supplier
The second step to buying liquidated goods is researching your supplier, so that you understand with whom you’re dealing. You can ask for customer references, and check out their reputation and type of operation: How long have they been in business? What do they carry? Do they have volume discounts? Above all else, know their policies. What are their protocols regarding returns, cancellations, and guarantees? What about exchanges and credits? Will they stand behind their products? The most important thing is to be sure a supplier is legitimate, and to feel comfortable working with them.
Know Your Product Market
The third rule in liquidation shopping is a rule in any kind of shopping in order to keep on track, you need to know what you’re looking for. There are a few key things to keep in mind when looking at liquidated and closeout buys:
- Know your customer base. Look for products your customers will want, not products that you personally want.
- Stick with your niche. No matter how low the price is for blow-dryers, don’t try selling them next to the java on your specialty coffee site.
- Be flexible when dealing with closeout goods. Liquidation isn’t a consistent source, so don’t plan to use it to stock quantities of specific products again and again. Once a product is gone, you have to move on and look for other products to round out your regular line-up.
Getting Started with Liquidation
Where do you find wholesalers and retailers with surplus goods and manufacturers with overstocks and discontinued products? Beyond Internet sources like Liquidation.com and LiquidXS.com, you can look at bankruptcy courts and insurance companies that deal with excess and damaged merchandise. Also, U.S. Customs sometimes has unclaimed goods, and police departments often sell off stolen property at deep discounts.
Liquidation is nothing for e-tailers to be afraid of you just have to understand what it is and how you can use it in your business. If you take the time to research your suppliers and your product market, liquidation can provide an excellent supplement to your other product sourcing techniques.
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