For any retailer, selling liquidated merchandise offers an opportunity to grow the business through increased sales and profitability. Liquidated inventory can be purchased very cheaply and so can be sold correspondingly cheaply without adversely affecting profit margins. It provides options to diversify into other markets, to increase the customer base, and generally to make the company expand.
All business models have their challenges, and selling liquidated merchandise is no exception. However, if you are aware of the challenges and know how to overcome them, you can use the process to great advantage. Be positive about what you are doing, but be realistic about the possible problems you face.
The Challenges of Liquidated Merchandise
The challenges you face when acquiring and selling liquidated merchandise largely arise from the reason the inventory has been liquidated. These include the following:
- Overstocks are brand new products, usually in their original packaging and often with full warranty, that are not selling well and so need to be cleared out. Although you can offer these items at discounted prices, there is a reason why they are not selling, and this may not be overcome by simply offering them at a reduced price.
- Seasonal products are liquidated when the season ends to make way for the new season’s items. They may be difficult to sell until the season comes around again, although people will always buy out of season if the offer is right.
- Discontinued products are often succeeded by new models that people want to buy. The challenge is therefore persuading customers to purchase the previous versions. Although many people will always want the latest model, others do not care and will take the best offer if it’s right for them.
- Customer returns possibly present the biggest challenge because they comprise a mixture of defective items, those with cosmetic damage, and some that are simply returned due to customers not wanting them or changing their minds. In some cases, pallets of unsorted returns are sold, and you will not know the actual state of the products until they are examined. You will, therefore, need to have the capacity and the capability to store and sort through the products, rectifying any problems, repackaging when necessary, and accepting that some will not be fit for sale. It may be possible to repurpose these or to use them for spare parts.
In addition to these lots, there may also be ‘mystery pallets’ where the content is unknown. These are best avoided despite the temptation that they may contain a bargain. Also to avoid are counterfeit and stolen items that some unscrupulous dealers will offer, since these can cause legal problems and may harm the company’s reputation.
Strategies to Overcome Liquidated Merchandise Challenges
Before you buy any liquidated merchandise, you need to conduct a thorough marketing review to establish which products will sell. If you understand what your customers want to buy, you can then acquire pallets of liquidated merchandise for which you know there is demand, and so you will not be left with unsold products.
For discontinued, seasonal, and slow-moving products, you need to have sales strategies in place because simply offering them at a low price is unlikely to work. The trick is bringing them to your customers' attention and giving them a reason to buy.
Use email marketing campaigns and social media to alert your customers to the availability of deeply discounted products and inform them of the deals available. Ensure there is visible and informative signage at key points in stores and keep employees informed so they can provide the necessary information to customers. For online selling, be sure to make the deals prominent and attractive.
Offer sales promotions, bundled deals, and time-limited special offers to attract attention. Most customers love a bargain, and you can inject a sense of urgency by setting an end date. If you do this regularly, customers will frequently visit your website or store because they expect bargains will be available
Returned stock will need to be sorted, and undamaged items can be sold as ‘as new’ while others may need some work to put them right. It’s vital that you correctly describe the condition of the products you are selling, since this will build customer trust and prevent complaints that will damage your business and returns that cause unnecessary work. You are in danger of being banned from certain sales sites if you describe the condition of products incorrectly.
Buying from reputable suppliers that can provide the correct documentation will avoid the risk of acquiring counterfeit or stolen items. At Quicklotz, we only deal with well-known companies and supply recognized brands. We provide full and accurate descriptions and authentication so you can be confident about what you are buying.
If you buy the right products in the correct quantities at the best prices and adopt proper sales strategies, you can build a prosperous business. We can help you to do that, so get in touch to get started.
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