Wholesalers and liquidators can both be used as a source of merchandise for retailers. They both provide products in bulk at below retail price, and both offer a range of items.
Because of the similarities, many people are unsure of the differences between them. In reality, they offer a different type of service, and it is important that resellers understand what they do in order to make the best use of their services.
How Wholesalers and Liquidators Differ?
A traditional wholesaler will buy products in bulk directly from a manufacturer and then sell them on to retailers in smaller quantities at wholesale price. These retailers will then sell individual units directly to consumers, either online or in-store, at a higher retail price. Wholesalers, therefore, provide an important service by selling to retailers the products they need in the required quantities. They generally supply a fixed range of products to a particular marketplace; for example, they may specialize in furniture, electrical items or clothing.
Liquidators provide a similar service but differ in the way they source and supply their products. They typically operate as facilitators for companies that want to dispose of large quantities of specific inventory items quickly. Companies usually want to do this because:
- They are going out of business and need to raise cash
- A store is closing or being relocated, and inventory needs to be cleared
- Warehouse and shelf space needs to be cleared of overstocked items, either because they aren’t selling well, are discontinued lines, or are seasonal items, and the season has ended
- They are customer returns that are faulty or no longer wanted and so cannot be sold as new products.
Liquidators often work with large, well-known brands and will arrange auctions and other sales methods to dispose of inventory. They can therefore usually be relied on to supply high-quality products, but at prices that are well below wholesale prices.
Choosing the Best Source of Merchandise
Most retailers have trusted wholesalers that they use for regular supplies of particular products. They know the prices they will pay, can choose from a range of merchandise, and can trust their supplier to deliver. Because of this, a wholesaler is still a viable source of products, although a liquidator is now a useful alternative.
Liquidators do supply a wide range of merchandise rather than the specific types that wholesalers often specialize in. They will also supply a mixture of new (closure, end of season, and slow-selling items) and used products (customer returns), which will offer a choice of low and even lower prices. So, they do offer more choice as well as prices that are below those for wholesalers.
Many wholesalers will now obtain some of their inventory from liquidation sales, sorting and grading the products before selling on in smaller quantities to retailers or even to smaller wholesalers. However, every time another company is involved, there is a markup in price, so you will be buying liquidation merchandise at higher than liquidation prices. So, in these cases, it’s better to go direct.
In many ways, it is a good policy to buy some of your regular items through a wholesaler and supplement this supply with additional products from liquidators as they become available. This will allow you to introduce new offerings into your range and to entice customers with low-price special offers and bundled deals.
The availability of liquidated merchandise means that your customers can take advantage of bargains, while you will still benefit from high profit margins due to the low cost. This means you will have a profitable and successful business that customers will visit regularly since they know they can get quality products at low prices with frequent special offers.
Making the Most of Your Opportunities
Liquidated merchandise offers great opportunities for you to grow your business, but like anything, it requires adequate planning and a thorough approach. You need to be confident that everything you buy will sell; thus, you should conduct market research and become familiar with your customers' needs.
Be sure of what you are buying and, particularly for used items, be aware that their condition may be less than ideal. The dealer should be able to give you an accurate description of the merchandise, with images, although a purchase of unsorted returns can include a wide variety of items. This should be reflected in the price, but be prepared to put in some work.
If you are at all unsure, start with buying small quantities and build up from there as your confidence grows. And always buy from a reputable and established dealer you can trust. At Quicklotz, we are here to help you develop your business and be successful. So, if you need advice on how to get started or anything else, get in touch.
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