The closeout business attracts many

people, from exporters to flea market vendors,

from retailers to eBay sellers.

The opportunity to purchase 

closeout merchandise

for pennies on the dollar

can definitely be very appealing.

I have seen closeout deals where

you can literally buy brand new

merchandise for as low as 

5% of the original retail price.

As a matter of fact, I routinely

sell closeout merchandise in my

warehouse for up 90% below

the original retail price,

and sometimes for even less.

So yes, the closeout business

has plenty of potential for

savvy retailers.

When people start calculating

the potential markups that they

can enjoy they get very excited

about buying and selling

closeout merchandise.

But while there is the potential

to do very well in the wholesale

business, there is also the potential

to lose.

So what can you do to help

tip the scale in your favor?

For starters, you need to take out the

guesswork from the process

of buying and selling closeout merchandise.

I think one of the biggest mistakes

a closeout buyer can make is 

making an assumption about 

the merchandise that they are buying.

To restate this in a positive way,

buyers can potentially do

very well when they 

have conducted a high degree

of research into the actual

products and examined the potential

of selling those products.

There are many reasons why the closeout

business can be challenging.

There are many categories of 

merchandise which can reflect the 

quality of the products being sold.

Buyers need to be aware

of these different categories,

and what they can mean

in terms of the merchandise that they

are considering.

There are also other important

details and characteristics of the

products that wholesalers and

retailers need to be familiar with.

The following 13 questions

can help you make better buying


Realistically there are no assurances

that you will be able to make money,

or not lose money, in the closeout business.

But these questions can at least help

you better navigate the process.

Closeout Question #1

What category of merchandise is the closeout?

For example, is the merchandise overstock, shelf

pulls, or store returns?

The category that the items belongs to will

help you have a better understanding of

what you can expect.

Closeout Question #2

Is the merchandise in brand new or used condition?

This is really important because there is a 

very big business that involves used

and slightly used merchandise. You

want to make sure that you know what

kind of merchandise you are buying.

Closeout Question #3

Is the merchandise in working condition?

This is especially important when it comes to


You might be able to repair the electronics

but you will want to know ahead of time

if you need to.

Closeout Question #4

Is there an expiration date for the


This is especially important for food items.

I have seen many closeout food deals

where the food is being sold close to

its expiration date. 

This is only a good deal if the food is

fresh and you can resell it your customers

so that they can eat it before its expiration date.

Closeout Question #5

Are there any restrictions on the sale

of the closeout merchandise?

You might come across a great deal

on designer men's jeans.

You want to make sure that the jeans

can be sold through the retail or

wholesale channel that you do 

business in.

For example, if you sell on eBay you

will want to find out if there are any

restrictions on the sale of the 

closeout merchandise on eBay.

Often you will need to get this

information from the sales channel

in which you are selling through.

Closeout Question #6

Is the merchandise authentic?

This is a really important question to

ask. If there is any hesitancy on the

part of the seller when you ask

him this question then I would

recommend staying away.

Closeout Question #7

Will the seller provide you

with an invoice?

Legitimate sellers will be happy to

give you an invoice or a receipt.

Closeout Question #8

Does the seller have a return policy?

While most closeout sales I have

seen are final sales, you need to ask

the seller that you are dealing with

what his policy is.

Closeout Question #9

Where is the seller buying his closeout

merchandise from?

Legitimate sellers can tell you

where they are buying their merchandise from.

They have developed a relationship with their

suppliers and are usually not concerned

with a buyer circumventing them by

going directly to the source.

Even if the seller does not tell you

exactly who he buys his merchandise from

he should be able to tell you what kind of

a source he is dealing with.

For example, the seller might tell you

that he is purchasing the merchandise as

overstock from a department store or

as a closeout directly from the brand.

Closeout Question #10

Have buyers been successful

with the closeout merchandise that is for sale?

For example, if you have a boutique in

the Bahamas you will want to know

if other boutiques in the Bahamas, or at

least the Caribbean, have also purchased

that closeout merchandise.

This will help you make a better decision

as to the potential of the merchandise.

Closeout Question #11

Does the closeout seller have repeat buyers?

This will give you an indication as to

the demand for the products that

are being offered for sale.

It will also indicate to you

the level of service that the

seller offers his customers.

Closeout Question #12

Will the closeout supplier buy back

your unsold merchandise?

It's good to know if you

have the option of selling the

merchandise back to your supplier

in the event that you cannot

sell it to your customers.

Closeout Question #13

Why did the merchandise become a 


A product can be sold as a

closeout because of many reasons

such as quality irregularities, 

changes in fashion demand, 

production mistakes, 

excess inventory, and so on.

You want to know why the

merchandise is being sold as a closeout

to see if the reason will become

an issue for your customers.

For example, if a lot of women's

fashion shoes

is being sold as a closeout

for quality reasons then you might

want to skip that closeout.

But if a lot of women's fashion shoes

is being sold as a closeout because

the shoes were produced by the

factory in a red color, instead of 

in an orange color, then that closeout

might be fine for you.

Or maybe that specific style of

shoes is no longer popular in New York,

but your customers in Trinidad 

would love them.

I have seen clothing being

sold as closeouts simply because

a department store canceled

an order and now the seller

of the merchandise needs to

find another way to sell his


You will only know by asking,

so ask away.