The closeout business attracts many
people, from exporters to flea market vendors,
from retailers to eBay sellers.
The opportunity to purchase
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
When people start calculating
the potential markups that they
can enjoy they get very excited
about buying and selling
But while there is the potential
to do very well in the wholesale
business, there is also the potential
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
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
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
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,
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
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.