Department store liquidations are a great way to get bulk merchandise at a low price. It is a process where everybody wins. The seller gets rid of the products he doesn’t need, and the buyer gets them at a low price. If there is a broker involved, he can also profit by buying from the seller and then auctioning for a higher price to another buyer.
What Are Department Store Liquidations?
The process starts at a department store that has merchandise it doesn’t need anymore.
It can happen at any large retail for that matter, including Macy's, Wal-Mart, Sears, Target, Bloomingdale's, among other retail businesses.
This can happen due to various reasons:
· Salvaged product – if the item has been damaged in any way. It can happen due to a flood in the warehouse, floor damage or any other reason
· Job outs–the store tried to sell these products but failed
· Final sale - if a store plans to relocate or announces bankruptcy
In either of these cases, a department store announces the sale. After that, interested parties contact them, and an agreement is made.
How to Buy Department Store Liquidations?
There are two ways to buy them, by contacting a broker or by getting in touch directly with the company. The easier way is to contact a broker. There are many broker websites online that offer updated listings of current liquidation sales. You just need to find the items you are interested in and place an offer.
However, there are many liquidators on the market, so you have to be careful who to trust. Prices lower than retail are a part of this deal. However, if the terms sound too good to be true, they probably are. You should look for a reputable broker, one that you know personally or at least someone who your friends had done business with in the past.
Prices are influenced by supply and demand.
If you see a lot of Calvin Klein dresses being sold for a few dollars a piece, when you know that the going market rate is $40 a piece, you should be take extra care to find out why those designer dresses are being sold for such a low price.
There might be a very legitimate reason why a liquidator is selling brand name merchandise substantially below the going prices, but you need to find out what that reason is.
For instance, in my closeout business, I'll lower my prices below my cost for merchandise that is moving too slowly, but as I mentioned, there has to be a reason why I, or any wholesaler, would drastically lower their wholesale prices.
The other way to buy is to contact the store directly. This is a much harder way since it usually requires to have an insider within the company. Liquidation purchases require a hefty sum of money, so it’s not always possible to have it at any moment. If somebody announces you that there is a sale coming, you can prepare to react in a swift manner.
Although buying from the store directly can get you a better deal, in most cases, brokers are the ones who find out about it first. Most of the major department stores even have signed contracts with certain brokers to confirm they have priority to purchase their goods.
What Kind of Merchandise Can You Buy?
The important thing to mention is that you always buy bulk merchandise when going for department store liquidations.
Its precisely why there is such a low wholesale price involved. It is a win-win situation, the store is in trouble and looks to unload a large number of items, and you will get them at a more than a fair price. The merchandise can be delivered in pallets, truckloads or containers.
Note that certain stores will want you to export their merchandise, or at minimum ensure that it's not sold in close proximity to one of its stores.
There can also be restrictions on advertising store brands, such as INC or Charter Club when purchasing pallets from Macy's.
As for the type of merchandise that you can buy, pretty much anything goes. It only depends on the inventory of a store at the moment of liquidation. You can find various items of clothing, including shirts, t-shirts, sweaters, jeans, and shoes, as well as jewelry and other accessories. You can also buy equipment such as showcases, mannequins, clothing racks, display shelving, checkout counters, warehouse equipment and much more.
Advantages of Department Store Liquidations
There are a lot of positives that come from this type of sale. The department store can unload the stuff it doesn’t need anymore. Plus, it will earn back at least some of the money invested in the first place. The money received can then be used elsewhere to contribute to the overall progress of the company.
The profit that can be made from liquidation sales is the main motive for many buyers. They can get a lot of merchandise for a considerably low price. More often than not, this is also a quality merchandise, making it perfect for small retailers. You may have never thought about it, but when you shop at a boutique, you may be shopping for merchandise acquired this way. Liquidation sales can often equip an entire another store with various products.
Disadvantages of Department Store Liquidations
The main disadvantage of purchasing goods this way are the surprises that come with it. Although this can be part of the fun for somebody, there is always a little risk involved. When you buy on liquidation sales, you always buy in bulk. It means that you don’t have the opportunity to see the items you are acquiring.
The chances are that you will receive some damaged goods. The important question is their quantity. For example, if you buy 100 designer t-shirts at an extra affordable price, you can get by if 5 or 10 of them are damaged. However, if more than half of them can’t be further sold, you’ve got yourself a problem. Fortunately, this is rarely the case. The majority of goods are usually delivered in the great state.
How Can You Sell It?
As mentioned before, the department store announces a sale and then waits for the interested party to make contact. Alternatively, they can get in touch with potential clients themselves.
If you are a broker, once you make a purchase from the store department, you look for third-party buyers. The merchandise is, in most cases, put for an auction. This part can also be skipped if a pre-deal was made with a certain client.
Third-party buyers also have the option of further selling the good for a profit. It is what small retailers do; they use liquidation sales to stock their shelves and then sell the items individually.
How People Make Money by Selling Department Store Liquidations?
By using low prices to their advantage. They buy the goods from the store at a low price and then they sell it at a significantly higher one, making a great profit in the process. Brokers make money simply by making a resell of the goods.
The majority of retailers does it a bit differently – they buy in bulk and then sell individual items. This process might take some while, but the overall profit they make is great.
Despite that, many small and indie retailers hesitate to use this commodity due to its unjustified bad reputation. The number of stores and people using it is the best guarantee that the system works. It’s true that you need to be a bit careful when buying on liquidation sales. However, the retailers that go through the process often brag how that was a phenomenal move for their business.
You can purchase products in this wholesale category from my New York closeout business, CloseoutExplosion.com, and from online liquidation platforms such as BStock.com, Genco,com, and Liquidation.com
While the online liquidation sites will require you to take the products unseen, you are welcome to visit my Brooklyn clothing warehouse, where you can make your own selection.