A liquidation sales event is a
retail sale in which the
contents and wholesale inventory
of a business are being sold off.
All types of businesses
are liquidated, from restaurants
to clothing shops to toy stores
to electronic stores to supermarkets.
There are two different ways that
liquidation sales generally take place.
One way is that the liquidator sells the
merchandise on behalf of the store owner,
or the landlord, and then receives
a commission based on the sales that
are made during the sale.
The second way is that the liquidator
will buy out the entire contents
and wholesale inventory of the
store, and then will sell the
merchandise at a markup.
It is important that you try to
determine what kind of a sale
it is, since there will be practical
differences between those liquidation
In the first event the liquidator
will not be as willing to reduce the
prices until the end, since the
liquidator is being paid
needs the wholesale merchandise to be
sold at a higher price so that
his commission can add up.
But in the second example
the liquidator makes his money
on the difference between what he
paid and what he will sell the
wholesale products for.
In other words, the liquidator
can reduce the price since his
profits are based on the markup,
not on a percentage of the sales.
In the first situation the liquidator
is under no pressure to sell
all of the merchandise, since he
has no money invested in it.
Yes, he does want to keep a
good reputation for his business
services so he will still try to
sell as much as he can.
But in the second situation
he wants to sell as much of the
merchandise as possible since
he spent money buying it.
Any unsold wholesale inventory
will offset the profits that he
made on selling the rest of the
When it comes to buying
merchandise from a liquidator
you have two ways to get a
One is to buy in bulk
so that you can receive
a volume based discount.
The more you buy, the more the liquidation
company will be interested in
giving you an amazing deal.
For instance, let's say the liquidator
is selling off 100 Nine West dresses
at 80% below the retail price.
You are more likely to receive
the best possible price if you
are willing to purchase
all 100 Nine West dresses
than if you only purchase
a few pieces of clothing.
The second way to get a
great deal when buying from
a liquidation company is
by waiting until the last day of the
At the last day the liquidator knows
that he needs to move out
all of the remaining inventory
otherwise it will remain unsold.
Keep in mind that some liquidation
companies will take any unsold inventory
and include those products in their
The risk of waiting until the last
minute is that the best products
will have been sold.
For instance, if a dress boutique
is being liquidated, and there
are Tahari dresses being sold
at 90% below retail, they are
likely to be sold out
within the first few days.
On the other hand, if by
some chance some of those
Tahari dresses are still left
by the last day of the sale,
you should be able to get them
for even less than 90% below retail.
One important piece of information
that you should know is that
liquidation companies are known
to mix in their own products
in the sales.
I remember going to a
liquidation sale for an electronic retail
chain called the Wiz.
I saw many music CDs by bands
that I am sure the Wiz never carried.
Liquidators will take advantage of
sales events to sell merchandise
that they have in their warehouses,
or will buy closeout products
specifically with the intention
of selling them at the sales.
There have been
some tremendous liquidation sales
over the last few years,
including for retailers such as Circuit City,
Linens N Things, A&P Supermarkets,
Radio Shack, Blockbuster,
Borders, Brookstone, among
While these sales are excellent
opportunities for retailers, flea market
vendors, eBay sellers, Amazon sellers,
and exporters, it is important to
keep a few things in mind.
You want to make sure that you
are buying merchandise that
is still in demand, you want to
avoid obsolete models and styles,
and you want to make sure that
you really are paying the equivalent
of a below wholesale price.
For instance, there were media reports
that stated that the liquidation prices
at the Sports Authority store closing
sales were not that great.
As a matter of fact, according to the
media reports many of the discounts
that were available were equivalent to
what could be found from other
offline and online retailers.
I would recommend that before you
purchase any merchandise you
should approach the manager and
request a lower price.
You would be surprised at the
extra discounts that you
can get on brand name apparel,
electronics, designer shoes,
and on other goods just
Hilco Merchants, Gordon Brothers,
Genco, BStock Solutions, and Liquidation.com
are some of the biggest liquidators in the
You can contact them to be notified
of the businesses which they are liquidating
merchandise on behalf of.
One final note.
Since you cannot
return defective merchandise at
these sales you need to
buy merchandise at the lowest
possible prices to cover any
merchandise which you won't be
able to resell.
I personally would prefer to focus
on apparel, footwear, handbags,
and other merchandise where the
risk of not spotting a defect is minimal.
Boxed electronics on the other hand
would present a risk since you
cannot inspect the contents of
the box, and you cannot try
out the electronics to see if they
Having said this, there are opportunities
to make money by purchasing wholesale
liquidation merchandise, whether you
buy them by the piece or by the pallet.
So while this part of the industry
has it challenges, the opportunities to
make money can still be there.
You are welcome to visit my
closeout warehouse in Brooklyn, New York,
and I will be happy to show you
all the below closeout deals that
I have available.