Five Steps to Guarantee Profits With Surplus Goods
by Chad Maslak on August 26th, 2009
Imagine how exciting it would be to receive your shipment of liquidated or surplus merchandise and finding it filled with top of the line, name brand products in high demand. As you look through the contents of the pallets you begin to imagine your new Ferrari or dream vacation from the boat loads of money you’ll be making on these goods… you see nothing but dollar signs.
Cha-ching! You’ve hit the jackpot… right!? Or have you?
I remember the fun part of receiving truck loads of pallets of very valuable merchandise. Most of it was surplus and liquidated goods. I remember rummaging through the “treasures” and digging through the pallets and sorting out all of the high end merchandise.
The more exciting part was getting to play with them. After all, you need to test them right?
Well, as I purchased the loads, I would evaluate the manifest, calculate my costs and determine the return on investment that I needed to be profitable.
When the shipment came in, I would hunt through the pallets, knowing exactly what I was looking for. I would specifically find all the camcorders, digital cameras and high end items. I always loved to see the boxes of items such as Sony Digital Camera’s, top end DVD recorders, Bose surround sound systems, in demand tooling equipment and tons of other profitable items!
I can remember counting the dollars in my hand from being able to turn some pretty healthy profits on all of that merchandise BEFORE I sold them.
You can also imagine the disappointment of opening a box and finding it full of junk accessories or a camcorder in pieces! Ouch!
That is a serious high to a very serious discouraging low in a split second!
The sad truth is this is often the reality of liquidated and surplus products in the salvage and surplus business. This is why it is absolutely essential BEFORE purchasing surplus inventory to:
1. Calculate your costs.
2. Determine your needed return on investment.
3. Know the type of product you’re purchasing and understand that you must take into account the defect percentage BEFORE you purchase…
4. and having a plan to know what to do with that defective merchandise.
Before you purchase, make sure to ask your closeout liquidators or salvage dealers some questions. There are several important questions to ask but one that you always need to remember is to find out what percentage of defective product you can expect.
If it is an empty box, make sure you let your dealer know so you can obtain a credit for that missing product. Most people who purchase surplus products don’t understand the fact that many of the items are returns, recalls or items that have been damaged by the customer or by the store staff. Product can also be damaged in shipment.
Unfortunately, too many people buy closeout or surplus pallets without knowing some key pieces of information This can really end up costing you a lot of money on the backend. Without this information you are running the risk of losing a lot of money.
I could share too many stories about people who have told me all about the great deal they found from a salvage dealer or at a salvage auction. They think they have hit the jackpot with closeout merchandise that will make them a fortune!
The sad part is when their excitement turns to despair when they realize their jackpot pallet is actually a junk pallet full of defective merchandise or broken products! Ouch again!
Don’t let this be you. The bottom line is:
1. Know and understand what type of surplus products you are purchasing.
2. Know your investment costs.
3. Determine the percentage of defects to expect.
4. Realize it will happen and have a plan to move them.
5. Remember things are not always as good as they seem and things are not always as bad as they seem. In other words keep a realistic expectation and don’t get to high or to low. Don’t become a yo-yo.
You can be profitable selling surplus goods and closeout merchandise but don’t forget these key steps.
1. Keep reasonable expectations.
2. Do your homework before the investment.
3. Always ask the key questions.
If you do these, you have a much better chance at turning your investment into profits!
Hi my name is Barbara and I don’t kow if you can help me but I am hoping? I have over 450 pieces of clothing that I need to liquidate, the average price I am selling them at is $1.80 a piece even less and I am talking high end items. They are not returns they are all shelf pulls from high end department stores like Macy’s Kohl’s Dillards etc..etc… Can you tell me or help me to get rid of this stuff, I do know about liquidation.com but they are to expensive to sell stuff with.
If you can help me please let me know,
Thanks Barbara
barbara
September 7th, 2009
at 8:26 pm
Barbara,
Your lot is a bit small for Liquidation (their value target per auction is $2,000). So you’re right – they probably aren’t the best call for this situation. I am guessing that you do not have a online or brick and mortar retail operation?
For a short-term, liquidate your small lot merchandise solution:
1) eBay – divide up your lot (or not), pull together a creative listing and see what the sort of response you get. It’s not exactly the most targeted venue but with their five free listings per month your fees for the whole lot could be $20 or less.
2) Alibaba – get the free membership, upload up to 50 products and see what comes of it.
3) Craigslist – Free but almost a complete shot in the dark when it comes to selling wholesale. Try posting in a big urban area near you with lots of small retail or breaking up the lot to make the purchase a bit more attractive.
Jonathan Staley
September 8th, 2009
at 4:35 pm