Often times one of marketplace merchant’s biggest challenges to growing their business is getting inventory at a price point that leaves room for profit after they sell it. We invited 888Lots to share their expertise with our readers about using liquidation lots as an inventory source. The following is a guest post by 888Lots:
What should I look for in liquidation lots?
This is the question that concerns many online sellers and retailers at all levels.
There are a number of liquidator companies that offer liquidated merchandise by lots, but there are several important factors that you should look at before you decide to purchase a liquidation lot.
There is no doubt that buying liquidation lots and liquidated merchandise can bring great opportunities for big profit, but you should know that there is also a lot of work involved in processing, so be aware if you decide to source inventory for your business from liquidation channels.
The first question you should always ask before you purchase liquidation lots is : Are your lots manifested?
Why is this important? The manifest gives you valuable information on the products in the lot, without the manifest you are practically buying merchandise blind and you might end up receiving unexpected products, damaged goods and you open yourself up to disappointment and frustration when you don’t get what you expect. You can usually purchase lots from some liquidators without this document, but I wouldn’t recommend it.
Most of the time the manifest will give you accurate information about the condition of the items, product descriptions, quantity of units, pictures of the products, the price you are buying the product, the discounted MSRP percentage and the MSRP value of the product. Depending on the company you work with you could also see the product’s sales rank, review rank and other valuable information that give you a better understanding of what you are buying and how much profit you could make.
Product Variance Rate
Another important piece of information that you should look for is the percentage variance for a lot. In the liquidation business, this is the margin of error that is allowed to occur, it could be between 1%-10%. For example if a liquidator states that they have a 98% accurate manifest and you receive 90% of the product you expected, you can get your money back for the missing percentage in variance.
Understanding Your Costs
It is important to correctly estimate and calculate your costs so you will have a more accurate ROI. A lot of people underestimate their expenses, forgetting that each marketplace has their own fees, or they forget shipping costs or inventory processing costs – all of which you should be aware of before you calculate your profit.
The Condition of the Product
Each liquidation company grades the condition of their products differently. You are going to notice variations in the classifications like:
- Brand new
- As brand new
- Brand new, never opened
- Box damaged and so on
Make sure you understand the difference between them. Don’t be afraid to ask for a clear specification.
Depending on your business needs you can sell good on different online channels. Since you are dealing with liquidated merchandise the optimal scenario would be to sell on multiple channels – do not limit yourself to selling only on one marketplace to get the best results from the goods you have.
If you are new to the liquidation business, start small. Find a company that you want to work with, and purchase a small lot. Then when you get to know the company, how they process the product, know how accurate their manifests are, how good is their customer service, etc., then when you are comfortable, you can start sourcing higher volumes of products.
This guest post was contributed by the 888 Lots team. 888 Lots is a liquidation company providing liquidation lots and individual items at wholesale prices. 888 Lots innovative platform gives you access to a great variety of merchandise as well and to features and tools to help you make smarter buying decisions. Register and become our member for FREE at 888lots.com.