E-commerce accounted for more than $500 billion last year, which is why so many entrepreneurs are turning to it as their business of choice. Unfortunately, keeping overhead low can be a challenge, but you can find ways to do it. One that’s particularly profitable is starting a wholesale liquidation business. This way, you can find inventory at extremely low prices and sell it for large profits. Here are just a few things you need to know to get started.
What is wholesale liquidation?
Many people confuse the terminology because wholesale and liquidation are two different things. Wholesale companies sell items at below-retail prices to retailers. Liquidation companies purchase returns and overstock items from businesses at lower prices, usually for the same purpose. However, because liquidation sales are also far below retail, they’re also considered wholesale. So, a wholesale liquidation business would be one in which you purchased liquidation items and sold them for a profit, either at retail prices to consumers or to other retailers at slightly lower prices.
Find your supplier
Not all wholesale liquidators are the same It’s important to do your research and find suppliers who offer quality products at good prices. Legitimate liquidators will have transparent pricing and quantities, and be easy to contact. They’ll also usually have quality brand name products available from popular retailers.
Keep good records
One of the fastest ways to kill a business is by not keeping good records from the start. This could cause you to forget about a shipping charge or fail to charge taxes when necessary. Any little slip-up in calculations could mean a big loss for your company, or shrinking profit margins you didn’t expect. If this is not your strong suit, it’s important to get help. If you can’t afford an accountant yet, find a friend who’s willing to help. In the long run, this could be one of the most important decisions you’ll make.
Decide where to sell
Almost every business needs a website, but with wholesale liquidation, you might have some other options. Amazon and eBay have the market cornered on selling goods online, and you have a lot of reasons to choose one of these platforms instead of your own. For one thing, it’s one of the top retailers in the world, accounting for more than $100 billion in sales a year. For another thing, they take care of all your advertising. All you have to do is list your products and wait for a sale.
That doesn’t mean you won’t have other good reasons to have your own website, however. Operating solely on a site like Amazon means giving up a lot of control of your business. If you’re ever kicked off the platform, you’ll be forced to find another means of income. But if you sell your items on your own website, you own the platform. You have more control over how it’s marketed and displayed. A smart tactic is to use both a website of your own and an online marketplace like Amazon. This will give you more diversity in your income while protecting you from unexpected loss.
Choose your inventory
You’ll need to decide on the type of business you’ll have before you ever buy a single item. This will largely depend on who you’re selling to. If you’ve decided to operate on a B2B (business-to-business) level, the products you sell will depend upon who you’re doing business with. In these cases, you’ll probably need to contact some ahead of time and find out what you could offer. As a B2C (business-to-consumer) retailer, however, you can make your business anything you’d like. Either way, it’s usually best to test the waters a bit by making a smaller purchase to see how it sells. Keep in mind, however, that with liquidators, the more product you buy, the cheaper your cost per item.