A manufacturer sells 10,000,000 toys to walmart during holiday season for $4 per item. Cost of goods sold (including both fixed and variable expeses is $2). ($2 profit per item using these number just as examples) The manufacturer makes $20,000,000 on this deal. Walmart sells 8,000,000 during the season however the agreement states that whatever they do not sell, the manufacture will “buy back” the items not sold so the manufacture buys back 2,000,000 items. Or $4,000,000 worth of goods. Did they lose money? No. They made a net of $16,000,000. But now they have 2,000,000 items that they don’t want. These get sent to liquidation houses or sold abroad to other countries at MUCH lower prices then the cost to produce. Why? Because they write it off, and they can no longer sell them at even the wholesale price. This is how dollar stores are able to sell toys and trinkets for a dollar. This same $2 will likely be worth about 20cents in the liquidation market.
Closed out items are pretty simple, it’s just last years models. The manufacturer or retailer needs to make room for new items to sell so they send all the old stuff they couldn’t sell at “clearance” prices to liquidation houses.
Some companies are good at differentiating items that are marked as damaged goods, others are not. A risk you can take when buying returns is to get something that simply doesn’t work. Buying apparel related returns is a little bit safer, for obvious reasons.
If a warehouse or manufacture is having a liquidation sale, this is essentially the same as a close out. They just need to get rid of items to make room for new inventory.
These are warehouses that store other companies liquidated items and sell them to wholesalers. A company like Macy’s or BestBuy will often have exclusive contracts to 1 housing company. Sometimes, the housing is done in house as well.
Overstock items can fall into basically all of the above, sometimes they are buy backs, sometimes they are closeouts, sometimes they are returns.
Popular Liquidation Sites:
This is one of the best sites to find some decent closed out inventory to sell.
This site is like close out central but for wholesale.
This site is pretty popular, and one of the first places people land. I have never bought anything here, but it’s a good resource.
Lesser known sites, but still good to purchase from.
They sometimes have random crap, but occasionally you will find some solid inventory to sell. For the sakes of time I’m not going to leave a description with these sites, just check them out.
How to get name brand designer goods for cheap:
This is one of the best sites, they do Macy’s and Bloomingdales. You have to be a business to deal here.
Ever wonder how people sell DVD’s for 2 bucks and still make profit? You can get DVD’s with cases for as little as 2.5cents each, and I’m not joking. I know a local guy who only sells DVD’s at flea markets and makes a TON of money. Hell, you can bring DVD’s to pawn shops and get a dollar for them!! Granted, you’ll have to buy a shit load but it’s worth it. This place you can get closed out DVD’s from netflix. The site has changed a little in the past year, they have a lot of other good name brand items.
This company is a huge liquidation house, it’s pretty popular. The stuff is decent. They have several terminals across the US.
I’ve heard stories about people getting stuck with only broken crap. This is usually the first place newbies go.. just like on ebay, everyone wants to sell consumer electronics. And for that very reason, the margins are not as good.
Other Consumer Goods (Name Brand):
I’ve seen a lot of purchases from these guys, they have a lot of good deals, and good items to add to your inventory. You bid on pallet or truckload.
Note: High end cosmetics, such as MAC , Dior, Chanel, etx will NOT allow their cosmetics into the secondary market. They don’t need hoards of people selling goods at 80% of value. So to protect their brand they have all official retailers send their goods back to them. However, you can still get some lower to mid range cosmetics: