Liquidation and Close-out Purchasing for eBay

Many eBay sellers make their living by buying lots from liquidation and close-out sources, then repackaging and reselling the merchandise. Where does liquidation and close-out merchandise come from?

In this blog post, I talked about 3 scenarios in eBay selling. These 3 scenarios actually exist in fixed price retail as well.

Think about large retailers such as Wal-Mart or Target. They will put up something for sale at a fixed price, which is predetermined to allow for a reasonable profit. If it doesn’t sell within a certain time frame, they will put the item ‘on sale’ and lower the price. They may repeat the price lowering until it sells or at some threshold (determined by company policy), they will decide to just get rid of the items.

Retailers know that there is a cost of letting an item sit on a shelf and the longer it sits without selling, the more it costs them. That’s why they often sell these kinds of items in bulk to liquidation and close-out dealers. These dealers then break the merchandise down into smaller lots and sell them to other retailers, such as eBay sellers.

There’s big business in liquidation and close-out merchandise, but it’s a tricky business. There is a reason the items didn’t sell in the first place and when dealing in liquidation / close-out purchases, you’ll have to very careful. These types of items are often referred to as “shelf pulls”. When you think about it, why would a retailer pull something off the shelf and sell it to a liquidator? When it’s an item that doesn’t sell!

Given this, how do you make certain these kinds of items sell? It helps to research your liquidation / close-out lot prior to purchase. Most dealers offer a manifest of their lots which will give you some idea of the lot’s components. The manifest is like a packing list. It won’t be very detailed but a good one will tell you enough that you can use the information in research software like Terapeak or HammerTap. Then using techniques such as ones described in the eBay Research System, you can often determine whether or not to purchase the lot.

The bottom line is: if you buy a liquidation / close-out lot, you’ll need to make sure there’s enough profit potential in the items whichever way you plan to package them. Liquidation / close-out items aren’t always shelf pulls, but a good percentage of them are. That always begs the question: how do I make sure they sell for me?

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