![]() Access to a Steady Supply of Liquidation Inventory is Key.Next I want to give some general guidance on how I have seen this industry and business work over the years. How the Liquidation Pallet Business Works These businesses will buy pallets of merchandise from one of the wholesale liquidators up the food chain, or perhaps directly from retailers, and then they will break down that pallet and sell the individual items through their own retail store, flea markets, eBay store, pop up store, or other channels. The last example business model is how a lot of people get started in the pallet liquidation business. Buy by the Pallet, Sell by the Unit via Retail There are a number of retailer examples like this that help liquidate merchandise through a chain of retail stores. “Our team of buyers are both opportunistic and entrepreneurial, so when a designer overproduces, a manufacturer makes too much product, or other stores overbuy, we step in and negotiate the lowest possible price and pass the savings on to you.” Marshall’s is a good example of this business model. There are also a number of companies that buy return and overstock merchandise from retailers in bulk and then resell through their own network of retail stores. Buy by the Truckload, Sell by the Unit via Retail Channels In this business model, the liquidator will need to build up a customer base of smaller companies that will buy individual pallets of merchandise. That next level down the food chain are liquidators that might purchase by the truckload directly from retailers or from larger liquidation companies and then sell that merchandise by the pallet. For example, they might buy 100 truckloads per day from WalMart returns and sell 1 truckload per day to 100 different smaller liquidators. When dealing with large quantities of merchandise the liquidator is probably buying by the truckload and selling by the truckload. In some cases it may even be an exclusive contract where the retailer sends all liquidated merchandise to one single liquidator. Often these liquidators will have a contract with the retailer that guarantees a steady supply of merchandise to liquidate. This type of wholesale liquidator will have a large warehouse, or many large warehouses where they will buy and store truckloads of return merchandise. These are the large liquidators that have contracts directly with retailers to help liquidate returns and overstock merchandise. Buy by the Truckload, Sell by the Truckload Let me describe each business model in a bit more detail. Buy by the Pallet, Sell by the Unit via Retail.Buy by the Truckload, Sell by the Unit via Retail Channels.Buy by the Truckload, Sell by the Pallet.Buy by the Truckload, Sell by the Truckload. ![]() There are at least 4 types of distinct players in the market: There are many different business models and approaches to playing in the wholesale liquidation business each approach has some key differences. What are the Different Business Models in the Pallet Liquidation Industry? ![]() Let’s talk through the different models next. I have seen various models and there are companies that play at every level of the industry. Now the pallet liquidator can resell that merchandise in a number of different ways. ![]() For example, a wholesale liquidator might get a coffee maker that typically sells for $50 at a retail store for $3 - which is 6% of the retail price. To put it simply, retailers will receive returned merchandise from their customers, or will pull inventory from the shelves or from their website that is not selling well, and they will bundle this inventory up on a pallet and sell the pallets of returns and overstock inventory at liquidation prices.Ĭlients that I have worked with would commonly get to purchase this inventory by the truckload from the retailers for 5 to 10% of the MSRP (manufacturer's suggested retail price). What is a Wholesale Liquidation Business?įirst of all, we need to understand what exactly we are talking about when we say a wholesale or pallet liquidation business. In this article I want to walk you through how you can start a wholesale pallet liquidation business, walk you through the key numbers and help you determine whether the numbers make sense for you to pursue as a business owner. ![]() Over the past decade as the Executive Director of an SBA Microloan program ( learn more about SBA Microloans here) I have had the opportunity to work closely with a couple of wholesale liquidation startups and have witnessed the process of launching and growing the business into what is a substantial operation today. ![]()
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