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Surplus Liquidation Buyers: How They Are Making Business?

Reliable and consistent product supply is a major challenge for most new businesses. But, there are also several ways to buy products such as wholesale distributors, wholesalers and surplus liquidation sellers. Before considering the surplus salvage industry to take your business forward, it is important that you, as a surplus stock buyers, gain some knowledge on how it works and be able to identify the bait and stay safe. When you examine this opportunity in greater depth, you will come across many terms like overstock, surplus, reclaimed, salvaged, customer return or offered for resale.

In support of the surplus liquidation industry:

Most S&S dealers are real, and their transactions are above board too. Outdated and slow moving stocks do pile up in nearly every industry, and these need to be disposed of. Depending on the nature of goods being offered, you may also notice several conditions that are attached to the offer. In some cases you may not be allowed to sell the stocks in the same geographical area you are buying from. For instance, in the USA, you may get a great range of exterior and interior paints from businesses that aggregate old stocks from large manufacturers and offer it in bulk to buyers who should agree to remove the stocks out of the US in whatever manner they determine to be appropriate. The pricing tends to be very attractive, but you should have the ability to handle the merchandise which can be termed ‘hazardous’ in some circumstances, find appropriate offshore buyers, perhaps repack the material and arrange logistics to the final destination.

But all businesses do not conduct themselves with honesty and integrity, and that is where you should be careful and do deeper research to keep yourself safe. The following are among valuable tips that you can use to make money from this business while avoiding the pitfalls.

  • Initially, think of spending about $22 for an annual membership with industry forums like Buyersinfo.net and look for other websites that provide Ripoff reports free of cost. Consider this as your learning cycle and do not engage in any trade until you have some level of expertise.
  • When your learning cycle is adequate, and you are ready to take the plunge, start slowly by buying small units and costing no more than a few hundred dollars.
  • Remember that good dealer in the surplus liquidation business will always work with you so that when you make money, the dealership also makes money. At the root of this business, you need to remember that you are buying ‘junk’ or ‘salvage’ although it may be classified under different names. You will make money only when you sell your stock to someone else.
  • Stay away from electronics unless you have the technical know-how to determine what really can be restored.
  • Understand the quality of stuff you are buying. Overstock, reclaimed, liquidated, salvaged and shelf-pulled are some of the common terms employed. But you are better off avoiding customer returns because they tend to be as bad as ‘junk’.

  • Ask for catalogues and if the dealer is asking you to pay for them, stay off that dealer. You are entitled to know what you are buying before you put your money in. Clothing, for instance, can be stained, retail-ready, without buttons, etc. How much you know personally to determine what you are getting and how much you can gain from the lot.
  • What part of the lot you buy would need to be thrown away? Don’t worry because this is a practice in the trade and most product mix involves a part that has to be thrown away. The upper limit should not exceed 20% of all that you pick up.
  • Ensure that you start buying in small quantity, a case or a pallet at best. This way, you can test the waters and gradually build up the business as well as your relationship with the dealer. Avoid all temptations to go for big stakes in the hope that you can make it big overnight.

   

  • Inspect everything that you intend buying with your naked eyes and ensure that what gets into the package is what you have seen and paid for. Be around when the truck is being loaded and have the boxes inspected when they reach your destination.
  • If your S&S dealer refuses personal inspection, you are wasting your time and money. An inspection should be ingrained into the business, even after you have built a successful business for several years. That is by far the only way you will stay safe in this business.

Before concluding this discussion, let’s have a look at two more important aspects of this business.

  • Enhance your knowledge on ‘cherry picking’ which deals with the art of identifying right opportunities at the right time.
  • Finally, learn about handling money. In this trade, you may find many dealers asking for a wire transfer. This is potentially a red flag because there are several other ways to ensure that your money reaches the dealer without hassles. Remember that a wire transfer into the dealer’s account is a one-way transaction, and if something goes wrong, your money is also as good as gone. You can always use a credit card or send a check or other methods of payment. But, whatever be the methods, you must have access to your money if and when the situation goes wrong.

The surplus liquidation business by itself has a great potential and involves a significant amount of money for those who go through a learning cycle and acquire enough knowledge to keep off the dangerous curves.

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