So you’re finally taking the plunge and starting your own retail business. Whether you pursue a traditional brick and mortar storefront or decide to go with an e-commerce platform to keep costs low, entrepreneurship is an exciting journey filled with memorable milestones. Before you make your first sale, you might be wondering how you’re going to acquire products. That’s where liquidation and wholesale come into play.
What is liquidation?
Oftentimes, liquidation is exclusively associated with a business closing. It frequently involves a company selling off large amounts of inventory, usually at dramatically reduced prices, to quickly generate cash to repay creditors. However, there are other reasons a business might choose to liquidate merchandise and those reduced prices are a major boon to a retailer like yourself. If you’re able to buy products at lowered costs and sell them for a solid increase, you’re setting yourself up for easy profits and larger margins.
In fact, this model of buying and selling liquidated merchandise isn’t all that new. Companies such as Big Lots often snatch up pallets of Target and Walmart liquidation at a fraction of the retail price and turn it around to their consumers for serious profits. It’s a great way to give your buyers some of the brand names they crave without putting a serious squeeze on your checkbook.
A wholesale approach
Wholesale is similar to liquidation in the sense that it traditionally involves the buying and selling of large amounts of merchandise. Often, many top retailers purchase their products wholesale directly from manufacturers and distributors to obtain large amounts of inventory in a single order. Depending on the manufacturer, buying wholesale can even be accompanied by some incentivized discounts.
Wholesale often follows the latest trends, identifies which ones are the most profitable, and finds a way to develop and sell mass quantities of hot products. Whether these are seasonal items, new crazes, or limited releases, wholesale purchases are done with the intention of generating profits for both the manufacturer and the retailer alike. Developing a relationship with a manufacturer when you’re a new store is often difficult, so there are a few ways to acquire the inventory you need to keep your customers happy.
Your distribution network
If manufacturers aren’t all that eager to work with smaller shops, it’s not a poor reflection on your business. Rather, many tend to prefer selling in incredibly large amounts that are much more suited to chains. So if a manufacturer isn’t willing to play ball, where do you get goods? Sometimes, it’s as simple as asking a manufacturer for a list of their distributors, some of which are exclusive middlemen for a given brand. You can try purchasing through them and see if they do smaller orders.
If you’re more interested in liquidation merchandise, there’s no better place to be than online. Many brands hold online auctions for products that need to go, and they sell them at incredibly low costs. Plus, since you’re buying directly from the brand themselves, you’re able to purchase with confidence in the quality of the goods. There are also online distributors as well who partner with top companies to get their merchandise in the hands of retailers.
Starting small
While it’s only natural to want your business to grow as quickly as possible, starting small is the way to go. It gives you a better indication of the market, as well as what your customers are truly craving. If you’re persistent, buy goods that you’re able to sell quickly and for good margins, and cater to the customer’s needs. With this model, you’ll be well on your way to becoming a top retailer or e-commerce provider yourself.