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Increasing Profit within the Secondary Market

Every year over half a million businesses are created in the United States.  Approximately one third of these start-ups are retail businesses.  A large portion of these businesses will focus on the “Secondary Market”. This marketplace offers great advantages and high rewards but you need to be well prepared.  Finding the right supplier to source products from is critical.

Secondary Market products consist of Closeouts, Surplus Goods, Customer Returns, Liquidated Items, and any product that is not sold after its initial manufacture. Many companies specialize in secondary market purchases and reselling.  Resellers might experience some level of unsellable merchandise in these types of wholesale orders but not always.  Retailers will be hard pressed to find a cheaper source of merchandise than secondary market items and these products can be a great way to turn a profit.

Working within the Secondary Market is more than knowing just your product niche; you also have to know how to sell products with a variety of quality conditions.  Getting creative is essential for moving not only the good products but also the less desirable ones.  A good strategy is to start small by purchasing a few pallets and working your way up to buying full truckloads.  If buying smaller loads is an obstacle, you might need to consider your source. Remember, where you get your products is just as important as what you get, especially when sourcing surplus goods.

To gain additional insight into this industry we spoke with Michael Lawrence of DirectLiquidation.com.  His company represents one of the fastest growing marketplaces for Surplus Merchandise.  

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A GUIDE TO BUYING RETURNED AND EXCESS MERCHANDISE

What to look for when sourcing returned an excess merchandise.

(aka: how small store owners and resellers can bank on the busts of retailers and manufacturers)

Around $440 billion worth of merchandise is returned each year – a lot of which can’t go back on the shelves. But one retailer’s headache is another’s opportunity, and for online sellers, independent retailers and resellers, there has never been a better time to source returned and excess merchandise on the secondary market.

So, how do you navigate the secondary market to successfully sift through the bad and the ugly to get to the good? Here are some tips on what sellers should look out for when sourcing customer returns and excess merchandise:

 

It’s best to buy directly from the source

By purchasing directly from the retailer or manufacturer you can assume that there is no middleman involvement and no price mark up. Historically, it has been difficult for small to medium sized buyers to buy excess inventory directly from large retailers and manufacturers; however, today there are new, efficient systems that automate the manual work otherwise required for them to sell to larger buyer groups.  One such tool is an online auction marketplace platform. These marketplaces provide a level playing field for all buyers to compete for the inventory, and they enable a direct relationship with the source via a transparent platform. Because they eliminate all negotiation over price, it is just as easy to have thousands of buyers involved as it is to manually sell to just a handful.

 

Source online from reputable sellers

Independent retailers, online sellers and resellers can often source inventory more affordably and efficiently by tapping into online auction marketplaces that sell returned and excess merchandise. There are numerous benefits to sourcing this type of product online including: greater product availability, detailed product descriptions, bulk quantities at your fingertips, shipping options, and a quick sales cycle. The key is to make sure you are buying from a known brand: many top retailers like Wal-Mart, Target, Costco and Best Buy have their own liquidation marketplaces while others leverage multi-seller marketplaces like B-Stock Supply or Liquidation.com. In the case of multi-seller marketplaces, be sure to use one that has a seller rating system, so you know you are buying from a reputable seller.

 

Purchasing inventory via these online-auction liquidation marketplaces can be a great way to secure inventory at an affordable, in some cases rock-bottom price, ensuring a better profit margin for you.

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Secondary Market, the Road to Profiting in Wholesale

Every year over half a million businesses are created in the United States.  Approximately one third of these start-ups are retail businesses.  A large portion of these businesses will focus on the “Secondary Market”. This marketplace offers great advantages and high rewards but you need to be well prepared.  Finding the right supplier to source products from is critical.

Secondary Market products consist of Closeouts, Surplus Goods, Customer Returns, Liquidated Items, and any product that is not sold after its initial manufacture. Many companies specialize in secondary market purchases and reselling.  Resellers might experience some level of unsellable merchandise in these types of wholesale orders but not always.  Retailers will be hard pressed to find a cheaper source of merchandise than secondary market items and these products can be a great way to turn a profit.

Working within the Secondary Market is more than knowing just your product niche; you also have to know how to sell products with a variety of quality conditions.  Getting creative is essential for moving not only the good products but also the less desirable ones.  A good strategy is to start small by purchasing a few pallets and working your way up to buying full truckloads.  If buying smaller loads is an obstacle, you might need to consider your source. Remember, where you get your products is just as important as what you get, especially when sourcing surplus goods.

To gain additional insight into this industry we spoke with Michael Lawrence of DirectLiquidation.com.  His company represents one of the fastest growing marketplaces for Surplus Merchandise.  

In the past, online liquidators pawned off “as is” and “salvage-grade” merchandise to buyers as the best value available in the wholesale marketplace. Product misrepresentation, low-grade items, and a narrow assortment of tier-2 or 3 brands were commonplace. The ability to purchase small loads or retail-ready products was virtually unheard of. In addition, if you were “lucky” enough to win one of their auctions you could expect a further 7-15% “buyer premium” charge for the privilege of buying their junk inventory. – Michael Lawrence

Michael went on to explain how Direct Liquidation can solve these problems, they offer buyers an incredible range of products, tier-1 brands sourced from their exclusive relationships with top national retailers and manufacturers.  Smaller loads are available so buyers can test customer demand without depleting resources.  Having an ability to test demand could be the difference between a good bottom line and a bad one.

Large liquidators buy huge volumes of surplus merchandise and returns for literally pennies on the dollar. They process and sort this inventory and make it available to the smaller buyer. Generally liquidation lots are sold “as-is, meaning there is no guarantee of lot quality and usually no return on purchase. Understandably, this comes with the deeply discounted prices on these lots, typically well below wholesale. But “as-is, doesn’t necessarily mean poor quality.  Frequently a large portion of the inventory is in new or like-new condition.  Fact is, buyers can and do make a healthy profit reselling this merchandise.

Secondary Market Wholesale Products

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Over 40 years of success, Jacobs Trading Company

Jacobs Trading Company is located in Hopkins Minnesota, for over 40 years they have successfully solved excess inventory and customer returns challenges for American manufacturers and retailers. As a marketplace of Liquidity Services (NASDAQ: LQDT), JTC leverages a network of sales channels that serve 7 of the top 10 retailers in the world.

JTC offers closeout prices on buy-backs, over-stocks, shelf-pulls, excess inventories and damaged goods purchased direct from retail vendors and manufacturers. Single category loads consist of “as is” products no longer sold at retail. A load generally consists of one of the following categories

Furniture
Domestics
Tools/Hardware
Apparel
Cookware/Bakeware

  Electronics
Rugs
Appliances
Power Wheels
Seasonal Specials

JacobsTruck

JTC also offers loads of Sporting Goods, Furniture and Toys. They supply a variety of outlets to include flea markets, surplus stores and auctioneers.

By visiting their website you can locate their distribution facilities strategically placed across the country. Whether you would like to purchase general merchandise loads or single category loads; a truckload a month or twenty loads a week, Jacobs Trading Company can accommodate your needs.

For more information about Jacobs Trading or for any other questions you might have, give them a call. You can CALL AND ASK FOR OUR THEIR SALES DEPARTMENT AT (763) 843-2000