Platform Overview

How to Start a Liquidation Business

Liquidation involves a business selling their assets in order to satisfy their debts. The assets are often sold at a very low price to purchasers. You can make a profit by starting a liquidation business when you purchase the liquidated assets at a low price and resell the assets with high margins. The business model is simple: buy low, sell high.

Starting your own liquidation business is a great way to earn an income for yourself. It is especially great for individuals opening a business for the first time because you do not require a large amount of money to start a liquidation business. Here are four important steps for starting your own liquidation business. 

1. Find a Reliable Liquidation Wholesaler 

As a liquidation business, you purchase goods from a wholesaler to sell to customers for a profit. A liquidation wholesaler sells liquidated merchandise at a discounted price. Many big companies sell inventory and assets to a wholesaler when those goods are returned or unable to be sold.  A simple Google search will reveal hundreds of wholesalers such as these.

The first step to starting a liquidation business is finding a reputed and trusted liquidation wholesaler. Many wholesalers will sell outdated goods that are hard to sell so a reputed wholesaler is necessary for quality assurance. A liquidation business needs a wholesaler who can ensure a reliable flow of goods and delivery of goods after purchase. This means finding a wholesaler that deals with large quantities of liquidated goods. It is necessary to find a reputable wholesaler with good customer reviews.  

It is valuable to examine the goods before you purchase them so you know their quality. Many wholesalers will mark their goods as ‘unchecked’ so it is your responsibility to conduct quality assurance. 

2. Determine What to Buy 

As a liquidation business, it is necessary to establish what goods you would like to sell and what you are capable of selling. You may have a particular interest in specific goods and have some purchasers in mind. Otherwise, the goods you sell can also depend on the wholesaler. The wholesaler may deal in specific types of goods like clothing apparel, consumer electronics or furniture. You must conduct research to determine what particular condition you want to sell the goods in. Some wholesalers may only offer brand new inventory while others may specialise in refurbished or salvageable goods. As a beginner, it is always easier to sell brand new goods than salvageable goods. 

Determining what to buy and sell requires research. It is necessary that you are aware of the market prices of the goods before you purchase liquidated goods. Information about companies that are in liquidation can be found here. It is also important to be aware of your profit margin. There are costs along with the purchasing price that may affect your profit margin including shipping fees, handling fees, and fees for storing the goods while they are being re-sold.

Another important consideration is knowing how much goods you plan to buy. Most liquidation purchases are final and payment is required immediately. It is important that you purchase goods without financially burdening yourself, especially if you do not have previous experience re-selling.  

3. Create A Selling Platform  

Once you have found a wholesaler and determined what you will buy, it is necessary to create a platform on which you can resell the goods. You may choose to have an online platform through eCommerce websites like Shopify, or have a physical shopfront. Visit our guide ‘How to Start an eCommerce Store‘ for more information about eCommerce stores. Alternatively, you may choose to sell through eBay or Amazon by creating an online business account. A comprehensive guide for selling on eBay is available here. Determining the correct platform will require conducting research.

It is important that you have a platform for selling the goods prior to purchasing the goods otherwise you may incur large storage fees to store the purchased goods. You may start your store as an online store and shift to a physical store once you need to expand your business. 

4. Find Purchasers  

Purchasers of liquidated goods can be other businesses or individual customers. It is important to keep the purchasers in mind when buying liquidated goods for resell. You must determine who you are selling to based on the goods you have purchased. You may then establish a marketing strategy that is aimed at those purchasers. 

As with other businesses, the success of the liquidation business will depend upon customer service. Especially on platforms like eBay and Amazon, the success of your online business will depend on the customer reviews. Poor customer reviews because of issues relating to the goods or the delivery of the goods will deter new purchasers.  When selling to businesses, it is important to network and build genuine connections with business owners who may buy large quantities of your liquidated goods. Good customer reviews and positive relationships with clienteles are key to recurring sales and long lasting profits.   

Finding customers requires perseverance. It is a slow process and it may be a while before you establish a large customer base. It is important to remain positive and optimistic about the business. Good luck!

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