Annually, thousands of retail businesses and corporations go out of business, and this results in billions in new products and inventory that require liquidating. This same inventory can sometimes be bought as cheap as five cents on the dollar and resold for as much as five times the purchase price on a wholesale basis. Margins are even better in a customer-direct operation. Sometimes ten times that of the purchase price. It's apparent then that inventory liquidation is a lucrative business model when done right. Here are a few ideas to get you started.

Have a Plan

Executing plans for any new business requires planning and strategy. Inventory liquidation is no exception to this rule, and while it is lucrative financially, it is not without its pitfalls. Some products are easier to acquire, store, and resell than others. Answer the questions, "What will I sell? From where will I buy my products? and To whom will I sell them?"

These answers provide direction that you can approach strategically to achieve your goals. Amazon liquidation is different from eBay or parceling items in an online store. Protect your reputation and right to sell on various platforms by always providing accurate descriptions of your merchandise and using best-seller practices. Along with making industry connections that can help with buying and selling, you should have a back-up plan for parting with hard to sell items.

General Store

The best products for inventory liquidation are power and hand tools, non-perishable food items, books, music CDs, toys, building materials, and electronics. Location is critical since you will be paying freight charges on shipments. Identify local suppliers of the products that you intend to sell and partner with them regularly to avoid the steeper freight charges. Connect with trustees that deal in commercial bankruptcies. They're usually appointed to auction off the inventory assets of clients, which generally goes to the highest bidder on a cash basis.

As a reseller, you have some options in how you move your products. In a customer-direct operation, you can retail the stock through a liquidation store that you own. You can also hold monthly inventory liquidation sales and advertise them on your social media and professional networking platforms. If you would rather wholesale your products, then you can establish B2B partnerships with local Fleamarket resellers and online store owners as well. Market your business by partnering with homeless shelters and thrift stores. These connections can prove quite profitable while also being socially responsible.

Specialize

In inventory liquidation, apparel, electronic appliances, and jewelry profit well, so consider that when choosing a niche. One clear cut advantage to specializing is if you decide to liquidate, then you only have to work with buyers within a few channels. Advantageous if you need to go from cash to inventory to cash fast.

Choosing your niche has a lot to do with knowing the needs of your clients. Solving the problems of your B2B and private clients is paramount to sustainability. However, having great products is just half of the battle. You must market your products to your customers or remain invisible in a highly competitive marketplace. If you're starting your business and need a loan, this credit union in Kentwood, MI, might be of some assistance.

Get It Done

Inventory liquidation is a "Get it done," type of business, and it requires strategy like any other. Establish relationships that your business can rely on while supporting your plans with a back-up because inventory liquidation is nuanced like that. Cut freight costs by buying close and choose a niche that solves a problem within your local market or with your online base.