So, you’ve decided to start a liquidation business. Starting a business has never been easy and knowing where to begin is often the hardest part. While the best way to learn is on the job, it’s still a good idea to do your research beforehand. Here are a couple of questions to ask yourself as you begin the journey of becoming your own boss.
What Kind of Liquidation?
The first thing to know is whether you’re going to be a B2B or B2C company. The four main types of buyers in business-to-business (B2B) markets are producers, resellers, governments, and institutions. Chances are, that’s the market you’ll be working with as a liquidation business.
However, if you’re going more the scratch-and-dent route, then you’ll be a business-to-consumer (B2C) company that sells directly to the end-user of the product. These categorizations help clarify the business you’re getting into and guide your research as you get started.
Why Liquidation Over Wholesale?
These two concepts can seem similar, but don’t get them twisted. While both involve moving large quantities of product, liquidation ends up being cheaper for the buyer. Because of the nature of liquidation, it’s more important that retailers move the product quickly, which causes the prices to drop. But then wouldn’t you make more money as a wholesaler?
Not necessarily. Liquidators sell boxloads, pallets, and truckloads of merchandise to businesses or consumers, thereby eliminating the middlemen of wholesaling. Prices are lower for you as well as the buyer, so you’re going to move significantly more product overall. More sales mean more money — the only other consideration is that you’ll need a lot of space to store a lot of product.
Where will You Store the Product?
Search for a liquidation warehouse in your area. Especially when you’re first getting started, you may not have the cash to purchase a property large enough to store all of your merchandise, not to mention actually run the warehouse. Find a distribution center where you’ll get your product as you’re building your business.
Ideally, the distribution center would be located close to both the retailer and the buyer. That way, you’ll cut down on shipping time and cost. Best of all, if it’s close to you, you can usually pick up the product yourself. There’s no need to purchase from an online marketplace when you can cut costs by buying local.
What Software Do You Need?
You’ll need several digital products to make your business run with the highest possible efficiency. Think about purchasing a word processor for writing documents, database software for tracking your goods, a web development tool for your online presence, a publishing tool for creating leaflets or emails, accounting software, customer relationship management software, cloud storage — to name a few.
You provide the specifications, and a company like Devsu will build custom software for your business. This helps bring your merchandise to market at a faster rate than if you operate your business solely from Microsoft Excel or (perish the thought) good old-fashioned pen and paper. You don’t need to become an app developer or learn how to write in code just to get your business started. Let someone else do the tech work and focus on learning everything about the products that will become your niche as a liquidator.
What’s My Niche?
That’s a great question, and only you can figure that out. It’s not the best idea to try to liquidate a dozen different merchandise categories, especially as you’re starting out. Choose one and become an expert. Do you already know a lot about electronics? Start there! Some other liquidation categories include appliances, clothing, raw goods, furniture, or anything else you can find in a home or a business. Ask yourself, what do I already know a lot about? That’s your niche. Sell what you know.