Making your way as a small business owner in America isn’t always easy, but it can be immensely rewarding—both personally and financially. If you value the ability to set your own schedule and work on your own time, then you might find that starting a business is the best way for you to make a living doing work that you care about. And if you’re considering starting a business, then you’ll want to look at the possibility of going into liquidation.
A liquidation business works by buying liquidation and returns pallets and then selling the products on those pallets for less than was paid to acquire them. Here’s what you need to know about starting a liquidation business and making money off of it.
How liquidation businesses work
Making money in liquidation is possible because of the nature of liquidation and of the big companies that dominate retail in both the brick-and-mortar and online shopping spaces.
First, let’s talk about liquidation. Liquidation is when a company sells off its assets in order to pay off creditors. It’s usually associated with a company shutting down. The company needs money now, so it will sell off its assets quickly to the highest bidder. In the case of retail, this often means big deals: a sort of wholesale version of a going-out-of-business sale.
Next, we need to talk about big companies. Behemoths like Amazon are not like little mom-and-pop businesses. Amazon has more than 310 million active customers. It sells hundreds of millions of products. The scale of a business like Amazon has consequences for the ways in which it does business.
Amazon gets to take advantage of what are called economies of scale—ways of saving money due to size. Amazon buys items in bulk, which lowers prices. It ships so many things that it has been able to negotiate a special rate with the United States Postal Service.
Amazon’s huge size is why it is able to charge less, ship for less, and maintain a generous returns policy. The same is true for Walmart and other giants. But size doesn’t always translate to efficiency. Take those returns, for instance: a smaller business would sort returned products out and put them back on its shelves or back into the proper places in its warehouse. But Amazon and Walmart don’t always do this. Instead, they stack those items on pallets and sell them off on the cheap—at the scale they’re operating on, nothing more than that is worth the effort.
So now we have two ways for small businesses to acquire cheap products: they can buy wholesale products in liquidation or they can buy return pallets from big companies. And if small businesses unpack their pallets and sell off those goods for their real market value, they’ll make a profit. This is how a liquidation business works!
Starting your own liquidation business
If you want to start your own liquidation business, you’ll need some start-up capital and a commitment to hard work—and not much else! Here’s what you’ll have to do.
You need to start by finding liquidation wholesalers. Track down a great auction site that will let you buy Amazon returns, Walmart returns, liquidation pallets, and the like. Start small and familiarize yourself with certain types of products. Finding your niche is key to making sure you’re spending and selling wisely, so be sure to take the time to learn about the products you focus on. You have to know what you’re selling if you’re going to make it in this business!
Finally, turn to the right places to sell these products. You could work on eBay, Amazon (as an independent seller), or any other major online platform. Or you could even work in person, if you have a brick-and-mortar shop and are just looking to supplement your product selection with returns and liquidation pallets.
Liquidation and returns aren’t for everyone, but they can be a great source of wealth in the right hands. Good luck!