Resellers in Florida are all looking for the same: discounted inventory. However, this is always easier said than done. While it is essential to stay competitive in any market, it comes with challenges in the time and resources it takes.
But in terms of approaches and options, what should you be choosing?
Discounted inventory comes in many forms, meaning you have to make a choice starting there.
When it comes to liquidation vs closeout deals, you will notice the decision turns more difficult. Understanding the key differences and working on the modus will bring change.
The key aspect is wondering which approach offers the best return. From there, you will incur between closeout merchandise vs overstock, and how each one brings risks and rewards.
Our role at Coastal Surplus Solutions is offering guidance and making sure you understand deals and where you should go when handling your business.
Our experience brings the best for your business and ensures you know the road to take.
For this, we want to help you evaluate each strategy, their impact, and how you make informed decisions from now on.
Liquidation: Lower Costs, Higher Risk
Considering costs is where everyone starts.
You always want to save upfront investment, shipping costs, and work on what is more affordable.
However, this leads to ignoring the key aspects of how deals work and what they bring (or don’t).
Liquidation deals involve purchasing inventory, which often comes in bulk due to pallets and lots organization.
These items come from businesses that need to clear their current goods and inventory, specifically items that come from:
- Excess.
- Overstock.
- Returned merchandise.
These lots are typically sold at deep discounts and a very low fraction of retail price. Sometimes, for even pennies on the dollar. This is what makes them attractive.
If you want low entry costs and the potential for high returns, there is no better way. However, this also comes with its cons.
- Key features of liquidation deals:
- Lower acquisition costs, since lots are usually priced well below wholesale.
- Higher risk since many customer returns, shelf pulls, or second-hand items are untested. Many of them are also damaged and don’t cover your expectations and are far from fulfilling them.
- Unpredictable quality since all items come from different sources. The seller or brand are the same, but the reason for liquidating these items varies.
- What is it best for? If you are an experienced reseller with the ability to test and refurbish, then you are going for the right option.
Now, as highlighted by FasterCapital, profit margins liquidation vs closeout are clear. Liquidation offers higher margins due to low costs, but the risk of unsellable inventory must be considered.
Closeout: Higher Costs, Guaranteed New Condition
Closeout deals occur when a retailer or manufacturer sells off discontinued, end-of-line, or surplus inventory.
These items are often brand new and in original packaging, making them incredibly viable and profitable.
This process occurs because they need to free up warehouse space or recover cash.
Unlike liquidation, these are more about amazing items that don’t include customer returns. This saves you the hassle of determining if most items are damaged or not, or if they are worth it as a whole.
- Key features:
- Higher acquisition costs, but while it is more expensive, it is still below regular wholesale prices.
- Guaranteed new condition, making your products incredibly profitable as they are often in salable condition. This reduces risks and guarantees that your investment wasn’t wasted.
- Consistent quality thanks to the nature of the goods.
- Best for retailers and boutiques seeking reliable, brand-name inventory. You can immediately resell and profit from them.
the profit margin with this in mind is more around a higher investment, but with more focus on customer satisfaction.
While profits are not massive at once, they come with stability. You can set a predictable scale and go over continuous profits.
How It Works – Example of Boutique Choosing Closeouts for Higher Margins
Boutique retailers often benefit from closeouts more than liquidation.
This is because they need to fulfill customer demand and focus more on selling right away. Not on having to repair or handle damaged goods.
This is why a boutique retailer specializing in home décor and fashion accessories considered closeouts. She experimented with both types of deals, but discovered that:
- Liquidation lots delivered lower costs, but a higher percentage of unsellable items was present.
- Closeout deals, on the other hand, were more expensive, but all of them sold out. At high price points at that.
- The higher overall profit margin came from fewer customers, but with great return and all inventory sold. Moreover, she had fewer customer complaints.
The benefits are not only in the financial aspect and profits but also in reputation. The boutique owner was able to build and maintain a premium brand image.
What We Suggest in Florida
As mentioned by FasterCapital, most resellers benefit from a blended approach. They use closeouts for core inventory, but liquidation lots for opportunistic buys. This offers the best of both worlds and more on the balanced side.
At Coastal Surplus Solutions, we assist you with sourcing, connecting with goods, and relieving this hassle from your shoulders.
We help you maximize your profits and minimize risk.
All it takes is calling us or filling out our contact form. Make sure to contact us and inquire about our services.
