Adventures in Reselling #6 – Be Selective in Buying Stock for Reselling and Why I Avoid Liquidation Services

in #life6 years ago

Many resellers get caught up in buying in bulk, believing that if they list it, it will sell. This is a fallacy that is perpetrated in many, many, Facebook reseller groups. From my experience, this just ends up putting you in a bind with items that are not selling for one reason or another (we will cover this aspect in a future installment of Adventures in Reselling). I have done this myself, and while I don’t regret it, I do have a better understanding of how easy it is to fall for this trap. For a better idea of my own experience in buying in bulk, check out Adventures in Reselling #4 – Not Paying Sticker Price Works at Walmart Too. I simply refuse to buy blind bulk – there is no way I will do it. We are going to discuss why in this entry in Adventures in Reselling.(html comment removed: more)

Buying blind bulk makes little sense.

First, many of these bulk, or pallet, liquidation companies are slightly deceiving in their listings. Many offer a manifest, a list of the items you can expect in the pallet, box, crate, or whatever you are buying. This is great. I would not buy a liquidation unit without a manifest because that is simply asking for trouble.

To make the liquidation offering more attractive to prospective buyers the company offering it will often put a price on the items in the manifest. Again, very helpful, at least on the surface.

The problem I have with these liquidation offerings is twofold. For one, you are not quite sure of the condition of the items you are buying. These liquidation offerings come in many assorted listings. Some may be listed as “customer returns” while others may be listed as “scratch and dent”. Others may be listed as simply shelf pulls.

Pixabay Photo
Image Source - Pixabay

If there is a picture of the liquidation items, it is often one photo. If it is a crate or box it is more than likely a shot from above – not really showing anything.

I understand these companies do not have the manpower to take photos of every item in the offering.

Another problem I have with liquidation offerings is goes back to that manifest.

Most liquidation companies put prices on each item on the manifest.

You may be thinking this is great. I have a promising idea of what I am buying, the value, and general condition.

Unfortunately, no you don’t.

The price that is most often used for item values on a manifest is the manufacturer’s suggested retail price from when the item was brand new. Many of the items in these bulk lots are often up six months or older. You will probably find a lot of these same items at discount at your local big box stores, at a much cheaper price than the MSRP on that manifest.

The problem with this tactic is, well, the you must do a lot of research based on the name of each item on the manifest to find out the current value of that item. It is rarely an easy thing to do, this research is very time consuming and cumbersome.

This means a lot of Googling and comparing names of product and prices (if available) and then when you think you have the right item, you must cross reference against whatever marketplace you plan to sell on.

Factor in things like Funko Pops, which many have the same unit number, or blind toys which some are worth more than others, and it becomes even more complicated to decide if that bulk purchase is worth it.

Expect damaged, unsellable, merchandise in bulk lots.

It is a fact of life with buying in bulk that some of it is simply going to be trash. You may not be able to resell it. As far as I know, no liquidation bulk seller offers a guarantee of any percentage of the lot you are buying to be good. Effectively, though not likely, you could end up buying a bulk lot for hundreds, if not thousands, of dollars and find it all to be worthless trash.

This is just part and parcel with buying bulk from liquidators.

From my personal experience buying bulk like I do, I have come across less than three empty Minions containers that were sealed from the manufacturer. Considering I have bought about 200 of them, that is an error rate of less than 1.5%, if you can get that same "junk" ratio with a bulk liquidation purchase then you are extremely lucky.

This is where it gets even more complicated.

It is not often that other sellers on the various marketplaces are selling the exact same item in the exact same condition as you think your item will be. Therefore, the prices will be all over the place.

Shocked Man
Image Source - Pixabay

Nothing sucks worse than thinking you are getting “brand new” items only to discover the item is in “less than brand new” condition due to package damage before you received it.

No one buying online wants to buy something listed as “brand new” and pay the premium for that condition only to receive an item that has damage to the packaging. That is a safe way to lose money in refunds, return shipping, and possibly receive a negative feedback on your chosen marketplace.

The price is not all that often as appealing as you may think it is.

When you are looking at liquidation listings you must factor in the cost of the bulk listing plus shipping then divide by the number of items available in the listing.

This will give you a real-world amount that you are invested for each item.

Now, we all know that you are not going to get the same price for each item in a bulk purchase. Some items will be worth more than others. You cannot hold that against the lower value items.

Until you sell enough of those items to make a profit off the liquidation purchase, you are still out the same amount of money.

That is something most people ignore so that they feel better about buying bulk liquidation listings.

Sadly, it cannot be ignored.

Pallet running
Image Source - Pixabay

In Adventures in Reselling #4 – Not Paying Sticker Price at Walmart Works Too, I detailed my second bulk purchase from Walmart. This was retail arbitrage and not technically liquidation under the traditional sense.

I purchased just under 300 items for about $80. I also purchased three $5 totes to carry everything home that night, rather than carrying an untold number of plastic sacks. That works out to less than $0.30 per item even after sales tax is figured in.

Why did I make such a bulk purchase if I am against buying in bulk?

I was able to dig around the two carts of toys and other items and see some of the stuff available. I could quickly ascertain the condition and what items were there. I did a quick price check against eBay sold listings for some of the items and saw that I would make over half my money back on less than 10 of the items. That is considering if the manager would not give me a better deal on the bulk items (they were listed as $0.50 each, I asked and got a $0.25 per item price if I took it all).

Walmart Bulk Deal
Image Source: Photo by Carl Williams

 

I got that deal for asking.

What did I get? I got a lot of Flip A Zoo items (regular and Disney) with some having since sold for $20 shipped ($2.66 shipping plus a $0.39 #0 padded envelope minus eBay fees). The profit margin was quite good on those items.

I also recently sold a complete case of Disney Crossy Road Series 2 blind boxes from this bulk purchase (I was able to pick up the display box at another Walmart for free as they throw them away). I had a total of $7.50 invested in this case. It sold this weekend for $55 shipped (cost me $7.50 to ship it, minus fees, and it went in a priority mail box I got for free from the Post Office). As you can see, the profits on that was quite good.

Disney Crossy Road Series 2 Case
Image Source - Carl Williams

My $80 investment earlier this year has already turned a profit of nearly $600 and I still have about 200 items to sell from it. Most of these remaining items will have to be listed in bulk to make them move (not a lot of interest in Marvel Comics licensed Fidget Cubes, of which I got 20).

The kicker here is, the manager would not take my flat offer of $100 for both baskets of toys. She said that would be too cheap and that she needed to maximize the sale if possible. On top of saving $20 over my offer, Walmart ended up paying two employees to sort the toys for me (due to inventory requirements, they had to scan each item). I was able to get the items mostly sorted by someone else which maximized my ability to list these items later.Walmart Deal #2
Image Source - Carl Williams

In that bulk purchase I also picked up over 100 blind boxes/toys other than the ones already mentioned (I got about 80 Flip A Zoos for those keeping track). One was a little green army men collection of 18 boxes. These went almost immediately for $60 shipped to a very satisfied customer in New York (I had these listed for less than two days before they sold). These were the wild card item for me. I had never heard of this toy before but comps on eBay (three boxes were the common sold at the time) showed there were profits to be made. I listed them all and they all sold nearly immediately.


Image Source - Carl Williams (one of the receipts as the register kept crashing).

In less than a week I had already turned a profit on this bulk purchase.

More recently, I picked up over 200 Despicable Me 3 blind toys (Series 1 and Series 2) from two different Walmart locations. I picked up 100 to 125 of them at the same location I got the 300 toys for $80. I asked another manager if he could do a better price than $0.75 each for these blind toys. They were in a bin mixed. I offered to sort them myself and take them all if he could do better than $0.75 each. He came back with $0.50 each and I took it.

Less than five minutes sorting and I saved over $25 plus tax on this purchase. I then went to my other favorite Walmart for liquidation deals. The manager here was firm on $0.75 each for the blind toys but gave me 50% off on the blister packs that featured 4 to 5 figures. I got the blister packs for $1.25, or about $0.25 to $0.30 per figure.

Despicable Me 3 Minion Mineez
Image Source - Carl Williams

My wife and me got a bit of together time opening these things and cataloging which ones we had. Right off the bat, in the first 20 we opened we got eight figures that sold in the next several days for $10 to $18 each. Within a few days I was already turning a profit on a controlled liquidation purchase.

Most of these Minions toys were commons that sell for about $1.25 to $1.99 plus shipping. Still, that is a profit considering the most I paid was $0.75 plus tax.

Why am I bringing that up?

Because I want to make it clear that buying blind bulk listings are dangerous. You have no clear idea what you are buying. I only bought this bulk lot because I could thumb through it a bit and see some of the stuff that was available.

Some of the toys in that 300 lot were in damaged boxes/packaging and since have sold for fair prices considering their condition.

Would I have bought that bulk lot if it was just listed as “bulk toys for $80 about 300 pieces”? Would I have dropped $75 to $100 for “bulk blind kids toys”?

Nope, I would not have.

Doing the numbers, you may be thinking that is cheap and a quick way to get some inventory. You are right, it is.

WWE Retro Action Figures
Image Source - Carl Williams (some of the sealed toys I got for $0.25 each in the deal).

It is also an effective way to get about 300 pieces of inventory that you cannot sell. I jumped on these sales because I could judge what I was getting. I weighed the odds of making a profit on the Minions because solds were all above $1 with shipping. Even if I only got commons that sold for a buck each plus shipping, I would still turn a profit on that purchase.

Therefore, I am not a fan of blind bulk purchases. I understand you can, in many cases, choose the general category that you are buying items in. From kitchen wares to household items to video games, your only limitation is how much you want to spend. From what I have researched, the more specific the bulk lot the higher the cost.

I also prefer cash flow. To do cash flow effectively, you must be pickier about what you purchase. Cash flow is anything I can sell within a week or two, or not even purchase till it sells.

This is more work for you as a reseller, but it is also the best way to maximize your profits.

I am not interested in running a rummage sale warehouse in my home. I have a set amount of space available and when I near the limitations of that space, I stop buying items and start focusing on selling them.

I am not knocking people that buy bulk lot liquidations. Some resellers have a great bit of luck with this way of getting inventory. It is just not for me and I see many people in Facebook groups, or on YouTube, discussing their results with buying bulk liquidation, especially blind bulk.

If you are new to reselling, please reconsider buying blind bulk. Take the time to learn the basics and to do your due diligence and learn the tricks of the trade.

Don’t fall into the “list, list, list” mentality.

Many people harp on the “list, list, list” mantra. I cannot express enough how this is a bad idea. Sure, it is true that if you don’t list it, no one can buy it. That is a fact. Well, in many situations.

Listing on eBay costs once you go over whatever allotment you may have (if you pay for a store then you get more listings per month). I have seen new sellers fall into the trap of “list, list, list” only to be caught holding the bag 30 days later with a $100+ bill to eBay and no sales.

This goes hand in hand with my dislike of blind bulk purchases.

You must list what people want to buy or you won’t sell anything.

Plain and simple.

If you are listing items that people are not interested in, then you are not going to get anything but a bill from eBay. With blind bulk buys it is tougher to judge what is popular, or sought after, based on that manifest.

Disney Flip A Zoo
Image Source - Carl Williams (some of the Disney Flip A Zoo pieces).

Therefore, I am not a fan of blind bulk buys. Just because Star Wars was big six months ago doesn’t mean it is still a cash cow for resellers. You could be stuck holding a ton of product that you cannot sell because thousands of other resellers are trying to sell it too and thanks to Disney over producing it all today, there is plenty of product to go around.

I have fallen into this trap before when doing retail arbitrage. I saw a decent price on some Star Wars figures and thought, man, those are going to sell so fast. I checked comps and there were tons being sold weekly. I grabbed a few and listed them immediately only to have to lower the price to break even levels to move them over a month later.

Don’t get caught up in “name brands” in blind bulk lots. It is a trap and they know it.

Many liquidators will put a few “big name” items in a lot that is not likely to sell otherwise. This is done to move those other items. The liquidator does not care if you make money off what you buy – they made their money and are onto the next customer.

By putting a few big-name items, with a high MSRP, the liquidator is hoping to catch an unsuspecting buyer who thinks the bulk lot is a great deal. Often it is not.

Most liquidators have a strict no returns policy – they know you are attempting to resell this stuff and they want you to be the end of the line as far as they are concerned. They are simply not going to take this stuff back.

DC Comics figures
Image Source - Carl Williams (more toys in the $0.25 each bulk buy).

Weigh the benefits of that bulk lot. Figure up the time you will spend researching the items, what they are in the first place, what they are possibly worth, then add up the cost of the lot plus shipping and decide if it is worth it to you.

For me, it is not. There are just too many variables to worry about with these blind bulk lots.

You may find that you are in a comparable situation. Think about what you want to do with your reselling business and how much money you want to have tied up in product. Myself, I would rather have a little more control over what I must carry for any period.

Previous entries:

Adventures in Ebay Reselling #1 - Just Because the App Says They Have It, They Don't
Adventures in Ebay Reselling #2- The Adventure is Often Worth More than What You Resell
Adventures in eBay Reselling #3 – Where to Find Stock When Your Favorite Store is Sold Out
Adventures in Reselling #4 - Not Paying Sticker Price Works at Walmart Too
Adventures in Reselling #5 – How I Became the Cotton Candy Cing, er King

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