Industry Insights: Why Liquidation Exists

What these numbers mean

When shoppers return nearly one dollar in six, retailers end up with a constant stream of goods that must be inspected, repackaged or sold on. Some items go back on the shelf. Many do not: they are open-box, missing a part, out of season, or simply not worth the labor to restock.

That surplus flows into the liquidation market, which sells it in bulk to resellers. For a buyer, the opportunity is a low cost per unit. The risk is variable condition, which is why testing, sorting and honest pricing matter.

How the supply chain works

• Return or overstock occurs at a store, warehouse or marketplace.
• Goods are consolidated onto pallets by category or as mixed lots.
• Pallets are sold in bulk to liquidators and wholesalers.
• Liquidators price and resell by case pack, pallet or truckload.
• Resellers sort, test and sell items one at a time or in smaller bundles.

What makes a good liquidation buyer

• Knows the resale value of the category they buy
• Budgets for freight, testing and a share of unsellable items
• Starts with a small lot and scales up with what sells
• Has a clear sales channel before buying

Use our profit calculator and read what to expect from customer returns before your first order.