What is Liquidation?

The cornerstone of our business is buying liquidation pallets. The liquidation market has gone through massive growth in the last couple years, in 2020 it became a $640 billion dollar business, according to data from Colorado State. Despite being such a huge market, there is still some confusion and mystery surrounding it. So, what exactly is liquidation?

The liquidation process is essentially a way for retailers to try to turn returned or overstocked goods back into usable money. When you operate retail on a large scale, like Amazon or Walmart do, storage space is highly valuable. Tying this space up storing items which cannot be sold again, or are not selling quickly, is a big loss to these companies. This inventory also depreciates the longer it sits, and can tie up huge amounts of money. It is in the best interest of companies to find a way to recover whatever money they can off these items.

One of the ways this is done is to put the merchandise on a pallet, wrap it up, and sell it wholesale at a fraction of the retail price of the items. This is a good way for companies to get rid of large amounts of items quickly. From here, it is usually sold by the truckload to distributors, who hold contracts that require them to sell a certain quota of pallets in a given time. These truckloads from the distributors are sold to stores that sell the pallets individually to people. This makes it much more cost effective for people to access these pallets, only having to spend a few hundred on one pallet, versus spending thousands (or tens of thousands) for a truckload.

This is where we come in. Individuals or businesses buy single pallets, and then sell the individual items off them ourselves. Because the items were originally liquidated at a fraction of their retail price, we are able to provide massive discounts from the retail price, while still maintaining a profit margin. 

It's an incredibly simple business model, but that does not necessarily make it an incredibly simple business to operate. Some pallets are sold with a list of what is on them, but this is not a common practice in my area. This means you only know what items are based on logos, labels, or model numbers you can decipher through the layers of plastic wrap holding the pallet together. This in and of itself creates a bit of a gamble when you don't know entirely what you're buying. Furthermore, because many pallets have returned items on them, it's a risk if they are even in good condition. Many are returned due to missing parts, being broken, etc. 

This is not to say all items from pallets are not good. Plenty of pallets are entirely new merchandise that just wasn't selling fast enough. Even returned items can be returned due to a bad address, accidental orders, etc. and be perfectly fine items. It is the job of people who resell pallet goods to sort the good from the bad and sell it appropriately. We sell exclusively new or like-new items on the site. Most are in factory packaging or were only removed by us to take identify or photograph the item. We sell items for parts or repair on other platforms that handle that process a lot better than we can. Any items that we don't have luck selling, we take to a local auction house to have one last chance to be sold.

Buying liquidated goods can be a great way to save for buyers. The industry standard is to sell for around 40-60% of the item's retail value, depending on the item and condition of it. That being said, it can be intimidating, and buying "pallet goods" comes with a bit of a stigma of buying a lesser product. We aim to help alleviate some of this worry and provide the information to help buyers navigate this market, and make the most of it for themselves.

Hopefully this post has helped clear up some of the mystery and misconception surrounding liquidation. Thank you for reading.