If you want to get into the business of buying and selling closeouts, there are some things you will have to do to in order to do business. These will apply whether you will operate closeout websites, sell excess inventory wholesale, or sell closeouts online. Any type of overstock and liquidation business will have similar fundamental themes.
1. Get A Resale Permit. To start purchasing factory closeouts and overstock, you will need to retain a resale permit (sales tax number). Contact your local government agency and take the necessary steps to obtain this permit. For instance, if you live in California, you would contact the California Department of Tax and Fee Administration. Getting a resale permit is very easy to do and is essential to your success. It will be necessary whether you Closeout websites may not need permits for physical locations, but will still require all other sales and business permits.
2. Find Jobbers. Jobbers are people who specialize in finding bulk products at discounted rates. The easiest way to find jobbers is to run a Google search for a wholesale jobber. Other ways to contact jobbers are through industry newsletters, Linked In or Facebook. Jobbers look for closeouts being sold off to clear space for newer merchandise. Companies always sell excess inventory when the rate of sale slows, or they need to get rid of inventory for other reasons. Some companies may list their overstock on closeout websites of they may have jobbers they already contact when they need to get rid of inventory.
3. Choose a 3PL Partner. It’s important to plan for the future and choose a 3PL that can handle your expected growth. All other factors considered, the 3PL you choose should be able understand how closeouts are shipped and and how to palletize overstock inventory. It’s important to plan for the future and choose a 3PL that can handle your expected growth. For example, if you start to sell excess inventory by the truckload, you will need a warehouse that has docks and forklifts. All other factors considered, the 3PL you choose should be able to propel your business forward and keep up with constant growth, not struggle to keep up. Depending on your industry, you may need varying levels of customization for your business. Overstock shipments are not the same as regular import containers. Closeouts often come in re-packs rather than original clean cases. Your 3PL must be able to deal with liquidated inventory that may not come in perfect and clean condition. Be sure your chosen 3PL partner knows exactly what you expect when it comes to customization, whether it’s multi-channel capacity or customer experience. If you will be selling from closeout websites, the 3PL must be able to handle business to consumer shipments.
4. Build A Customer Base. To build up a customer base takes time and dedication. One way to attract closeout buyers is to attend networking events and collect business cards. In the days and weeks that follow, send emails to let your new contacts know how much you appreciated meeting them. Ask whether you can do anything to support them by selling them closeouts and overstock deals, and continue to keep in touch. By building relationships, you establish yourself as a reliable resource and open the door to new business opportunities. When you are in a business that sells excess inventory, it is important to stay in front of customers all the time. Closeout websites are online showing discontinued products 24/7.
5. Have Access To Funds. Most startup founders use their personal savings to fund their businesses, according to Forbes. That said, don’t drain your bank account to raise funds for your business. Entrepreneurs should set aside enough living expenses (for for rent and groceries, for example) to last them for a year. This is because many startups aren’t profitable for months after opening. The advantage to closeouts is you can quickly flip deals and make money on overstock or excess inventory. Smaller, service-based businesses can probably get away with three to six months of operating expenses, according to FreshBooks. The SBA has a number of tips for saving up to start your small business.
Closeouts are a great way to make quick money, if you know where to find the right deals and where to sell them. Liquidators are plentiful, but the good ones know how to identify true closeouts from motivated sellers who need to get rid of excess inventory.