If you are an online seller and wondering what price point you should be aiming to buy at, here’s the answer for you:
Hopefully you have already read our article that explains The Different Types of Wholesale because it explains how Overstocks, Liquidations, Store Return and Salvage. The second part to the series is called Complete Guide to Liquidations. These two articles combined explain these different “qualities” of wholesale liquidations; and obviously, the better the quality the more you will pay. With that being said I want to show you some super simple math:
Lets say you purchase Target store liquidations. These sweaters retail for $25 and you scored them at only $3.99; this is approximately 85% off of retail. This also means you have $21 in between your cost and the full retail price. Of course you also have other costs that factor into that equation; such as listing fees, closing costs, credit card processing, shipping and so on. So let’s say the $25 retail sweater that you paid $3.99 for will ultimately cost you $8 after all of the associated costs. This revised number means that you have $17 separating your asking price from the full retail value of the merchandise. If you sell it for $14.99 you will have “netted” approximately $7. If you sell it at $10 you will have netted approximately $5. And, of course, if you are able to sell this top for the full retail price of $25 you will have netted $17… but you and I both know that it is unlikely you will be able to get full retail unless it is something special (in fact, if it’s extra special you can often get MORE than full retail)
So we can safely assume that if you pay $3.99 for a $25 (approximately 85% off) Target store sweater you will technically “make” $5 - $15 in profit.
Now let’s say you purchase a 100% Cashmere coat. This coat retails for $800 but you got it for 75% off, meaning you paid $200. While buying ay 75% off is a lesser discount than buying the Target sweater at 85% off, you have more room for profit because this item has a higher retail. This means you can see the coat for $300 and net no less than $70 profit. You could also sell this same coat for $400 and take in at least $130 profit.
With that in mind you could buy a $3,000 canoe for $2,000 and sell it for $2,500 and take in more profit than the Target garment or the Cashmere coat, even though you got this item for UNDER 30% off retail!
So as you can see, the “correct amount” to pay for merchandise is not a specified amount being that a small discount can equal large profits and a large discount can equal small profits. With this in mind, there is no specific amount you should aim for but as a general rule of thumb you want to get merchandise at no less than 50% off retail if it is a liquidation. If the merchandise is a brand new wholesale item (shipped to you when it released to stores) you should expect to pay 30% - 40% off retail. If the merchandise is Store Returns, an average pricepoint is 75% - 85% offf retail, depending on condition. Overstock prices can greatly vary from 20% off to 75%+ off retail. And lastly, Salvage merchandise should be AT LEAST 90% off retail.
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