I have already described the process of Retail Arbitrage in an earlier post. While you can find some great discounts on brand name items, one downside of Retail Arbitrage is that it can take a lot of time to find items that you want to flip.
What if there was an easier way to get name brand fashion items at an amazing discount? Cheaper than the wholesale price even?!
Lucky for you, there is a way to save your time and still offer drool-worthy listings to your Poshmark buyers at irresistible prices.
However, it will likely require a larger up-front investment.
Buying Liquidation Lots
When retail stores need to make room for their new inventory, they ditch the stuff that hasn’t sold. Except, they still want to get something for all that inventory instead of just throwing it away. This is when retail stores will liquidate their older inventory and sell it for way less than they even bought it for to recover a portion of their costs.
Sometimes stores will also liquidate returned or damaged inventory.
For places like Nordstrom and Saks, they have discount stores that they will send this inventory to in hopes of recovering more of their costs. But there are lots of other stores that don’t have discount outlets to send things to. Instead, they will sell their inventory to a liquidation company for pennies on the dollar. That liquidation company then turns around and sells the liquidation lot to anyone willing to buy it for a small profit margin.
Despite passing through several entities, these liquidation lots can be an incredible deal and give you even higher profit margins than buying inventory at wholesale costs.
There are many liquidation companies out there and some are much more honest and up front than others, so it’s a good idea to be careful before jumping into a liquidation purchase.
The up-front cost for buying liquidation loads will typically be on par with meeting a minimum order requirement from a wholesaler. But the benefit is the potential for much larger profits. And in regards to Poshmark, it is one of the only ways to acquire certain brand name items to resell.
Types of Liquidation Loads
Liquidation companies may use different terms for their product loads, so make sure you understand what you are buying. Not all loads are new inventory and some may include damaged items. You’ll want to be sure that you know what you are buying before it shows up at your doorstep.
If you have the skill to repair damaged clothing or jewelry, then the extra steep discounts on damaged loads may be worth it. Otherwise, I would plan on sticking with new items that still have the tags.
Here are some common terms that tend to be used by liquidators.
Closeouts & Overstocks = New merchandise that did not end up selling. It may be out of season, unpopular, or the merchant could not market it effectively. Whatever the reason, these types of loads should be in great condition.
Shelf Pulls = These items may have slight damage to the packaging, tags or to the item itself. They may have been tried on in the store. However, they are still considered to be in new condition.
Customer Returns = It’s possible that returned merchandise might be damaged or missing pieces. However, that is not always the case. Usually, customer returns loads will have a mix of inventory in pristine condition and inventory that might be unsellable.
Even with these terms defined here (and many other places online), a reputable liquidator should publicly define exactly what their load descriptions mean. And when shopping for them online, it’s best to look for liquidation loads that have photos.
If possible, see if there are any local liquidators where you can stop by and look at the inventory before spending a lot of money on it. That will be the best way to make sure you know what condition the clothes are in.
My Favorite Liquidator
I wholeheartedly recommend Via Trading as an inventory liquidator to purchase from. They are located in California and get all sorts of interesting loads of product. Occasionally, you can even find loads for just a couple hundred dollars to try it out.
Most of their women’s apparel and footwear loads are a couple thousand dollars, but I have found handbags, jewlery and lingerie loads for between $200-500.
Some of the loads are as cheap as 17% of the wholesale price, giving you an incredible profit margin. I think this is so useful for Poshmark because we already have to take into consideration the 20% Poshmark fee with each sale. And Poshers are typically expecting a discount on clothes they purchase.
Here’s an example using the discount above and a Michael Kors bangle bracelet:
Normal wholesale price = $46
Retail price = $115
Your liquidation cost = $7.82
You sell it on Poshmark for $60
Poshmark fee = $12
Your profit = $40.18
Sweeeeet!! That is a 413% return on investment!! Like seriously, how often can a reseller pull that off otherwise??
Other things I love about Via Trading is their clear descriptions of each load available. Many of their loads are manifested, which means they tell you exactly what items and how many of each are included. Their definition page is here. And they include lots of pictures.
If you are lucky enough to live in the same area as the liquidation company that you are buying from, then you may be able to just pick up your purchase and avoid extra shipping costs.
Since liquidation loads are typically very large, they will usually be shipped by freight as pallets. If possible, get a shipping quote before making your purchase so you can factor that in to your expected profit margin. You definitely don’t want to be surprised by an outrageous shipping fee once you have made a purchase.
Another thing to be aware of is that you will need to have space to store a large amount of items until you have resold them. This may be difficult if you are living in an apartment, especially if you are not on the main level. However, if you have an extra room to use and are willing to figure out how to get your freight shipment into it, then it’s always a possibility.
What brands would you be thrilled to find liquidation lots for?