Lots of people make a business out of buying and then reselling liquidation inventory. To be successful, it’s important to learn about the secondary retail market, especially when it comes to sourcing inventory for your business. In this article, we’ll break down some basics to get you started.
The secondary retail market is essentially an aftermarket, where large retailers sell goods – that can’t be sold on primary shelves as new – to small business owners (you!). And then you, the reseller turns around and resells that merchandise to consumers through a discount store; at a flea market or online store; or, in the case of apparel, through sites like Poshmark and ThredUp.
Driven by high return rates (close to $400 billion worth of merchandise is returned each year) as well as pressure on retailers to find sustainable solutions for excess inventory, the secondary retail market is exploding. Accordingly, there has never been a better time to source returned and excess merchandise to resell.
Sourcing is the art of finding inventory that you can resell. Ideally, you’ll want to find deeply discounted merchandise that you can also sell at a discount to your buyers (while still making a profit). When it comes to sourcing, try and source directly from retailers as much as possible. Obviously, B-Stock is a great place to do this. Another tip is to start small and test out the inventory before making large purchases. For some people small might mean a few pallets. For others, it could mean one or two boxes. Either way, you’re buying in bulk.
As a new small business owner looking to source inventory, one of the first lessons to learn is to buy in bulk and resell at slim margins, so you can pass the savings along to your customers. For example, if you buy 100 widgets at $1 a widget, and turn around and sell them for $1.10, you’ve made $10. Or maybe it’s 1,000 widgets at $1.10 each; now you’ve made $100!
So, instead of widgets, you might be wondering what type of merchandise is available on the secondary retail market?
Just about everything is bought and sold on the secondary retail market: if you can buy it in a big store or online, chances are you’ll find it on the secondary market as well. Granted, some merchandise sells better than others. For example, trying to start a fresh fruit resale business might not be the best idea; but reselling canned foods or other nonperishables would sell well next to general merchandise such as paper towels and small appliances.
When buying secondary retail market merchandise, for the majority of the time you are buying items that are no longer considered new. These are typically returned merchandise or items that can’t be put back on store shelves. Many times it might be a damaged box or parts might be missing, or the original packaging is not available. For example, shoes might be shipped in poly bags instead of boxes. Many times, products are sold as-is with no warranty.
Historically, it has been difficult for small to medium-sized buyers to purchase secondary market inventory directly from large retailers and manufacturers. However, today there are new, efficient systems that automate the manual work required for them to sell to larger buyer groups. One such tool is an online auction marketplace platform like the one that B-Stock offers. Nine of the top 10 U.S. retailers, among many others, have partnered with B-Stock on B2B online auction marketplaces. At any given time there are 1200+ auctions open for bidding across our network of marketplaces. Here is a look at current open auctions for mobile, apparel, consumer electronics, and appliance inventory:
To buy inventory from B-Stock, you will need a resale certificate (read more on resale certificates). After you have your resale certificate, you’ll need to apply to each marketplace you want to buy inventory from. Tip: check out our Buying Basics Series, starting with How to Become a B-Stock Buyer).
After sourcing the inventory you need, you’re ready to resell! So, where do you go? While some of our larger buyers resell in their physical stores, many of our buyers take their inventory online utilizing popular secondhand marketplace sites like eBay, Amazon, Poshmark, or TheRealReal. Additionally, buyers may set up their own storefronts online or sell at flea markets. For tips to get started reselling online, check out 5 Marketing Tips for Reselling Online.
Happy sourcing and reselling!