What is Wholesale Liquidation?

February 07, 2022 2 min read

Have you ever wondered what happens to all the returned and unsold items from retail stores?  Did you think that it was carefully rewrapped and put back on store shelves?  Think again!  Merchandise worth billions of dollars each year gets liquidated.  There are massive amounts of merchandise which have been returned to stores by customers that remains unsold.  There is only a small percent that ends up back on the shelves or are resold by the stores or manufacturers in their factory outlets or their own discounted online sites.  Some of it is also re-sold to discount stores such as TJ Maxx or Big Lots but the large majority of items are then liquidated.

The amount of merchandise that retailers need to liquidate each year well exceeds over $400 billion.  Some of it may get destroyed or donated, but most of the merchandise is re-sold to liquidators and through secondary market liquidation channels.

The vast majority of consumer goods purchased in the US are purchased under two different channels:

  • Primary channels:  Retail stores, chains or e-commerce retailers where many of us purchase our consumer goods. 
  • Secondary channels:  Markets where many aged, discounted, used, open-box or refurbished goods are sold.

These items recovered from liquidated businesses are referred to as liquidation stock.  Entrepreneurs and small business owners have taken advantage of this reduced-priced inventory to start their own resale business.  The extra merchandise is often sold as whole pallets called liquidation pallets.  You can buy these pallets from any liquidator or big retailer.  Each pallet may contain an assortment of items, (usually grouped together by size or merchandise type) such as, apparel, housewares, tools, electronics and much more.

Flea markets, auctions, yard sales, discount bargain stores, thrift stores, and other outlets sell vast amounts of secondary channel goods.  Resellers also use virtual marketplaces such as eBay, Amazon, Facebook Marketplace, Instagram, Offer Up, Craigslist and many more to sell liquidation merchandise. 

Liquidation resellers come from many different walks of life.  They can include stay at home moms, retirees, college students, or anyone looking to start a business with a small capital investment.  The demand for the merchandise has grown exponentially as more savvy consumers are turning to secondary channels as a way to save money on products they buy.  The growth of social media platforms such as Facebook and Instagram have also greatly contributed to the growth of the secondary channel markets. 

While the industry has seen rapid growth over the last 5 years, there is still much more growth projected over the next 5 years as more consumers are expected to look at secondary channels in greater numbers. 

In our next article we will discuss how liquidation merchandise can benefit you.