Cliff and I absolutely can't resist buying good liquidation items to sell on Amazon FBA.
A lot of people don't even believe us when we tell them that, yes, you can source Amazon inventory at liquidation stores. So you should see the look on their faces when we tell them that we regularly leave a single liquidation store with thousands of dollars in profit!
In fact, we basically built our Retail Arbitrage business by sourcing inventory from liquidation stores.
Over the years, we have made some contacts in the liquidation industry. Every once in awhile those connections will pay off big time.
Today I want to present one of our own liquidation sourcing trips as a case study. You'll see how we came about this very profitable opportunity to turn a $2,500 investment into $8,500 profit.
Shopping for FBA Inventory at Liquidation Stores
On our usual shopping day, a Monday, Cliff and I were planning a trip to one of our regular liquidation stores. We had recently had good sales on a test-buy of some sunscreen multi-packs and we wanted to buy more inventory.
After we have a successful test-buy, we are usually ready to go deep on an item. We decided to call the store to ask about the sunscreen before taking the trip. Even though I had not talked to the store owner at this particular store in a while, I thought “what the heck” and just called him up to chat.
After chatting with him for a few minutes he invited us to come to his warehouse the next day to check out some of the stuff he thought would be “perfect” for us. And he let us know that he had plenty of the sunscreen in stock too.
When we arrived, we were shown around the warehouse to look at the new products they had in stock and then taken to the room where they kept all of the “higher end items”. These were the items that they didn't want to put into the salvage store because they wouldn't get the most money for them. They were testing these items out on eBay instead of selling them in-store.
If you know our buying style, we are actually looking for the items that appear to have no “extra value”. This is why we always tell new sellers to not worry about being gated in hot toys or big brands like Nike. So we thanked them for showing us the fancy stuff and went back to dig for some treasures in the warehouse!
There were a few items that they had in case lots that were exactly what we were looking for. After we showed them all of the items we were interested in, we talked prices and then counted up quantities for each item.
One of the cool things about sourcing this way is that these people know we are buying for resale. There is no hiding the scanner or acting like we are buying for our second cousin's graduation party. Just straight up wheeling and dealing so that we both come out ahead.
For them, it's a quick sale and they get money to reinvest into new products. When we buy 100 of something, it's an instant return for the store owner. If they put it on their store shelf, it could take months for that same item to sell out.
For us, it means not having to remove stickers from hundreds of items. By only having to list a few unique SKUs, we get to keep our total inventory numbers low like we like. Best of all, we can skip a few shopping days after a big haul like this! But if we find more great deals, we probably won't 🙂
We love when building our business can be a win-win for all parties!
The Details of our Liquidation Flip
Here's a breakdown of exactly what we bought that day at the liquidation store. You'll see that we sold most of the items we bought as multi-packs, but we were able to sell the Allergy Medication as a single.
- Lip Gloss (2-pack): 240 @ $2 each / Rank: 78,000 / FBA Price: $30
- OTC Meds (2-pack): 360 @ $3 each / Rank: 9,000 / FBA Price: $29
- Allergy Meds (single box): 111 @ $3 each / Rank: 13,000 / FBA Price: $17
- Neutrogena Sunscreen (2-pack): 378 @ $1.50 each / Rank: 9,500 / FBA Price: $25
- Banana Boat Sunscreen (2-pack): 48 @ $1 each / Rank: 86,000 / FBA Price: $18
All of the ranks are in Health and Beauty. My comfort zone for that category is 150,000, so all five of these items felt very safe to me.
Here's a quick rundown of the other essential numbers from this liquidation trip:
- Total Buy Cost: $2,508
- Total List Value: $15,808
- Potential Profit: $8,800
As far as our time investment, we spent an hour and a half at the warehouse, plus an hour driving. We had 2 helpers packing the items for FBA and it took them about 3 hours. We paid them $10/hour each.
We love all trips to liquidation stores, even if it's just to buy a few items. But trips like this are really the icing on the cake.
The fact that we made over $8,000 in profit with about 6 hours of work was no accident. So don't read this and feel jealous that you “can't find any good deals” like we do!
If you have one takeaway from this liquidation flip, I hope it's this: develop relationships with your suppliers.
It doesn't matter if it's the manager of your local Walmart or if it's the owners of a Mom & Pop liquidation store.
I know you might have decided to start your Amazon FBA business because you can do it from home where you don't have to interact with too many people. And on days when I'm exhausted, I certainly love that I can do my Amazon biz in private!
But taking the extra initiative to form relationships with suppliers can really pay off. I mean, this one relationship literally paid off for us to the tune of $8,500!
If I had just gone to the store that day without chatting with the owner on the phone first, I might have left with just the sunscreen. That would have cost me thousands in profit!
If you want to learn how to make the most of liquidation stores, check out my eBook Liquidation Gold.
Liquidation Gold covers how to find the best liquidation stores, what to look for before you buy, and plenty of helpful examples and tips.
I hope this case study has opened your eyes to the potential of liquidation sourcing for Amazon FBA. I know these stores might look a little rough on the outside (ok, and inside too!), but the potential for hidden treasure is limitless!
Do you love liquidation or have you been scared to try it? Maybe you don't know how to find stores – that's ok, it took us a while to find good ones, too. Get out there and try it and let me know if you have questions in the comments below.