Liquidation Inventory Buying

When you buy liquidation merchandise you will almost always be shown the 'retail value' of the inventory you are purchasing.  It is extremely important to understand what this number represents when you decide what to pay. 

Generally speaking, the way you should determine the right price to pay, is to decide what you can sell the items you are buying for, decide what sort of margin you need to earn to stay in business and make a profit, and subtract that from the selling price.  Sometimes, it is a bit more complicated, however.

First, when you are presented a 'retail value' you must determine whether that is original retail, current retail, online retail or MSRP.  It is easy for sellers to pick a number that is well above what you can reasonably expect to get for the merchandise when you sell it. With consumer electronics, the original retail can be well above current retail because prices of consumer electronics products typically decline over time. In some fashion markets, MSRP is never the actual price. That is just a high price on the tag with a line through it.  It helps them establish a sense of value in the product.

So what should a buyer do? 

When you evaluate a manifest, I recommend you sort the list in descending order of retail value. Start at the top and search for each product online to find the price you could pay to buy that product right now. This is most likely the best price you will be able to get when you try to sell the same thing.  Work your way down the manifest filling in the best current online price next to each item. Don't forget to compare products in the same condition (if you are buying used, don't price it the same as new)! Once you have covered the products that represent 70 or 80% of the value of the lot you have probably gone far enough. 

Now, decide on the margin you require add in any additional costs, like shipping, subtract from the number you arrived at above and this should be your best offer.

Just remember, the ONLY retail value that matters is the one that a customer will actually pay you for the  products. Know this number and you can always buy with confidence.