Category Archives: Liquidation

Our Liquidation Store Experiment

Today’s post is written by Rebecca, my wife and partner in doing FBA as a full-time job.

We’ve come down from the high of Q4 sales through FBA, and we’ve maximized sourcing at after-Christmas clearance sales in local retail stores. In years past, our focus at this time of year would shift back to mainly sourcing for FBA product at local thrift stores and garage sales. This year, however, we decided to use some of our capital leftover from Q4 sales to try a new location for sourcing: liquidation stores. Today’s post is a write-up of our first venture into sourcing at a liquidation store and a summary of the things we learned from that first trip.

mrsjess01-187x300Before we made this first trip, both Stephen and I read the ebook Liquidation Gold: A guide for Amazon sellers by Jessica Larrew. If you have liquidation stores in your area and want to learn about their potential for sourcing product for FBA, I highly recommend this book, for reasons I’ll mention below.

We used the methods Jessica discusses to find the liquidation stores within a 1-hour radius of our home, and we decided to try out the closest one first. Liquidation Gold did a great job of helping us know what to expect when we got to the store and how to tackle looking for potential items to resell in this large warehouse-type store. Let’s just say, the merchandise and aisles were pretty chaotic. At this particular store, there is barely enough room for one shopping cart to go down an aisle, much less for two to meet each other head-on. We had to do a lot of maneuvering with the cart, say a lot of “excuse me”s to fellow shoppers, and get down and dirty on the floor to dig through bins of items on the bottom shelves. The lighting is pretty awful, and the signage is all scrawled on scrap paper with a permanent marker. It was nothing like sourcing at a Target or JCPenney or somewhere that they try to make your shopping experience more aesthetically pleasing so you’ll stick around and buy more.

DSCN2295-800x600 But we didn’t let the ambience fool us! We were giddy with excitement as we started down the first couple of aisles. Grocery items and Health & Beauty items are new categories for us — in the past we’ve tended more towards Books or Toys & Games. We were pumped at the idea of finding items we could sell in multi-packs for big profits, but we were hesitant to start dealing with items that have expiration dates. The topic of expiration dates is an important one that Jessica discusses in several chapters of her book, and we felt a lot more confidence going into the store armed with that information.

Overall, we had a great first sourcing trip (I’ll share the numbers below). We found items to sell as individuals, items for multi-packs, items we wanted to test and come back to purchase more at a later date (but not too much later or they’ll be gone!), and items we knew already that we wanted to buy everything on the shelf. After scanning everything on the first two aisles in a fifteen aisle store, we were ready to call it a day and head home with a cart full of groceries to process and resell. There was no way we could scan the entire store on that first trip!

Looking ahead, there are several lessons we learned from that first trip that we’ve since applied in our subsequent trips over the past couple of weeks:

1) From now on we will allow more time for an initial trip to a new liquidation store. Maybe it’s just us, maybe we’re still working on a steep learning curve for a new sourcing category, but it took a lot longer to scan items and make decisions than when we source for books or toys. Part of the issue is that we need to do more research on CamelCamelCamel and the Amazon website to ensure we’re making good decisions about buying for multi-packs versus individual items. We’ll get faster at this as we go, but for now it’s taking us a bit longer than we first expected.

img_11412) We learned the hard way to make better notes as we shopped. There were a few items that we wanted to test before we purchased large numbers, and we mistakenly assumed that we could keep everything straight in our minds after we got home and started processing for shipment. Wrong. After a couple of days and the sales started coming in, we were asking each other, “Now, which ones did they have more of?” about the flavors of a particular beverage mix we had purchased two different varieties of. One flavor had started selling, but one hadn’t yet — would have been nice if we knew whether or not the liquidation store had more of the popular one on their shelves without having to driving all the way back and check! Also, we want to make better notes about prices of individual units and the numbers needed to make multi-packs, so that we don’t have to keep looking that information up on Amazon or a scouting app when we’re trying to decide if we want to go back and buy more.

3) We will continue to do tests of certain items, as Jessica describes in her book, but we will also try to be bolder in our buying in the future. It’s such a risk to take one of an item to do a test, but not know whether there will still be more on the shelf if the product sells quickly on Amazon. We’re still working out our tolerance for risk in these new categories.

4) We’ll look up more often. When we find a great item and grab all they have on the shelves, we also now know to look up on the top shelf for possible overstock quantities. We don’t want to leave any money on the table… or the shelves.

Liquidation-Sale5) We will eat a bigger lunch whenever we plan to source at grocery stores in the afternoon. Seriously, I almost needed a separate cart for all the stuff I wanted to take home for our family to eat! This particular liquidation store specializes in gourmet foods, and the prices were low, low, low. I’m having to learn a new level of restraint in personal purchases while shopping for groceries to resell.

OUR FIRST LIQUIDATION EXPERIMENT:
$148.75   Total purchased at Liquidation Store (1/29/14)
$46.22     Shipping costs to FBA Warehouse (1/30/14)
$194.97Total invested in our Liquidation Experiment

As of 2/24/14 our sales (after Amazon fees) were $389.87. This brings the amount of profit from our experiment to $194.90 The good news is that in less than a month, we have doubled our initial investment. The even better news is that we have not sold out of all of the items we first bought. There is still at least $50 more in profits just waiting to be sold. If things go as expected, our liquidation experiment will have quickly turned $200 into $450. Thank you, Jessica Larrew, for providing such a great resourse in Liquidation Gold.

So what about you? Do you have any experience with liquidation stores? What tips would you like to share? We’d love to hear your experiences.