Hi. My name is David Solomon and I am the CEO of Closeouts World. We’re going to be doing a series of videos that talks about different ways of looking at the closeouts market. In 2019 there have been over 1000 different closeouts companies in the united states and around the world, all of them have one premise. To buy merchandise at the lowest cost and to sell it so their customer can make a good profit margin off them. In today’s video, video number one, we’re going to be talking about what closeouts really are.
What Are Closeouts?
Closeouts are
merchandise that departments store or manufacturers, a retailer, even
a liquidator has left over and they’re trying to get rid of it at
below their original cost. What that means is that I buy, for
example, a pair of sneakers, and I buy it as a wholesaler at 20
dollars I’m gong to try and sell it for $25. If I have leftovers
I’m going to try and sell it at less than the original selling
price. So instead of selling for $25 I may sell it at my cost, but
preferably I’m going to sell it at $15 or $16 until I can actually
liquidate the merchandise. What this does is give a bigger profit
margin to my customers and it allows the customers to buy volume in
the closeouts market.
Where do all these closeouts
come from?
We have the department stores such as Macy,
Walmart, Kmart, Kohls, you name it. Around the world we’ve got over
a hundred different department stores that closeouts are available
not only on an annual or weekly basis, but literally on a daily
basis. They’re divided in categories and in a future video we will
be looking at what those conditions are.
Today we are going to look at the condition of merchandise available in the market. What this video is meant to do is to give you information on what you are gong to be looking at when you buy closeouts. For example id you are doing Amazon you are definitely going to want to purchase something that is brand new, overstock, or shelf pull. If you’re dealing in eBay you can do returns, or refurbished- it is a different platform that allows the customer to buy from different types of categories and conditions. If you are a retailer or a wholesaler you have the full gambit available to you and you can buy and category you want and the condition you want.
What is overstock and shelf pulls?
Overstock is merchandise that was in the store, or it was in the manufacturer, or another wholesale, or liquidator, but it is in new condition. Now I say new condition because it does not necessarily mean brand new. Brand new is something that comes directly from the manufacturer- it’s still in the original cases, with the tissue papers, still with the original box, everything is the same way it was manufactured originally.
You can get everything in new condition that you can put on Amazon or your store and it will be retail ready. This is what we consider overstock and shelf pulls.
What is a
shelf pull?
Shelf pull is merchandise that may have a sticker on it. Looking at our own cosmetics, out cosmetics are brand new, a Maybeline lipstick. It was something originally in the store with a sticker price. We can not call this brand new, or overstock- we can call shelf pull. This is something that is on the shelf at one point in one of the retail stores, it could be Walgreens, rite-aids, Walmart, and they took it off. Why did they take it off? This is where the wording and terminology “Closeouts:”comes into play. Why is this specific item not available in the store anymore and why has it been taken off the shelf? A few possible reasons. One maybe the store ordered too much and they just don’t have the capacity to sell whatever they ordered. Number two it could be that they only have one piece in a particular color and they don’t have the space to store one color and the new color. There are also few other reasons which fall into the array of that. We have to think of Shelf pulls as something that is in new condition, but not something we can call “brand new”.
Lets look at brand new merchandise.
A piece of jewelry still in it’s originally plastic and packaging from the manufacturer, it is something that we can say this is exactly how it came originally. Will there be a difference in prices between brand new, overstock, and shelf pulls? Sometimes. Sometimes you’re going to pay a little bit more something that is brand new because it is in its original cases. Sometimes you’re going to play less for shelf pulls because it has the chance of the case for the packaging not being 100% brand new. There may be a scratch or a smudge on it so you can tell it’s not brand new. Pricing definitely works to your advantage when you’re working with shelf pulls vs brand new.
Let’s look at the next condition- refurbished.
Refurbished
merchandise is actually something is not new anymore. It could have
been something that was returned to the store, it have been something
that was defective, it could be something didn’t have a box, it
could be something from a hundred different conditions. What they do
is they will send it to a professional company that does
refurbishing. Refurbishing is taking a product that is not new and
making it as close to new as possible so it could be sold in a retail
environment. It could comeback in a non original box. These are
things that will be sold very close to the condition of new, but will
let the consumer know that it is not new. If we were to actually open
the product we would see there is packaging, there wrapping, there’s
a manual, everything is there exactly as if you were buying a new
item- but it’s refurbished. What does this mean in terms of
pricing? It’s going to be cheaper. Instead of purchasing an item
for $100 in the store now it may be $80 or $70. What does this mean
to you, the person actually buying the closeout? It means you have
the opportunity to buy at for less than the original wholesale and
you can still sell it very close to the retail- within around 10, 15,
even 20 points.
We’ve looked at brand new, we’ve looked at overstock, we looked at refurbished, and we’ve looked at shelf pulls. Now we’re gong to look into the warehouse and we’re going to look at returns, and we’re going to go all the way down to look at used and as-is merchandise.
We’re gong to look at a few of the condition we spoke about. Shelf pull or any merchandise can come in “big boxes” or they can come in “gaylord boxes” or merchandise can come in regular boxes. When you look at shelf pulls of merchandise that comes on pallets everything is in in new condition, but it is not how the boxes come from the manufacturer, we can call it like-new because it is in like-new condition.
Returns.
This is a pallet with right here called Returns. Returns sometimes comes with boxes or without boxes and you really have to think about when you’re going to the store to return something how are your returning it? Are returning merchandise always in the same condition? No! Looking at a pair of boots someone bought these pair of boots and for whatever reason they decided they were going to return it. Now is it in new condition? No it’s not. Now can it be cleaned and can it be sold? Yes of course, these boots are Crocs and have a good high value. Unfortunately you can not send this to Amazon and you can not put this in your store to sell immediately. You have to spend some time and little bit of labor taking care of this in order to make sure you can sell them. Here we have some Sketchers sneakers here, these are not in good condition though- these are merchandise that were returned. Now is every single piece and is every single pair of shoes going to be like this in this pallet? No! Do we have a percentage? No. Customers always ask us, what is the percentage in the returns of good stuff vs stuff that will be possibly un-salvageable. We always say between 0-100%. Pallets can be a mixed in a variety of many different conditions. We like to call it the good, the bad, and the ugly.
Let’s move to another returns. These are JCPenny returns. On these returns nothing here is in it’s original packaging. This is how it was returned to the store. Someone bought this, this could be in brand new condition, they just don’t have the packaging, they returned it to the store. How is this going to be sold in your environment? How are you going to market this? How are you going to sell this? Very easily! There’s a hundred different ways, and we can discuss this, so we you speak to a sales person when you’re buying something you can always ask their advice and they will be able to help you out on how to market this to your own customers. Let’s take a look at this…
Shelf pulls mixed with returns.
These are JCPenny kids clothing. It’s actually merchandise that is brand new. It looks great! Is it brand new? No, it’s not. This is something that was on the shelf- it clearanced out at 15 dollars, is it something that can be sold in a retail environment? Yes. Can you put it on Amazon? Of course! But you’re not going to get sizes, you don’t have the sizes of the exact same items so it’s not going to be brand new. Now, are we going to find things in here that may have a hole? Yes! There’s going to be a good mix. Finally we’re going to talk about…
Used Merchandise
Used merchandise is a behemoth of animal in itself. You have to have the right customer for this, this is not for everyone. This is something that can go very well in thrift stores, exports, and even be put on eBay- BUT you have to know what you’re doing. If you have questions you can talk to us to help give you the advice that you need in order to buy and to sell this kind of merchandise.
Let’s take a look at what kind of merchandise we have here. The first merchandise we have here is used clothing. Now the clothing itself, in a different video we’ll be talking about grading, it is classified in A, B, C, there is merchandise that is called credential and there’s industrial category. There’s a lot of different categories and we’ll be discussing this in a future video. So used clothing when they come they com in either a 1,000 pound pale or 100 pound bales, and the bales have different types of clothing. Here we have a mixture of clothing, a mixture of winter and summer clothing- men, women, and kids, and once again you can re-categorize it to have either just adults just kids etc.
Over here you can see a pallet of just jeans. The jeans pallets are going to be a mixture- again different grades, brands, qualities, different conditions, but everything here is used. Some of it is in perfect condition, some of will look like it’s brand new, some of it will even have it’s tag on it. Why is it classified as new? It’s merchandise that has been sitting previously.
Finally lets take a look at books.
Great
item for Amazon, great item for eBay, great item if you have a retail
store, a lot of these books are in conditions that are either new or
close to new, but we sell them as used. Why? Because that is the
condition that they are in. You’ve got really good categories here,
great genres, you’ve got hard covers, soft covers and in a future
video we’ll be talking about just the books and how to sell those.
The used categories are actually divided into many categories, but
you have to know who that is before you jump into that kinds of
condition.
I hope that this video has shown you a little bit about the condition of closeouts merchandise and you have a little bit of an explanation. Like I said in future videos we will be getting into more details and more specifics, on what exactly the closeouts industry is about and what is about and what is sold. How to get to your customers, how to get to your vendors, what kind of merchandise is the best that you want to sell. Right now the one thing that is most important that you realize is that there are many different types of closeouts. In order to get your niche you need to start understanding not only the industry but the merchandise itself.