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Closeout & Liquidation Forecast

Jan 1, 2008
by Christopher Heine

After the holiday season, retailers will be sending back countless truckloads of valuable unsold and returned merchandise. Ironically for buyers, 'tis now the season for some of the most profitable merchandise opportunities.

January has almost become an international, month-long holiday for closeout buyers. One great aspect of the Internet age is that consumers are taking advantage of the technology like never before, to find cheap, post holiday goods. This growing online phenomenon makes the selling of unsold and returned merchandise an incredibly advantageous territory.

There is little question that wholesale or liquidation buyers who react the fastest can cherrypick quality merchandise. However, what kind of products are the best to pick up? What are the latest trends?

A good place to start answering these questions is to look at best-in-class companies that offer closeouts, such as Jacobs Trading Company, Warehouse One, Spinning Disc Entertainment, Roth's Choice '70 and KCP Wholesale Distributors. Luckily, those firms and others can be found at www.closeoutcentral.com, where closeout and liquidation opportunities abound.

Bi Lingual Closeouts
"The salvage market has become a lot more global," said Howard Grodnick, President, Jacobs Trading Company, Plymouth, MN. "Within the last 12 to 18 months, it has been remarkable." The 40 year old Jacobs Trading Company is a direct source wholesaler specializing in excess inventory, customer returns, shelf pulls and damaged goods from retailers and manufacturers. The products vary from week to week and are sold by the truckload. Cookware, rugs, furniture, tools and electronics are the mainstays of the trading company, with a current emphasis on electronics.

"One of the stronger product trends I have seen is the transition from analog to digital in the TV market; it has been a big change for us," Grodnick explained. "We are currently selling a lot of LCD and plasma televisions, versus the analog sets we used to sell."

For a checklist of items in their catalog, visitors to www.jacobstrading.com should click on the Hot Deals link located at the upper left. The company has ten distribution centers in the US that are concentrated primarily in the eastern half of the country, with one location in Las Vegas to expedite delivery for West Coast customers.

Payment must be received within 24 to 48 hours after an order is placed, and before the goods are shipped. One thing for sure, the company delivers on its promises. "If the load is committed in the morning and payment is received, it will be shipped out in the afternoon," Grodnick said.

It is worth mentioning that JTC's website offers a Spanish language link on its homepage, appearing just below the picture of its headquarters and on the left hand navigation bar. Grodnick's multilingual website underscores how the company has moved into the international market with great success, due to a new global demand for salvaged merchandise. He said that the Spanish website will bring in its fair share of post holiday liquidation product orders.

"We have had the Spanish site for three years now, and its traffic is growing," he noted. "There are some developing markets in South America, as well as in South Africa and the Middle East. The salvage business was light years behind everyone on a global scale, but now we are catching up."

Best Seasonal Buys
Like JTC, Warehouse One deals in returns and has discovered that the market overseas is starting to open up. "We, too, have a lot of people who are ordering from South America," said Kim Hancock, Sales Manager, Warehouse One, Crossville, TN.

The 12 year old company's website, www.warehouseone.net, is becoming chock full of fantastic products available on the cheap from its Christmas returns. Like many other wholesale outlets, Warehouse One's inventory is constantly changing, as buyers show up where the deals are.

"In January, we are going to be dealing with a lot of seasonal merchandise like Christmas trees, decorations and holiday products," Hancock said. "We will buy the products and immediately offer them to the customers. But if they do not sell, we simply hold onto them until next season so our customers have cheaper, in-season products available. It makes us money and saves them money without them having to store the merchandise."

Outside of seasonal merchandise, the company deals primarily in housewares, home decor, furniture, clothing and small appliances, keeping over 2,000 pallets in stock at all times. Warehouse One's main customer base consists of auction marketers, flea marketers, exporters, wholesalers, chain retail stores and mom and pop shops.

Warehouse One owns all of its merchandise and prefers a personal touch to its customer service. In terms of the latter, the firm's phone reps call their customers by their name instead of addressing them by a number. The company has a quick turnaround policy on its orders. Shipments get processed on the same day as payment is received. Business in the coming year looks good for Warehouse One, because closeouts are up, according to Hancock.

"It does not matter if it is a small retailer or a bigger retailer like a Macy's; there is a lot of excess right now," she said. "The return price is two to three percent less than what the store pays. So if they paid $.25 for the item, we may get it for $.22."

Discount Pop Culture Items
Even if the closeouts market has been trending up, such positive reports are not always the case. Not too long ago, said Eric Bordin, VP, Spinning Disc Entertainment, the sector was down compared to the rest of the merchandising universe. Distributors in this niche ought to take note and ride the current tide.

"People who used to buy the budget items shied away for a while and now they are back," said Bordin from his company headquarters in Long Island, NY. "While there is also a market for pricier stuff, buyers want cheap right now. And, they often do not care what it is."

Bordin's firm, www.spinningdiscent.com, not only offers classic and collectible DVD movie titles, such as Ronald Howard's "The Adventures of Sherlock Holmes" or Stephen King's "Children of the Corn," but the selections also include music CDs, posters and small electronics. In one example, he said that a mixed lot of 50 CDs costs $84.

With the holidays in the rearview mirror, Bordin said his firm has been reducing prices to liquidate surplus and returned goods, as he makes room for the new incoming products. He explained that the time is ripe for retailers looking to pick up inexpensive, but extremely sellable popular culture items. Great pop culture memorabilia from the 1950s through 80s are trends that never go out of style. "We are not going to let stuff sit around and collect dust, so we will definitely put these items on sale during January," Bordin said. "We will cut the prices by about 25 percent."

Meanwhile, the company started selling small consumer electronics and retro movie posters just this year, in order to diversify their catalog and strengthen their business. Bordin expected many of those items to be available on the cheap, too. "There will be new sale items every Monday or every Friday because you want to have people coming back to your site every week," Bordin said. "We have sales specials year round because it is good for business. It helps us perform well against the competition."

Best in HBA
Bordin brings up an interesting point: the web has become amazingly competitive. It often makes one wonder if newcomers are able to survive against the entrenched players. It appears that upstarts still have a fighting chance, especially if they are selling closeout merchandise. "Sales have really grown for me dramatically, and I have only been in business for a year," said Jeff Roth, President, Roth Choice '70, El Paso, TX. "I have great sources and great connections for name brand stuff at extremely cheap prices."

His company, www.rc70.com, offers health and beauty products, including excellent brands like Revlon and Vidal Sassoon, for some of the best prices on the market. Roth works directly with manufacturers to get the hottest items, while picking up liquidation items from a variety of sources on the West Coast.

He completes orders nationwide, as well as in Mexico, essentially serving swap meet marketers and mom and pop stores. RC70.com also offers the following regular wholesale categories; Dr. Scholl's, Blow Dryers, Flat Irons, Hair Straighteners, Curling Irons, Rollers, Clippers & Trimmers, Foot Baths, Spa, Massagers and Fountains. "We guarantee quality and the best service," Roth explained. "If anything does not work, I will take it back and deal with the manufacturer. The customer always comes first."

Another example of a wholesaler that has a great selection of closeouts this time of year is KCP Wholesale Distributors. The firm offers cosmetics, skincare products and fashion accessories, including scarves, belt buckles, belts and eyewear. "Skincare and clothing accessories seem to be trends that continue to grow," said Felecia Fornino, President, in Middletown, NJ. "We also have body lotions, shower gels and name brand cosmetics like Lancome, Revlon, Loreal and Clarion. We sell to all types of resellers. These include discount stores, pharmacies, flea marketers, other wholesalers, eBayers, and online retailers like Makeup.com. We give them all top notch service."

For more information, contact:

Jacobs Trading Company
13505 Industrial Park Blvd.
Plymouth, MN 55441
Tel.: 763-843-2000
Fax: 763-843-2101
Websites: www.jacobstrading.com and www.closeoutcentral.com/Seller_Profile.cfm?sid=101

Warehouse One
9305 Cherokee Trail
Crossville, TN. 38572
Tel.: 931-788-1011
Toll Free: 866-445-3636
Fax: 931-788-1152
Websites: www.warehouseone.net and www.closeoutcentral.com/Seller_Profile.cfm?sid=323

Spinning Disc Entertainment Inc.
28 Werman Court
Plainview, NY 11803
Tel.: 516-777-2772
Fax: 516-777-2111
Websites: www.spinningdiscent.com and www.closeoutcentral.com/Seller_Profile.cfm?sid=153

Roth's Choice '70
1080 Los Jardines Circle
El Paso, TX, 79912
Tel.: 415-845-3113
Fax: 650-240-0710
Websites: www.rc70.com and www.closeoutcentral.com/Seller_Profile.cfm?sid=1051

KCP Wholesale Distributors
1385 HWY. 35 North Suite 148
Middletown, NJ 07748
Tel.: 732-583-1975
Fax: 732-583-1422
Websites: www.kcpwholesale.com and www.closeoutcentral.com/Seller_Profile.cfm?sid=918

Topic: Product Trends

Related Articles: closeouts  liquidations 

Article ID: 475

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