Wholesale Clothing Liquidators – The Why, The What, The Who, The How

Why do Wholesalers need Liquidators?

The clothing industry is seasonal.  The demand for merchandise fluctuates between months.  The fast changing market is the reason why some retailers are able to carry quality items at significant discounts.  This article will outline Why wholesalers liquidate, What gets liquidated, Who buys the liquidated items, and How you can get your hands on liquidated items before the competition.

The bulk of the wholesale clothing business is conducted during select months of the year.  Large retail buyers are “open to buy” only on certain months.  It’s the job of the wholesaler to make sure that they have enough inventory to satisfy their customer’s needs while at the same time making sure that they don’t have excess inventory.  As expected, it’s not easy to approximate correctly and often times wholesalers will have excess goods on hand.

What happens with the Excess Inventory?

The excess inventory is sold at significantly reduced prices.  Sometimes the price is below cost, at cost, or at a small profit.  The price the inventory is sold at is based on the wholesaler’s judgment call.  The wholesaler takes into account the projected demand, the quantity, and the overall profit for the item.  Wholesalers make up the losses at the end of the season with the profit at the beginning of the season when the item is hot.

Who buys the Excess Inventory?

Sometimes the wholesaler will look for large liquidators to sell all the excess directly in one shot, other times they will keep the excess inventory in-house and give big discounts to loyal customers.

The business of liquidation sometimes calls for buying and holding.  Liquidators have to be smart in their purchasing, and timing becomes crucial.  They have to make sure that they can afford to tie up their funds for 2-3-4 months at a time.  The prices liquidators offer will be cheaper than the wholesaler, but you’ll still find a significant markup.  The liquidator takes into account the opportunity cost of tying up their funds for the given amount of time and will mark up accordingly.

How can You Buy at Liquidation prices?

For average retailers, your best way to get your hands on excess inventory is to develop a strong relationship with your wholesalers and ask them 1 or 2 months before the change of the season for discounts.  You’ll find that wholesalers will have some sort of deals to offer.  They might ask you to buy a certain quantity for the price to be effective, but you’ll walk away with a quality product that you can sell for cheaper than your competition.

Make sure that the clothing wholesaler you deal with is direct from the manufacturer; these are the only ones that can really offer you attractive discounts. Skip the middle man.