Zac Montgomery: Welcome to another episode of Built by Liquidation, a liquidation podcast where we introduce resellers to liquidation. And today we are talking about the state of the liquidation market. I've gotten a ton of calls over the last couple weeks, especially this week, from customers, from vendors, from friends, and we're all in the same boat. It seems like the liquidation market is dead. If not dead, it's definitely extremely slow. ⁓ prices are going up. Customers aren't buying, it's really been depressing for a ton of people. So, is it going to get better? No. ⁓ it's really not. ⁓ some stuff will get better, of course. It's summer. I don't want people to stress about slow sales. People are out of town, people are on vacation. The economy sucks for a lot of people. ⁓ people have other stuff to buy besides we are in a market, we are in an industry where we sell consumer goods. Yes, we sell them at a discount, but we sit primarily sell things people don't need, they just want. And so when times get tough, they're gonna buy the stuff they want from us, but they're tight with their wallets right now. So that part will change. Fourth quarter's coming up, Christmas is coming, there is a reprieve coming for sales. Will prices go down? Will our costs go down? And I don't think so. ⁓ a lot of people are just hanging on to hope that COVID was you know, a catalyst for inflation on our costs. That cost is not going anywhere anytime soon. ⁓ you have Target changing the way they process their freight. All of Target's inventory, I think, come August is gonna be manifested. So these unmanifested general merchandise trucks, case back trucks, clothing trucks that you paid a flat price on, you will now pay a manifested price on it. What does that look like as far as cost changing? Well Target clothing right now we can buy anywhere from 80 cents to a dollar and a quarter. If we were to pay 10% of retail for clothing from Target, which is what I think it'll be, you're paying an average of $2.50. The average MSRP for a Target piece of clothing is $24.99. Do the math. You're gonna pay it twice as much money for the same product in the next two days. Amazon product. If you're familiar with Amazon's RFP, which is their how they bid out their product. you know that the cost of Amazon has just increased several percentage points. Is that gonna change? People think that it it can't go up any possibly anymore and I think it can. Amazon is looking for auction houses. They're Amazon is now looking for the end user to to give their ⁓ contracts to. Beforehand they were looking for brokers for for people like us that could handle high volumes of trucks and now they prefer to find end users like auction houses. larger discount stores to give their contracts to. ⁓ so it causes the product that's left over in the market for wholesalers to go up. So you see in bin stores close left and right for a lot of reasons. One being the cost of goods is just too high. The other reason is they're just poorly run and they don't know how to run a business. If your bin store is struggling, more than likely you don't know your cost of product and you're putting out too much product. And I guess I can ramble on that for a second. I think the biggest problem that bin stores have is you put out too much inventory. And we're actually changing something in our store this weekend. ⁓ and we're gonna see how it goes. But we've been running twelve pallets in our store every Saturday or every every weekend. We do three days a week. And twelve pallets cost us four fifty a pallet. It costs us about five thousand dollars. The problem is at the end of the weekend, every weekend I have six full Gaylords left over of product that wasn't purchased. Now we've on that Clarify on those 12 pallets, we run about 15 to 14,000 in sales. So we're doing really well on the on the bin product, but we're still left with six pallets of goods. So what we're gonna do this weekend is we're just gonna put out four less pallets than normal. We're gonna put out eight instead of twelve. We're gonna add a shoe day and an FC day to our bins to stretch out the product that we have. So my suggestion if your bin store is slow. Put out less product. These people can only buy so much stuff every weekend. Stop giving them too many options and let them actually completely buy out ⁓ your product. So if your bin store is struggling, that's my suggestion to you. You can only get so many people in your store every weekend anyway. Let them buy it out. Let them let the bins be empty at the end of the week. Let there be a graveyard of crap. ⁓ that's fine. They missed out, they'll be in line sooner next time. So That's my suggestion on that. ⁓ If you are a palette flipper, I don't have good news for you. I think the palette flipping days are behind us. We sold palettes for eight years. ⁓ We did really well with it. The cost of inventory, again, is affecting everybody. There's fewer and fewer spots to be in the middle, and palette flippers are in the middle. ⁓ So if you're looking to get into liquidation, I've got bad news. I would not get into palette flipping. right this minute. I would wait. Freight costs are continuing to increase. shoot, last about three years ago we were shipping freight from California to to to Fayetteville, Georgia for thirty five hundred dollars. I got quoted this past week for nine thousand dollars for the same exact lane. That was a kick of the nuts. ⁓ deal still works, but it's still a kick of the nuts to pay three times the amount per freight. And we're seeing that all over the country. The I mean the lanes I'm paying six hundred dollars to go two hours. It's absolutely crazy. I don't know if that's gonna change with gas prices coming down. If gas prices are coming down, I'm not here to speculate on that. Once prices hit a certain point, I don't think stuff ever comes back down. I think businesses learn to adapt to those new prices and vendors and companies see that we've adapted, we've We're still hanging in there, we're still making money, why would they go back down on their price? And I I don't think we're gonna see that much reduction anywhere in the industry. So bad news for bin stores, bad news for pallet flippers, ⁓ brokers. If you're a liquidation broker, and we'll do some some we've got some content coming out on that. If you want to learn how to be a liquidation broker, I'll be happy to teach you. Liquidation brokers are struggling as well. The volume has to increase, their margins are going down, quality of product is coming down, which causes more complaints from customers. ⁓ I would be very careful about buying from brokers today. I would find more of a direct source. I'd find someone who owns the product, the physical product, on their floor. That way you can buy straight from them and reduce the amount of issues that you have. If you're looking to get into reselling liquidation, I have good news. I think there's still money to be made buying liquidation inventory. I think you just have to get more creative. I think you should be looking outside of the box for categories to sell. I think a lot of people get in, they want to buy tools, they to buy electronics, they want to buy all the fun categories. And those categories are just continuing to see competition come in, which pushes that price point up. So my suggestion, if you're getting into reselling, especially liquidation, find a category that people don't want. and what I mean by that is other resellers don't want or don't find sexy or don't find appealing. Get into home improvement, stay away from the tools section and find the cabinets, the flooring, the vanity the vanities, the blinds. If you can find a if you can find a buyer for blinds, you will get rich in liquidation. I promise you that. That's one category that I've never been successful with. But if you can find a way to be successful selling blinds, window blinds, you will make a ⁓ crap load of money. ⁓ I still think clothing has a huge a lot of margin in it. I think a lot of us just dump clothing in our bins or they we set a set price for clothing at four to five dollars and we really limit ourselves. If you look at I was just talking to someone about this the other day, if you look at boutiques, boutiques are getting $29.99, $4099 for these dresses that we all sell for under five dollars. You know, I think we just have to get more creative on how we sell where we sell our product. There's a lot of vendor markets. We're opening one that I think you could get a higher price point in versus just selling up another call coming in all day. ⁓ yes, my point is find somewhere else to sell product versus just your flea market, your yard sale, your basic stuff. ⁓ we've got whatnot, we've got live selling, we've got TikTok, a lot of live selling platforms coming out, and I think you can make money with them. I've had A few videos where we say that we couldn't make money that we passed on it and we stopped selling on these platforms. I do think that it is possible for you to make money. I would just go niche. I had a guest on our podcast a few weeks ago. He sold fossils. He's doing really well. There's only three fossil sellers on whatnot. So if you want fossils, you have to buy from one of three people. He's one of them. ⁓ everybody and brother is selling liquidation pallets right now. You know, random pallet pulls electronics. I would pull away from that. I would try to find a niche market and build a customer base around that. I think clothing would still do good on whatnot if you have the patience for it. ⁓ I'm trying to think what else would do really well and whatnot that nobody's doing right now. I've heard food does really good, candy. ⁓ we had Ray Todd on and he did well with candy. If you're not a volume seller, if you're a small seller and you want to get started reselling it. Go on the app. So if you're a volume seller like us and you're trying to move large volume, I think you're gonna struggle. But if you're just buying a palette at a time, I think you can build a really nice community around you. I think you can still make money. If you follow Dawn Sorrows, she's a follower of ours and she watches this. I'm shouting you out. I don't know what your channel is, but comment it below. ⁓ she's I'm watching her build a following slowly. But it's really it's really neat to see it's how we did it when we started. We started off buying individual palettes and reselling them on Facebook. Before the marketplace was a thing, it was all groups. We created our own group to get people to come straight to us and we built a community around reselling our stuff. I think that's what's the most important thing. If you're just getting started, you don't have to have a retail store, you don't have to have a physical location. You can do this out of your garage, out of your basement. You just you want to build that community so you have customers who keep coming back every single week. ⁓ and that'll that'll speed up your growth a lot. So That's my suggestion for just getting started. Build that community right away. Get your Facebook pages, your Instagram pages, your social media needs to get started right away. And then film the journey. One thing I really regret now that we're trying to break into social media is I didn't film our journey the entire way from start to finish. I was I did really well for about a year, ten years ago, and I regret not filming it from then to now because I'd have a lot more followers and this whole process would be way than it is. Today. ⁓ fourth quarter is coming up. That's a fun one. We just had a we just had a commenter ⁓ ask us what to do to plan for quarter four, how to take advantage of fourth quarter to make sure you make money at some point this year. ⁓ we have a couple things going on. We have stacked up over the last few weeks and months all of our bin product that we need to make it from September through December. So all of that product has just been sitting, it's fully paid for, it's waiting to be dumped in the bins, and we're ready for that part. So we'll still be on the hunt for some some toys, some you know, eye-catching items that bring people into the bin store, but we're set and ready to go for our primary inventory. So it leaves me a lot of time to focus on other stuff. That would be I think I'm always hesitant to say buy more inventory. I'm not a big believer in stacking up inventory. Five years ago, I would have told you something different. I would have told you start buying toys now before summer's over. Buy a little bit. While prices are cheap, they don't go up that much. You know, people are like, well, you buy in the off season, you get so much better pricing. You get somewhat better pricing. Sometimes it's the only time it's available. And if there's a category like Halloween, you want the animatronics, my suggestion would be to go ahead and buy those right at the end of Halloween season. Toys are always available at all. All year long. It's not something you need to buy right now and hold till you know till Christmas. You might pay us a few percentage points more. It's worth it in my opinion. I think cash is king. I want my cash in the bank ready for a deal. I don't like buying inventory to hold and sit. That's my opinion. A lot of people I know that have a fully different opinion. But like I've said before, and I'll say it again today, I look at the liquidation industry and the business as a tool. I don't look at it as a full long-term forever business. and I treat it like that now. So I look for deals that we can make cash on quick. We can pull our cash out, we can put it into something else. I'm not a big fan of buying inventory that's gonna sit and take me months to sell. That being said, if there's a no-brainer deal that's gonna take me a long time, and I have one coming in next week from California, we have a paint by numbers kit coming in that we're gonna film a ton of content on. We're gonna sell that deal straight to consumer. ⁓ that deal's gonna take me months to sell. And I've come to terms with that. I've set the money aside for that and I've planned for it. But that's not how I that's not how I handle liquidation. I like deals that I can buy today and sell within a week. So my suggestion for quarter four, get rid of all the shit you have right now. Start now's the time, put it on sale, bundle it. wholesale it, get rid of it, get the cash ready for fourth quarter. It's coming. People are going to start buying. They don't want to see the old shit that's been in your store all summer long. Whether it's your retail store, your eBay store, your whatnot store, find a way to move it quickly, build up some cash and get ready to buy stuff that's going to move in fourth quarter. So that's my suggestion for quarter four. Don't stack up on inventory today, stack up on cash today, and get ready for the deals that are definitely coming over the next couple weeks and months. We've talked about the state of the liquidation market today. ⁓ we've talked about should you get into pallet sales, how you should get into reselling liquidation in general. We've we we glazed over brokering. If brokering is something you're interested in, let me know. ⁓ we've got some more content coming out. Brokering is on that list. We talked about bin stores, the state of bin stores, how to make some money with your bin store. We talked about fourth quarter, what to do to prepare for fourth quarter. And I appreciate you guys listening. If you're on Spotify, screenshot that you're on Spotify and let us know because we'd love to build up our Spotify. ⁓ listeners. If you're watching on YouTube, TikTok, or Facebook, please let us know that also we want to know where our people are watching. And stay tuned for more content and more solo podcasts from BuildFi Liquidation.