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Is Your Liquidator Cherry-Picking?

When you’re just starting in the world of purchasing liquidation lots, trust can be hard to come by. I get it; I’ve been there myself. “Cherry picking” in liquidation is a term that describes the act of liquidators pulling the higher value items of pallets to sell them for profit, leaving the lower value items for their customers who purchase pallets.

Value Gurantees From Liquidators

With no way to physically inspect the pallet or lot you’re interested in, relying solely on a few poorly taken pictures, and knowing you’ll be investing more than your typical thrift store or retail arbitrage run, it’s natural to approach with caution when deciding what, how much, and from whom to purchase.

Thankfully, many established liquidators offer some form of guarantee to ease your concerns. For instance, boasts a 98% accuracy rate, promising to make things right if there are any discrepancies in the manifest that significantly reduce the expected value of the pallet or lot. In such cases, they offer credits for future purchases.

However, it’s essential to be aware that not all liquidators, especially smaller-scale ones, provide such guarantees. Some may even be resellers themselves, potentially posing challenges to your business.

In the world of pallet flipping, it’s not uncommon to purchase a pallet and discover one or two high-value items within it, essentially covering the cost of the entire pallet. In such instances, all the lower-value items become pure profit.

However, if your chosen liquidator is also selling individual items, there’s a considerable risk that they’re cherry-picking these high-value items from the pallets. They resell them for a profit, and then passing on the rest of the pallet to other resellers. This can significantly impact your profits, potentially leaving you at a loss.

Identifying which liquidators engage in cherry-picking is relatively straightforward, and it’s essential to perform due diligence before partnering with one.

Tips to help you assess potential liquidators:

  1. Ask About Individual Item Sales: Inquire whether the liquidator sells individual items separately. If they do, exercise caution. This situation increases the likelihood that they’re sourcing high-value items from the very pallets they’re selling to you. This is not always the case, but it is important to consider the possiblity that it can happen. Joe and I purchase from liquidators who also resell as well, but we build relationship with them with clear expectation.
  2. Inquire About Guarantees: Determine whether their pallets are manifested. Find out if they offer any guarantees or policies if the pallet contents don’t align with the manifest. While a lack of guarantee doesn’t necessarily mean you should avoid them, it is added protection for your business.
  3. Read Customer Reviews: Research the liquidator by reading reviews from customers who have purchased from them before. While every business might have a few disgruntled customers, pay attention to recurring complaints or issues in negative reviews. Are there any positive reviews that counterbalance the negatives? This research can provide valuable insights into their reputation and reliability.

In the end, safeguarding your business and sourcing strategy is your responsibility. Purchasing pallets and lots in bulk like this involves calculated risks, especially since you often don’t get hands-on with the products until after you’ve made the purchase. We’ve learned from our own experiences, so you don’t have to make the same mistakes.

If you have any questions or need advice, feel free to drop a comment below. We’re here to help you navigate the exciting world of reselling!

Happy reselling!

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