Wholesale Liquidation Business: 5 Biggest Challenges & Their Solutions

Whether you are looking to buy liquidation pallets from your liquidation stores or starting any form of wholesale business you need to be aware of the challenges that the industry faces. Knowing the issues beforehand can help you plan things better. 

This gives you a better chance of handling those issues. Today, we will be looking at 5 challenges that wholesale Liquidation businesses face today and get an idea about what can be some possible solutions for them to get more profit. So, let’s get into it.

Finding Good Employees

One of the biggest challenges that many wholesale businesses face is human resources. It is kind of hard to find the right people for the job. Many times you will not find an experienced employee within your budget. Experience has its own cost. 

But if you hire a newbie you will have to train them to get them up to speed on your systems and software. Also, during the training period, the person will not make you any money and you will need another experienced employee to teach them everything.

Solution – One of the ways to do this will be to move towards using simpler software and other systems. The more complicated any system or software is, the harder it is for people to learn it. Moving towards a simpler system will drastically reduce the learning curve and you can get more people to work for you quickly.

Overstocking or Shortage

Another challenge that many wholesale businesses often face is maintaining their inventory. It can be very easy to overstock or understock products. You will lose money in both cases. When you overstock products, you expect there to be a huge demand for them. 

When that’s not the case and you end up losing money. When you understock a product you end up selling all of it but the market still has a lot of demand for it. Thus, you will lose clients as well as the opportunity to make good money.

Solution – Whether you are stocking up on different items by buying liquidation pallets from liquidation stores or you are getting goods straight from the supplier you have to manage your excess inventory correctly by renting self storage units. Invest in any software to help determine the Inventory Turnover Rate. This will help you figure out which items you need to restock on and which items you can skip out on.

Imbalanced Customer and Supplier Demands

One of the issues that plague many businesses is a mismatch between the customer demand and the supply of the products. In general, what happens is wholesale businesses directly deal with suppliers. 

When they receive orders from customers they transfer the order to the supplier who then supplies the product. But when there’s a mismatch or unevenness in the supply and demand many businesses might end up overstocking on products or there might be a shortage of goods. The previous challenge is an effect of this one.

Solution – The solution here too is to focus on inventory management. It is very easy to lose track of products coming in and going out when you are dealing with bulk orders. Rather than doing it manually, you can use an Inventory Management System that tracks all the incoming orders and the pending ones. Besides that, you need to keep a handful of options when it comes to suppliers. When one supplier runs out of something you can check other ones.

Increasing Cost

Another common problem that many wholesale businesses face is the problem of increasing costs. This does not just plague the wholesale industry but the entire business industry in general. Inflation, labor cost, manufacturing cost etc. keeps on increasing and might start chewing away at your profits if you are not ready for it.

Solution – One of the ways to counteract this is to be ready for it. Whether you like it or not, costs are going to increase. So, prepare for it. Use CRM software or hire experts who can help you figure out what’s most important for your business on the employee side and the customer side. This way you invest your funds and efforts into things that work. Also, come up with ways to increase the selling price of your products by giving more value to the customers in terms of services.

Distribution Issues

The last challenge we are going to talk about is distribution issues. Whether you are one of the liquidation stores shipping liquidation pallets or any type of wholesale business then you will have to be a part of the supply chain distribution. The problem is that there are multiple ways distribution can be interrupted. Natural causes, political reasons, unforeseen circumstances like accidents etc. This may end up causing delays in deliveries and can cost you a lot of money.

Solution – Always expect things to go sideways and prepare for them beforehand. Work with multiple distribution companies and contractors. Come up with the optimal overhead costs to cover the disturbances. Keep backup options if things do go south.

So, these were some of the challenges that many wholesale businesses face today. We have tried to provide a general overview of solutions that can be looked into. The purpose is to give you a starting point so that you can do some research. Each of these challenges is a big topic in its own right. So, take some time to look into each of them. We hope this was helpful to you and wish you all the best.