How to Profit in the Closeouts Market

How to profit from closeoutsToday’s consumers want the biggest bang for their buck, making the retail sales environment more competitive than ever. Closeout merchandise can offer merchants an opportunity to sell goods at low prices, as well as make large profits, if they know where to look and how to buy, says Howard Grodnick, president of Jacobs Trading Company (JTC). JTC sells returned and excess merchandise in every category by the truckload. JTC’s parent company, Liquidity Services (LSI), operates, an online marketplace where buyers can source surplus inventory by the truckload, pallet or small lot. “We refer customers who aren’t ready to buy a load to LSI, and they can get started on a smaller scale,” Grodnick adds.

“Closeouts are first quality goods that have reached the end of their shelf life and need to be liquidated,” Grodnick explains. When a buyer, such as JTC or LSI, purchases liquidation merchandise, they often get an exceptional deal on a big inventory and pass those cost savings on to retail buyers. To get started in closeouts, Grodnick recommends that merchants develop relationships with several suppliers to find the best partners. Here are some steps to consider taking.

1) Determine if the liquidator has a business location with hours of operation. If feasible, visit the site. Also, gauge their reaction when you ask to visit their business, they should welcome you.

2) Find out if the liquidator owns the merchandise they are selling or if they are brokering it for someone else. Be aware that, if they are representing the goods for someone else, they might not have inspected them prior to sale and, if something is not right, they might not take responsibility for it. There are legitimate jobbers and brokers, and it could be a pleasant experience, but retailers should shop carefully.

3) Start out buying a small amount of goods to test the waters.

4) Uncover any additional costs, such as freight charges or service fees. These are fine as long as the grand total is still at the price point you have in mind.

5) Ask for references.

6) If the liquidator is online, be sure they clearly classify their merchandise. They should provide easy access to photos and product details. offers customers an array of product pictures as well as inventory descriptions. In addition, the website has a Buyer Education Center with articles, videos and advice to help retailers grow their businesses. “When merchants have successful results at their local flea market or store, and find out they spent $100 on a lot and made $200, they are happy. The risk and reward generate excitement,” Grodnick shares. “Many of our customers over the years started in this business because they needed extra money or were hosting a fundraiser, and then they realized it was fun and they could make a good living at it.”

For more information:

Jacobs Trading Company
8090 Excelsior Blvd.
Hopkins, MN 55343
Tel.: 763-843-2000
Tel.: 800-498-1909