Liquidation and closeout are two terms used to describe what retailers do with merchandise that doesn’t sell well, gets returned by customers or receives some form of damage. While some liquidated or closed-out merchandise is truly in unsellable condition, most items in these categories still have plenty of value and appeal for a wide variety of customers. Consumers and companies who know about these items can often find things that they want or need, at a steeply discounted price.

Companies liquidate, or do away with, items in their inventory for a variety of reasons. In some cases, items simply don’t sell well enough for a company to keep them in stock or continue offering them to retail or wholesale consumers. In other cases, items are only sold on a seasonal basis, and the company liquidates its stock when the appropriate season ends. Other reasons for liquidation of an item include merchandise damage, disruptions in available supplies of an item, and replacement of an obsolete item with a newer type or version. Generally speaking, the main reason behind product liquidation is a desire to save money or cut losses.

Closeout items are liquidated products that get offered for sale by the original manufacturer or retailer, or by other retailers that specialize in liquidated items. In some cases, closed-out merchandise is in brand-new condition and simply didn’t sell fast enough for the original manufacturer or retailer. In other cases, closeouts come from customer returns, sample merchandise or items that sustain some form of damage. Typically, most closeout items are undamaged and in excellent shape. Even damaged items offered as closeouts usually have only minor or insignificant blemishes or defects. Items commonly available as closeouts include clothing, footwear, computers and other electronic devices, housewares, domestic items for bathrooms or bedrooms, fragrances, cosmetics, luggage, toys, art, cleaning supplies and general merchandise.

Consumers and companies who know about liquidation and closeout merchandise can save tremendous amounts of money, compared to the amount they would pay for in-stock items. For example, closeout items in essentially brand-new condition can cost anywhere from 15 to 80 percent less, than items officially identified as “new.” Store returns typically go at an even lower price and can provide a cost savings as high as 90 percent or more. In most cases, retailers and wholesalers of closeout merchandise pass the vast majority of their savings on to their customers. Businesses that commonly sell liquidated closeout merchandise include flea market vendors, exporters, auctioneers, wholesalers and discount retailers.

Some companies specialize in closeout merchandise on a large scale. Instead of smaller businesses that might only offer a few liquidated items, these larger operations offer goods to their customers by the pallet, lot or truckload. Top-notch sellers of liquidation and closeout merchandise have business relationships with a wide range of department stores, catalog companies and other retailers who have a need to turn over their stock or change their inventory. These relationships give them the ability to offer an expanded product line that’s unrivaled by smaller organizations.