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Are there any general rules to follow when buying inventory from a seller going out of business? (e.g., 25% of what they could sell the items for? 30% of what they paid for the items? etc?)
The two areas i am specifically thinking of are textbooks and clothing. Not to buy any other part of their businesses, just an inventory list with the inventory. What price would i offer? What types of percentages do such sellers expect?
Textbooks are worth almost nothing. Colleges revise the course and reading requirements so often that the older textbooks are better off recycled. Clothing only is worth something if you have an outlet to sell the clothes. I might offer 20% on the clothes and skip the textbooks entirely just to avoid the schlepping.
Are there any general rules to follow when buying inventory from a seller going out of business? (e.g., 25% of what they could sell the items for? 30% of what they paid for the items? etc?)
The two areas i am specifically thinking of are textbooks and clothing. Not to buy any other part of their businesses, just an inventory list with the inventory. What price would i offer? What types of percentages do such sellers expect?
You dont buy the items as a % of what they could sell the items for, you buy the items as a % of what the wholesale value is.. (not even what they paid because you dont know if they overpaid or not)
You have to figure out what it would cost to buy the items from another source, (estimated guess), and then offer the seller less.
I say less because you will get lots of products you dont want, items that dont sell, broken, etc.
So in sum, offer something like 20-30% of the MFRP if they are going out of business?
Too much.. liquidation values are somewhere around 20% of the wholesale value.. If I'm making an offer, and its the type of offer that its an all or nothing, meaning I get the good and the bad, i'd probably be in the 10% of the retail value just for the sake of starting.. I routinely buy truckloads of items from stores and I think my average cost is about 17% of the retail price.
I wouldnt go higher than 20% though because a lot of items, if bought in bulk can be bought from the manufacturers for about 50%, and I even have deals with some of my suppliers where I only pay 40%, and thats direct, with a return policy etc.
Start at 10%, and "settle" in the 20% neighborhood if you have to go that high.
I cleaned out my bookshelf and was shocked that Amazon bought back a fair amount of old textbooks. Give Amazon the ISBN and they will tell you what they will pay for it. The money comes back as credit towards other purchases. Was glad because I was just going to throw the textbooks away because for the most part not worth much money.
There are CPA's that specialize in inventory valuation, Id look into that in your area. That being said be VERY careful buying textbooks. Theres a reason that college bookstores run on Just in time methodology. What sells for 400 dollars today will be worth 1 dollar tomorrow. Look on amazon for proof of that.
I recently bought inventory from a guy who went out of business but was stil sitting on a lot of inventory and had a noncompete. I knew I could lowball him because his options to sell his inventory were very limited and whoever he sold to didn't decide to buy his inventory so I knew he had limited options.
Also, I knew I had to get it cheaper than when I buy from my normal supplier as otherwise what's the point I may as well just deal with my normal supplier where I know who I'm dealing with and what I'm getting. I think I offered him about 40% less than what my normal supplier charges me for teh same product, he accepted and we made a deal.
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