Cell Phone

This semester, I finally got straight A’s (while taking Organic Chem!), but you wouldn’t know it from the mistake I made this morning: I washed my phone. I left it in yesterday’s jeans and tossed it in the washing machine right along with the pants. Maybe it was too many late-night study sessions in the library. Were my A’s worth my phone? Probably. But it leaves me in a pickle. I don’t have a phone, I don’t have the money to buy a new one, The Bank of Mom and Dad doesn’t offer washing machine insurance. However, I found a seller on Amazon who is selling the same model as my phone for way less than I would expect. It’s a good deal, and the seller has good reviews, but I’m skeptical. The phone is listed as new, but it’s also listed as “liquidation resale.” What does this mean? Should I be worried about quality (because I just “liquidated” my phone, and believe me, it’s not something I’d want anybody buying)? What kind of company is selling stuff for “liquidation resale,” and where does the phone come from? Is it different from a refurbished phone?

So sorry about your phone! The short answer is that you have probably found a true-blue, bona-fide good deal. There are lots of businesses that make their money buying closeout and overstock electronics and then reselling them. This is the cheapest way they go about buying wholesale electronics. That said, let’s go in to what makes these businesses tick.

The company selling your phone is probably a kind of middleman. They have bought a pallet of electronics from a closeout liquidation supplier, who in turn bought those electronics from a manufacturer or retailer. Normally, a seller will buy their products from a wholesaler or distributor, and then sell them at market rates. Your seller can sell new goods below market rates because they are buying them below wholesale prices.

There are two ways that unused goods come on to the market this cheaply. The first is through overstock, and that means exactly what it sounds like. The store has ordered too many of one product, and now they have to get rid of them because they no longer have the room to store them. The store puts that merchandise up for sale with a closeout liquidation supplier. A seller then buys it for individual resale, and the merchandise gets into your hands through them..

The second way is through closeouts. Closeouts are done to make room for the latest gadget. If the retailer still has last year’s phone on the shelves and they are no longer selling, they will bundle them and sell them as a pallet to make room for this year’s phone. Again, a seller will bid on these phones through the closeout liquidation supplier, put them up for sale online, and it gets into your hands.

Sellers, like I said, bid on pallets of merchandise through the closeout liquidation supplier. Once the merchandise ships, it ships with an affidavit of quality, ensuring that the product that buyers get is new. The closeout liquidation suppliers do not own the products that they ship. Instead, they act as a platform on which other companies list their closeout and overstock merchandise.

So, which companies are offloading entire pallets of electronics to second-party sources? The answers will surprise you.Walmart, with its world-spanning supply chain, resells pallets of everything from stereo systems to teddy bears.Best Buy runs a liquidation site that focuses mostly on the latest tech. Big companies like these need to get rid of thousands of products a day, and it ends up benefiting people like you.

Let’s break this down: say you’re Jim, and you run Jim’s Big Box Electronics Store. You sell phones and laptops, stereos and earbuds. You buy 300 models of the latest phone, which sell for $250 apiece, but you only sell 100 of them before the latest model comes out. You have a great big shipment of new phones coming in, and you need to make room for them. You don’t want to throw the 200 old phones away, because those cost a lot of money, darn it! You sell those 200 old phones (which have never been used) on a closeout liquidation supplier’s website, letting other parties bid on them to get them out of your store. Bob’s Closeout Electronics buys them from you, so that you have free space in your warehouse. Bob turns around and sells those unused phones for 25% off their retail price, netting some lucky person a very good deal.

To answer your other question, yes, the phone you’re looking at is different from buying a refurbished phone. A refurb phone might be even cheaper, but it will vary more in terms of quality. If a company is buying wholesale electronics through a closeout liquidation supplier, it means that they are getting new products.

However, you should exercise caution while buying products online, whether liquidated, refurbished, or brand new. There are plenty of articles suggesting ways to cover yourself.How-to-Geek suggests reading the reviews and paying attention to who is selling the product. If push comes to shove, and you end up buying a phone that doesn’t work any better than the one you just washed, Amazon will guarantee purchases from third-party sellers so that you can return your phone. Any large site will probably offer comparable protections.

If you look at a site like Direct Liquidation, you will probably notice that there are tons of products for sale. Selling overstock and closeout merchandise is an appealing business idea. It definitely saves people like you money. Be sure you do your due diligence when buying a phone, but as long as you ensure your source is reliable you will probably be ok. The phone is new, rather than refurbished, and has probably come from a big-box retailer or manufacturer who needs to move merchandise out of their warehouse. Congrats, by the way, on acing this semester. Just be sure to check your pockets next time you wash your jeans!

“Know what you own, and know why you own it.” -- Peter Lynch

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