Consumer Alert: Your holiday returns might end up here. Big deals to be found at liquidity warehouses

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ROCHESTER, N.Y. – By now, you may have already returned that ugly sweater you got for Christmas. It may not have gone back on store racks. In fact, it very likely ended up somewhere else, a warehouse filled to the ceiling with merchandise retailers no longer wanted.

They’re companies that buy unwanted merchandise or overstock from retailers, then resell it for as little as 20 percent of the original price. One company that’s gotten a lot of attention on TikTok is called Liquidity Services.

In a video that’s gone viral, a TikToker with the handle Tidusflips can’t believe what he’s finding in a warehouse of liquidated merchandise. The video showing him sifting through products with extraordinarily low prices has gotten more than 54,000 likes.

Liquidity Services is part of a movement called the reverse supply chain. That’s when companies buy merchandise, no matter the condition, that retailers don’t want. Then they auction it off, usually in bulk, on their website. The practice keeps unwanted consumer goods out of landfills and it’s a goldmine for folks who buy in bulk, then sell the items on third party sites like eBay or Amazon.

For example, I found new wired earbuds on the site. There were 204 of them selling for $270. The cheapest I found these on Amazon were selling for five bucks. So theoretically, if you sold all of them for five bucks a piece, you’d make $1,020, $750 of which was profit. 

I also found 14 iPhone 13s selling for $1050. On Amazon the best price I found for a 13 was $439. So, if you sold all the phones at that price, you’d make $6,100, about $5,000 of which would be profit.

What I’ve described is akin to dropshipping. And anyone in the business will tell you it’s harder than it looks, and there are lots of pitfalls. But it’s relatively low risk. Some sellers on Liquidity Services will mail the products to you; others want you to pick it up. So, you need to be aware of the seller’s location before you bid.

If you’d just like to check out a warehouse, the closest one to us is in Pittston, Pennsylvania, about a three hour drive from Rochester.