Closeout Buyers vs Closeout Brokers – The Difference

There are two types of closeout companies, Closeout Buyers and Closeout Brokers. The difference between buyers and brokers is extremely important to you as a product manufacturer or brand.

Closeout Buyers

MAC Wholesale is a closeout buyer. A Closeout buyer makes offers to buy your merchandise, pick up the goods, and bring the goods to the closeout buyer’s warehouse. When closeout buyers begin selling  their goods to their customers, they are shipping the goods out of their own warehouse. This is the best way to sell your closeouts – you’re able to move all of the goods to one buyer, and have an offer that is legitimate and reliable.

Closeout Brokers

Closeout Brokers are the people that give a bad name to the closeout industry. They typically do not have a warehouse of their own, and their business consists of brokering manufacturers’ closeout lists, and trying to pre-sell the goods out of your warehouse. Enabling a closeout broker to try to pre-sell your closeout list is a huge mistake. Brokers will lead you on with a less than reliable “take-all” offer, in order for them to figure out what the lowest price you’ll accept will be. After they know what they can buy the inventory for, they will blast the deal around the closeout and off-price marketplace to try to pre-sell it (while giving you the run around about picking up the goods). More often than not they fail to sell the goods, and they back out of the buy for various reasons.

Why is this a problem? You’re now beginning the selling process all over again. But more importantly, when you go to find a real buyer for the goods, like MAC Wholesale, a real buyer is going to offer you less money for the merchandise than they would have offered you if you had come to them first. The merchandise has already been blasted around the off-price and closeout marketplace unsuccessfully. Many of the largest off-price buyers have already seen the goods offered by the broker, and it becomes a riskier buy for the real closeout buyer. When retailers now see the goods from multiple companies, they are hesitant to buy goods when they are uncertain of who owns them. Can you imagine trying to stock a retail store for an upcoming season with high risk for your incoming  orders being cancelled?!?! This is one of the reasons MAC Wholesale has such a great relationship with its retailer customers – buyers know that we own all of the goods that we sell, and they can count on us being able to fulfill their orders.

How to Determine if the Company is a Buyer or a Broker

From my experience, here are some ways to determine if the buyer is a real buyer, or just a broker:

    1. Ask the Buyer Where his or her Warehouse is
      “We have warehouses all over the country” is the most common, not legitimate answer. This means they are brokering goods out of manufacturers’ warehouses. I’ve been in this business long enough to know who all the major legitimate players are in buying closeouts, and no US based closeout buying company has more than 2 warehouses. If I’m wrong, let me know – I’d love an introduction to the company.
    2. Verify that the Buyer’s Warehouse Exists (and is not an office building)
      It’s 2016 – it’s amazing how easily you can verify information with the internet these days! Simply check the address(es) on Google Maps and click on the Street View option. Warehouses are BIG buildings – if it doesn’t exist on Google Street View or it looks like the building is exclusively offices – well, you get the point.

      One other option (though not always cost effective or feasible) is to ask to visit the buyer’s office & warehouse. I love when manufacturers come for a tour and to meet! MAC Wholesale is proud of its warehouse and operations. We always welcome the vendors we buy from to come and visit, see things in person, and see what types of merchandise we currently carry. We’ll even buy you lunch too!

    3. Does the Company have a Website?
      If the company doesn’t have a website, this is a major red flag. Every legitimate closeout buying company has a website. “Our website is being redesigned” is not an excuse – when companies redesign their website they leave their existing website up in the meantime – wouldn’t you?
    4. Is the Buyer’s Email Address a Free Email Address? AOL, Yahoo, Gmail, etc…
      It’s 2016. Any real closeout buying business has a website, and its buyers have company email addresses at websites that have information on them. If a buyer is emailing you from an email address @AOL.com, @Yahoo.com, @Gmail.com, etc….., they are almost always a broker.
    5. Ask for References
      If the closeout buyer is legitimate and established, he or she must have references from other companies like you that would be happy to vouch for the legitimacy of the closeout buyer. REAL companies, established brands that you know. Not the buyer’s buddy’s company, where his friend is doing him a solid.

Summary

The most important thing to take away from this article is that there can be major consequences to working with a closeout broker. When it comes time to sell your closeouts & excess inventory you want to be working with a closeout buyer that owns and takes possession of his/her goods. Going this route the first time means getting the highest real offer, and it ensures that the purchase order you receive is the real deal, and will lead to the goods being picked up by the closeout buyer.

MAC Wholesale is a closeout buyer. If you’ve got closeout or excess inventory to sell, please contact me today for a prompt take-all offer on your inventory!

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Matt Miller
Matt Miller
As a buyer for closeouts & excess inventory I'm always looking to buy new inventory. If you've got inventory to sell, please introduce yourself! You can reach me directly at (508) 388-9830 or by filling out the contact form on this page.
I look forward to speaking with you and providing you an offer!