Posted by Alex Jackson on 6th Apr 2018
Are you a private label seller getting your goods manufactured and imported directly from China? If so, you may have had quite a few restless nights recently with the news on potential tariffs. There has been a lot of talk of a looming trade war in the past few weeks with China and its possible implications. The war has not yet begun and could still be averted but things remain far from clear. The potential tariffs are far-ranging covering over 1300 exports from China, these goods include everything from commodities like steel to medical equipment, pharmaceuticals, and electronic components. This list of goods to face the new tariffs is still fluid and could grow to include more consumer goods left out of the initial draft. How this will affect the economy is a question without a simple answer. Businesses will adapt as they always do. They will find new suppliers for these goods and make changes to their supply chains, the question remains at what cost?
This can be an uncomfortable position for any business relying too heavily on goods manufactured and imported from countries, we are currently at odds with China. So who’s not losing sleep right now over a looming trade war? Domestic producers of similar goods stand to benefit greatly and virtually any business with a diversified portfolio of goods and suppliers.
So how does this affect my business? Well if your selling liquidated goods you can actually
turn this uncertainty into a big advantage for your business. You already know the basic advantages of liquidation merchandise like price points, quality, and selection. For those with a few years under their belts, they also know how selling liquidation merchandise is also recession proof, after all, people still shop in an economic downturn they are just a bit more selective when it comes to price points. What you may not realize is that liquidation merchandise is also a safe port in the midst of a trade war storm.
Retailers who specialize in liquidated goods are not only insulated from the potential negative effects of a trade war and tariffs but can actually benefit. Liquidated goods are essentially immune from tariffs effects because these goods are in the late stages of their lifecycle. The goods are already manufactured and in the country, tariffs would simply not apply at this stage. Sales of these goods stand to benefit for the exact same reasons. An item produced and imported after these tariffs take effect could be significantly more expensive to produce and import. Manufacturers with higher production or raw material costs will simply pass them along to the consumer in the form of higher prices, making your goods all the more attractive to the end consumer. It’s a win-win scenario your cost of goods remains the same and you gain a competitive advantage. The most successful entrepreneurs understand that any bad situation can be turned to their advantage if the problem is carefully viewed from just the right angle.