Getting Started with Costco Auctions

Here’s how to set yourself up for success in liquidation reselling.

1. Get your resale permit:
   This is your golden ticket. It lets you buy wholesale without paying sales tax upfront. Apply in the state where your inventory will be shipped—it can take a week or two to process.

2. Understand sales tax rules:
   Marketplaces like eBay, Poshmark, and Mercari collect sales tax on your behalf. But if you sell directly (through your website, for example), you’re responsible for collecting and remitting it. If you sell to other resellers, get their permit number, and no tax is required.

3. Apply for access to liquidation platforms:
   Head to bstock.com/Costco (or other vendors like Target, Best Buy, and D*** Sporting Goods). Apply with your resale permit, EIN (or SSN if you’re a sole proprietor), and shipping details. Approval is often instant.

4. Explore inventory:
   Once approved, start browsing auctions. You won’t see full details until you’re registered, but familiarize yourself with categories, pricing, and bidding trends.

5. Location matters:
   Shipping costs can eat your profits. Buy from a distribution center close to you. Auctions list item locations—use filters to find inventory near your state or city.

6. Know the product conditions:
   Auctions list items as A (like new), B, C (mixed), or D (damaged). Each condition impacts resale value—learn the differences.

7. Understand shipping logistics:

   • Small items may include free shipping.
   • LTL (Less Than Truckload) means delivery via a smaller truck, often to a residence or storage unit.
   • Full truckloads require a commercial location with a forklift or loading dock.

8. Stay ahead of the market:
   Auctions run multiple times a week, with inventory surging during peak return seasons (like post-holidays). Timing is everything.

Get your permit. Get approved. Start studying the market. This isn’t about quick flips—it’s about strategy. Those who learn the systems win.

Auction Fundamentals for Success

In the world of liquidation buying, understanding the fundamentals is crucial to success, no matter who you're buying from.

Here is a breakdown of auction fundamentals, especially in the context of liquidation buying. It covers the key aspects that can make or break a deal, from research and pricing to shipping costs and understanding item conditions.

1. Know Your Resale Price Before Buying – The retail price isn't what matters; it's the price you can actually sell at. Always ensure you know the resale value of the items before you bid, and make decisions based on data rather than excitement.
2. Math Over Emotions – Auctions are designed to get you bidding, but success comes from calculating profit margins, not getting caught up in the excitement.The key to making profitable purchases lies in being strategic and using math over emotions.
3. Understand Shipping Costs – To achieve profitability, research is vital—never buy without knowing the market value of each item. Use tools like eBay's sold listings to see what similar items are actually selling for. Understanding shipping costs is equally important, as it can significantly affect your overall investment, especially with large items, shipping can eat into profits fast.
4. Always Use a Manifest – One crucial rule is to never buy a liquidation lot without a manifest. If you don’t have a manifest, you have no recourse if something is missing or different than expected. The manifest lists every item you're purchasing and serves as your receipt if any items are missing or damaged. Without it, you're vulnerable and have no recourse.
5. Consider Item Size & Storage – When it comes to the type of items you buy, small, easy-to-store items like jewelry, handbags, and health products often provide better profit margins, especially if space is limited. Small, high-value items are easier to manage, but some people can leverage large items if they have the space and equipment. On the flip side, if you have the capacity to handle larger items, like furniture or appliances, this could give you an edge.
6. Unfair Advantage – In every area of the business, solving problems will make you money. Whether it's dealing with shipping challenges or product issues, having the ability to resolve these problems can lead to long-term success. Everyone has a unique advantage, whether it's storage space, industry connections, or specialized knowledge. And remember, in auction and liquidation buying, success is built over time through experimentation, calculated risks, and continual learning. Mistakes are inevitable, but they're also the best way to gain knowledge.

Understanding Product Conditions at Costco

When it comes to buying products from Costco,  knowing what you’re buying is crucial to making a wise investment, especially when dealing with bulk products from Costco. There are several conditions to consider, each with its own level of risk and reward.

The most common is A/B grade, which often includes returns or unsold items. These products typically offer a good balance of quality and value. These items may be returned merchandise or unsold stock and are often in excellent condition but may lack packaging or have slight wear.While you might find some incredible deals, there’s always the risk of getting something less-than-ideal, and there’s a 5% variance rule with no recourse if it falls within that range.

On the other hand, Grade C/D is a riskier category, often filled with broken or incomplete items. The products from this category should be avoided unless you have a lot of experience and the ability to repair or refurbish items, as these typically come back damaged or incomplete.

There’s also another promising category "like new", where products are nearly new but might have minor damages like labels or wear from handling. Then there’s “new” condition, which ensures items are in original packaging, but you should still check if bundles are complete.

“Mixed condition” is the least recommended as it can be a gamble. These products are highly unpredictable, ranging from brand new to broken or missing parts, and there's no recourse for these sales.This condition is often a source of frustration for those unfamiliar with the products, and for most, it’s safer to avoid as it comes with no guarantees about what you'll receive.

Ultimately, understanding these categories helps guide your purchases. If you're just getting started, focus on A/B grade or "like new" items. If you’re unsure, it’s better to skip mixed or C/D conditions. Patience and understanding of product nuances are key to finding the right deals and avoiding disappointment.Take the time to research, and remember that profit comes from consistent, informed decisions over time. Like anything, start small and grow your expertise with each purchase. Keep your focus on value and avoid getting lost in the allure of immediate deals.

I hope you enjoyed this preview of Costco Unlocked!

Ready to learn more?

Keep scrolling to purchase the full Costco Auctions Unlocked program.

• What You'll Get in Costco Unlocked

  • How to register on the Costco Auction site.

  • Detailed breakdown of each product category - what works and what doesn't.

  • How to buy, what to pay and how to solve problems.

  • Selling Strategies for Success.

  • Scaling and Automation. 

  • Text + Video Lessons.