A look at why the US discount and liquidation channel is worth a Chinese factory's attention, with the honest numbers behind it.
The US "discount and liquidation" channel is the network of buyers who buy goods at below-retail prices and resell them to consumers at a discount. It includes:
These buyers move billions of dollars of product per year. The discount channel is one of the largest consumer-goods markets in the world by units shipped.
Three reasons this channel is real and worth pursuing.
Selling to Walmart or Target typically requires: - 6-18 months of qualifying - EDI integration with the buyer's systems - Vendor compliance audits (factory, social, environmental) - Minimum order quantities in the 5,000-50,000+ unit range - Net 60-90 payment terms
A closeout buyer or off-price sourcing desk will: - Buy in the 500-5,000 unit range - Wire/ACH within 14-30 days - Work with first-time exporters if the goods are right - Source via independent agents and consolidators
The barrier to entry is lower. The volume ceiling is lower too - but the path to it is faster.
If your factory currently makes commodity product for big-box retail under private label, you have a problem: the buyer's margin comes from paying you as little as possible. A closeout buyer is buying excess, discontinued, or overstock inventory - and they pay for the value of what's in the box, not the brand on it. Your same factory can supply closeout buyers and capture more margin per unit.
A single shipment to a US closeout broker often gets re-sold into: - LATAM (Mexico, Central America, Caribbean) - Eastern Europe (via transshipment) - Africa (via secondary wholesale) - MENA (via re-exporters in Dubai)
The US closeout channel is a gateway to international secondary markets without managing multiple international sales relationships.
Per public market data (these are widely cited figures - verify with the buyers' own annual reports before quoting):
| Buyer | Parent / brand | Approximate annual revenue | Notes |
|---|---|---|---|
| TJX Companies | n/a (parent) | ~$55B (FY2024) | Largest off-price retailer |
| Ross Stores | n/a | ~$21B | Off-price apparel + home |
| Burlington Stores | n/a | ~$10B | Off-price apparel + home |
| Dollar Tree | n/a | ~$30B (FY2024) | Discount variety |
| Dollar General | n/a | ~$40B | Rural discount |
| Five Below | n/a | ~$3.5B | Teen/tween discount |
| HomeGoods (TJX) | TJX | (TJX divisional) | Home segment of TJX |
| HomeSense (TJX) | TJX | (TJX divisional) | Home segment of TJX |
| Grocery Outlet | n/a | ~$4B | Discount grocery/home |
| Big Lots (pre-2024) | n/a | ~$5B (last full year) | Note: Big Lots filed Chapter 11 in Sep 2024 |
TJX alone buys roughly $20B of merchandise per year. Much of this comes from overseas - China is a major source. A Chinese factory selling to a TJX vendor or agent reaches the entire TJX family of stores (TJ Maxx, Marshalls, HomeGoods, HomeSense, Sierra, Winners).
Note on Big Lots: Big Lots filed Chapter 11 in September 2024. Their inventory was liquidated through a Hilco/Gordon Brothers process. A Chinese factory that had Big Lots as a customer lost that channel overnight. This is a real risk of working with any single discount buyer. Diversification matters.
Honest framing - what the discount channel is not:
The channel works because the goods you sell are not your main brand. Discount buyers want closeout, overstock, B-grade, end-of-line, discontinued, or factory-second inventory. If you sell your main-line branded product into this channel, you may damage your main brand's pricing and positioning.
The discount channel is segmented. A few rules of thumb:
| Buyer type | What they buy |
|---|---|
| TJX / Ross / Burlington | Branded apparel, accessories, giftware, home décor at off-price |
| HomeGoods / HomeSense | Home décor, accent furniture, rugs, lighting, kitchenware |
| Dollar Tree | Variety goods $1-$5 price point |
| Dollar General | Rural discount, household basics, food-adjacent home |
| Five Below | Trendy teen/tween, mostly under $5 |
| Closeout brokers | Whatever's available - they buy from factories and resell |
| Thrift chains | Mostly donated goods, not factory-direct |
| B-stock / salvage | Customer returns, shelf pulls, salvage lots |
For a Chinese factory with home goods: HomeGoods/HomeSense are the highest-volume discount-channel buyer for furniture-adjacent home goods. They buy from overseas agents and consolidators, often in mixed containers.
For a factory with housewares: Dollar Tree, Five Below, and off-price home segments are the relevant buyers.
For a factory with B-grade or overstock: Closeout brokers are the direct buyers - Hilco, Gordon Brothers, Liquidity Services.
Three cost dimensions to think about:
The unit price a discount buyer pays is 30-50% below what the same unit would sell for at retail. So if your factory's normal wholesale price is $10/unit to a regular retailer, the discount buyer pays $5-7/unit. The "discount" in discount channel is real.
Discount buyers often expect: - FOB China (you ship from your factory, they arrange onward) - LCL (less-than-container-load) acceptable for first orders - Mixed containers (multiple SKUs from multiple factories)
This is friendlier to first-time exporters than big-box retail, which often requires full-container minimums and specific routing.
Discount buyers buy by deal, so the time between orders is unpredictable. Plan your factory's capacity for peaks (large closeout deals) and valleys (no orders for months).
The right path depends on your factory's situation:
Each path has different cost structures, timeframes, and risk profiles. The pages linked above walk through them in detail.
Three reasons this channel is real and worth pursuing.
Selling to Walmart or Target typically requires: - 6-18 months of qualifying - EDI integration with the buyer's systems - Vendor compliance audits (factory, social, environmental) - Minimum order quantities in the 5,000-50,000+ unit range - Net 60-90 payment terms
A closeout buyer or off-price sourcing desk will: - Buy in the 500-5,000 unit range - Wire/ACH within 14-30 days - Work with first-time exporters if the goods are right - Source via independent agents and consolidators
The barrier to entry is lower. The volume ceiling is lower too - but the path to it is faster.
If your factory currently makes commodity product for big-box retail under private label, you have a problem: the buyer's margin comes from paying you as little as possible. A closeout buyer is buying excess, discontinued, or overstock inventory - and they pay for the value of what's in the box, not the brand on it. Your same factory can supply closeout buyers and capture more margin per unit.
A single shipment to a US closeout broker often gets re-sold into: - LATAM (Mexico, Central America, Caribbean) - Eastern Europe (via transshipment) - Africa (via secondary wholesale) - MENA (via re-exporters in Dubai)
The US closeout channel is a gateway to international secondary markets without managing multiple international sales relationships.