Liquidation stock is the stock sold by a company just to cover some dues. This could be explained in the following example. If a company had taken a loan from a lender and then due to the recession problems that is currently occurring in the market, the company is unable to pay the loan installments and they are facing bankruptcy due to this situation. In this case the company is thinking of a way to get out of this pit. The only option they have is to sell some of the stock that they have just to cover the loan. When they do this with a sufficient amount they can evade bankruptcy easily.
There are special wholesalers specialized in buying these stocks from the manufacturers and are responsible of reselling them to smaller wholesalers or retailers. These wholesalers specialize in this kind of merchandise because that they can buy a large amount of it without paying a lot of money to the manufacturer. Also if the liquidation wholesaler is dealing with very large quantities then they are able to get very good bargains from the manufacturers.
When you are interested in entering such field you do not have to have a lot of money. You can skip the step of buying large quantities from the manufacturer and stick to the smaller quantities that you can buy from the liquidation wholesalers. In this way you will make a very good profit as you will have the merchandise in your store with a very low over head cost and you will be able to re sell it again with good prices that make you a good profit and in the same time it is lower than the similar items in the market.