Liquidation 2.0: The Benefits of Buying Straight from the Source

LiquidationBy Eric Moriarty

Historically, large retailers and manufacturers have relied on one or two liquidators for dealing with their returned and excess merchandise. Over the past few years however, a shift has taken place: many organizations are bypassing traditional liquidation methods and incorporating technology-based programs for obsolete inventory into their overall business strategy, or as we like to call it, “Liquidation 2.0.” This includes launching customized B2B online auction marketplaces that connect returned and excess merchandise directly to business buyers. EBay makes a great analogy: the web-based platform allows people to buy and sell products directly to one another via a transparent process. These B2B online auction marketplaces serve the same purpose, but provide a direct sales channel between businesses. The result is a level playing field for all business buyers, big and small, to compete for the inventory – no more middlemen preventing you from getting a fair shot at it.

If you are an independent retailer who purchases customer returns and other excess inventory from a third party liquidator, or perhaps you are thinking about it, there has never been a better opportunity for you to remove the middleman and purchase directly from the source. Consider the following benefits:

No price mark ups

In order for a liquidator to make money, they need to buy the merchandise low and sell it high. This can result in substantial price mark ups before you ever have access to the inventory. By purchasing directly from the source you are buying from someone that wants to move the inventory as quickly as possible and simply get the fair market price buyers are willing to pay. In addition, when buying directly from the source the merchandise is shipped only once, from retailer to you — eliminating the retailer to liquidator shipment. This is a direct cost savings that no longer needs to be recouped by a price increase. This savings translates into better profit margins that flow directly to your bottom line.

Better margins are particularly evident when you purchase directly from the retailer’s B2B online liquidation marketplace: a competitive and transparent auction platform means you’ll never pay more than you want.

No product poaching

Oftentimes liquidators will comb through the inventory they purchase directly from retailers, pull out the best products for themselves, and then sell the rest to you. Those liquidators then sell the prime products at retail themselves, capturing margin that would otherwise go to you. Bypassing the middleman means that you’ll have fair access to non-pilfered bulk quantities of merchandise, across all condition codes, including new. You’ll also be able to capture margin that may have been currently unavailable to you.

Enjoy a direct relationship with the retailer

Cutting out the middleman will allow you to establish a direct relationship with the retailer, something that historically has been tough for small to mid-size businesses. Leveraging a retailer’s B2B liquidation marketplace is an ongoing way that many small business buyers are purchasing excess and customer-returned inventory directly from the source.

Transparent negotiation via an online liquidation platform

Sourcing product from a traditional liquidator can often mean hours of back and forth negotiation with no visibility into competing offers for the merchandise. Purchasing directly from the retailer’s online B2B liquidation marketplace enables a level playing field and transparent platform for all buyers to compete for the inventory.

Regardless of whom you are buying from or what sales channel you’re using, it always pays to be detail oriented, especially when sourcing on the secondary market. Here are some best practices to take into account:

Understand what you are purchasing: make sure you have as much available detail on the product(s) as possible before you buy, including a thorough description, actual image(s) of the inventory, shipping dimensions and costs, condition codes and technical information, if applicable.

Know your condition codes: products sold on the secondary market can range from brand new in box to salvage condition. Be sure to familiarize yourself with each condition category and understand as much as possible about the condition of each item in the lot.

Have access to a constant supply of product: it’s important to have enough product to satisfy the needs of your customers. Having access to multiple retailers’ B2B online auction marketplaces will allow you to continuously increase your breadth and depth of supply. This is especially important for inventory planning and management.

Do your research: a credible seller will provide thorough product descriptions, images, accurate condition codes, quality customer service and, most importantly, visibility into the terms of purchase.

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Given the number of retailers and manufacturers jumping on board the Liquidation 2.0 bandwagon and launching their own B2B liquidation marketplaces, there has never been a better opportunity for independent retailers to eliminate the middleman and purchase returned and excess inventory straight from the source. Combine the direct access with a little secondary market know-how and you can be well on your way to reaping the benefits.