An economic downturn provides great benefits in terms of the availability of merchandise at rock bottom prices, resulting from the liquidation of wholesaler’s and retailer’s stock as they suffer from the economic condition.
This provides other businesses with a great opportunity to source their stock at the lowest possible prices. Some business owners feel guilty about exploiting other business owners who are battling, but remember that they have to clear their stock in order to pay their debts and solve their business crises. One is merely using the system to maximize one’s success in business; there is nothing wrong with that. In fact one is doing the business under liquidation a good turn.
Benefits of Buying Liquidation Merchandise and Closeouts
It is clear that one would benefit to varying degrees in such a scenario. It usually happens that a wholesaler or retailer is prepared to negotiate prices up front whilst at other times the stock would be up for auction. The route of auctioning the stock is often taken when a wholesaler or retailer is being legally liquidated due to having been declared insolvent or bankrupt.
Purchasing the liquidated merchandise at an auction is usually the best possible option as it will be available at the lowest possible prices. Whether one wants to wait for the auction date before making an offer on the stock is another matter. This may not turn out beneficial at all, especially if the business being liquidated is willing to negotiate prices beforehand. It depends on a couple of factors.
Being aware of how urgently one needs the stock and the lead time required until delivery can take place is very important. Another strong determining factor is the demand in the market for these goods, at the prices which one would be able to offer them. If demand is low or relatively low I strongly suggest reconsidering the need to purchase the stock. Another important factor is one’s available storage space and whether one would need to rent or buy more storage space, thus increasing the cost of acquiring the merchandise.
Finally, the question would arise as to whether one has calculated the full cost of acquiring the goods correctly; including the delivery cost, storage cost, distribution cost, handling cost and the cost to actually procure the goods.
One should remember that gaining the full or maximum benefit can only be achieved with in depth planning and due consideration of all possible scenarios in acquiring the benefit. Caution must be taken in this regard; rushing into a deal without comprehensively taking everything into account, including the correct quantity required, meeting quality standards, the price, storage, and the other determining factors stated above, could lead to a critical business error.
As long as the business owner, manager and the procurement manager keep their wits about them and perform this function as they should, great business benefits can be achieved. Here are some of the reasons why these opportunities arise:
- Certain manufacturers have over sourced raw materials or have under budgeted their costs, expecting to be able to meet budgetary constraints, thus over committing their business’ financial resources.
- Wholesalers who purchase from manufacturers and distributors suffer the same fate in terms of their budgeted purchases and expenditure.
- Certain retailers experience the same causes for failure.
- Certain wholesalers and/or retailers have to clear redundant or oversupplied stock from their outlets.
- Wholesalers and retailers are declared insolvent and their stock must be liquidated according to a court order.
- A wholesaler or retailer may simply decide to close his business due to various reasons. Look out for these opportunities; they arise ever so often.
Finding Liquidation and Closeout Opportunities
In order to benefit from liquidations one has to monitor the market, read newspapers, periodicals, business newsletters, court rolls, and keep in touch with leaders in the relevant industries. Websites are rising up at present which offer liquidation notifications and services. As part of their services they offer
to source liquidation merchandise for one, arrange the delivery there-of, deal with all import & export procedures and close the deal off on one’s behalf.
Be cautious when dealing with liquidation agents. Do the necessary research to establish the reputation and reliance of the agents before making the decision.
From my experience, it is usually better to do it in one’s own capacity, otherwise one needs to take responsibility for other peoples errors and shortcomings.
There are numerous benefits from sourcing liquidation merchandise but, as in all functions within a business, due caution and diligence is good policy.
Read the following articles:
- How to Find Products to Sell
- Are You Choosing the Wrong Products to Sell?
- Sourcing and Manufacturing Your Products Abroad: How to Use Alibaba.com
- How to Find Suppliers for Your Business
- Where to Find Suppliers for Your Business
Recommended Books on Liquidation Merchandise:
- Government Auctions and Surplus Liquidation: Deeply Discounted Merchandise, Cars, and Real Estate
- USA Based Wholesale Directory 2013: Over 750 USA Based Wholesale Soures
- How and Where to Locate the Merchandise to Sell on eBay: Insider Information You Need to Know from the Experts Who Do It Every Day
- The Private Citizen’s Guide To Government Sales: Buy New, Seized, and Surplus Merchandise And Real Estate From The Government For Pennies On The Dollar
- What to Sell on eBay and Where to Get It: The Definitive Guide to Product Sourcing for eBay and Beyond
Original Publication Date: November 9, 2009
About the Author
Category: Open a Business