5 Important Facts About Retail Liquidation You Need to Know

01 Feb 2021
5 Important Facts About Retail Liquidation You Need to Know

Every year, sales forecasts predict massive sales and profits, especially around the holidays. Retailers all over the world take inventory, making sure they have enough for when the buying truly begins. This could mean stocking up on existing products or launching new product lines to entice buyers. However, the aftermath of stockpiling products can mean excess stock. Not only does this lead to losses with unsold inventory sitting on the shelves, but also, these items take up valuable space in warehouses and stores. Managing these items and keeping track of them can become a headache, leading to a chaotic, disorganized inventory.

This is where retail liquidation comes in: at Michaels Global Trading, we work with manufacturers, wholesalers, and retailers to maximise the recovery value of excess, obsolete, or underperforming merchandise and inventory. Not only is liquidation an obvious solution to eliminate cost, it is also an effective way to get the job done quickly and efficiently without having to do the difficult work yourself. Before considering it as a viable option for your business, you must first define your needs. For example, is there a short-term cash need, or what are the various distribution channels? First to understand, though, what is retail liquidation? Here are 5 important facts you need to know about retail liquidators and their business:

What Liquidation Really Means

Liquidation refers to the selling of products, inventory, or other assets for less money than they were bought for. It is a viable solution for those with excess assets, with the ability to generate cash quickly. The sold product then gets stored, staged, or resold. Sometimes, the items may be put up for auction, or even disposed of.

Type of Product

The category of extra product or inventory determines your liquidation solution. Closeout merchandise comes in many forms: clothing, toys, makeup, footwear, décor, and many more. Typically, these products are those that are unsellable, and are divided into two categories:

  1. Salvage items. Salvage merchandise is that which has been returned, damaged, or are not for sale. This could be a result of returns made by customers, dissatisfaction in product quality, or minor damages such as small scratches or smudges. Damaged products are usually sellable, depending on the level of damage.
  2. Job outs. This category refers to items that were laid out for buyers, but did not sell. They have been displayed on the retail floor, but have not done well for profits. As such, they are brand new, unused, and in great condition, but are taking up valuable storage space in the warehouse and store. The chance of job outs being damaged is much less than salvage items, and so they can be sold at a higher cost (but still reduced when compared to the cost of buying).

Distribution Channels

Once you determine the type of closeout merchandise you wish to sell, there are several distribution channels available to you to dispose of the assets. For example, retailers can use their normal distribution channels at a reduced price. However, this method utilises manpower and resources to transport and distribute the items, which may not be worth it considering the items are at reduced cost anyway. Another option is to refer to a professional merchandise liquidation company, also known as an off-price buyer. Liquidators will pay immediately and take charge of the assets. They will pick up and transport the items, and are responsible for their sale. This is an effective method of inventory management, and helps you get rid of items quickly and efficiently.

Buying in Bulk

Most closeout sales are bought in bulk. The buyer will buy a sum total of products that is large in number versus just an item or two, as is typically done in retail. The bulk buy may be for assorted items or those all belonging to one category. For example, you could buy 100 T-shirts from many different vendors, but these items would be non-identical, and varying in size, colour, and make, depending on the vendor.

Alternatively, you could buy 100 units of accessories, but these might vary in type, ranging from jewelry to hair ties. The type of item for sale and how they are categorised and bundled is up to the discretion of a closeout dealer. However, as the items are sold in bulk, buyers rarely get to determine what each is, and pick and choose what they would like. There will always be an element of surprise when it comes to selling and buying retail liquidation items, but dealers will provide information on how to determine which bulk bundle is right for you.

Retail Advisory and Liquidations

Liquidation professionals purchase surplus inventory and then apply their own system for storage, staging, and reselling. Branded and damaged merchandise also get liquidated, and the seller gets the best possible resale rates. However, if you’re confused about which distribution channel works best for your unique business needs, it is best to do a quick consultation. Most liquidators will do a free, no obligation consultation to answer your questions or offer a quote. Professionals have the answers that will allow for maximum profit. For example, our team at Michaels Global Trading knows that re-selling is better to raise the most capital possible, while an auction can help get rid of your stock faster. Consulting with liquidators will help you decide which option to choose.

Retail liquidation is an effective and quick solution for clearing stock that you don’t need. Not only does it clear up valuable space in your warehouse or retail store, but it also frees up manpower who are busy organizing and keeping track of excess items. It saves retailers the hassle of organizing an excessive amount of product, as well as trying to resell it for the best price possible. Our team of expert liquidators are equipped to cater to all your needs during the liquidation process, and will help you get the best rate for your items. To find out more about a liquidation solution or get a quote, call Michaels Global Trading at 888-471-5066 or contact us here for more information.

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