When looking to sell liquidation assets or turn overstock, surplus, or obsolete merchandise into cash, there are a few liquidation options available to you, including whole lot purchases and auctions. Knowing the difference between these two types of sales can help you make the right decision for disposing your company assets depending on your needs.
Whole Lot Purchase
For manufacturers and large retailers, holding onto excess or obsolete inventory can be costly because the items continue to depreciate with age, they tie up capital, and they take up valuable space in the warehouse. If they want to relocate or close their business, they may also want to get rid of business assets such as equipment and property.
Usually, businesses can raise quick capital by selling their inventory and assets in bulk through negotiated transactions with select buyers. If there is only one buyer, then the liquidation process is considered a whole lot purchase.
The buyer may be a business or reseller, and will purchase everything that you’re selling in one fell swoop. More than one buyer may be involved when selling different things, like inventory, equipment, and property.
Usually, the dealers do not appraise the assets item by item. Instead, they do a mental appraisal of the entire lot while taking into consideration the cost for storing, advertising, and possibly re-packing and distributing. They also must take into account the fact that some of those items will take very long to sell, or won’t sell at all.
If you can’t agree on the price, you will need to find another dealer willing to purchase the entire lot. This will likely take more time, more negotiations, and more money due to the cost of storage and security.
By making bulk purchases, the buyer/dealer enjoys huge discounts in exchange for giving the seller quick cash and saving them from the hassle of advertising and finding different buyers who can purchase the entire lot. The buyer can then break the lot apart, repack the items, and redistribute them in smaller lots to smaller resellers and retailers.
Auctions take place very fast. You simply contact the auction house and give them the freedom to dispose your assets to the highest bidder. If bidding takes place online, you can attract buyers from all over the world, which can increase competition and drive prices up. Otherwise, you may end up selling your assets at a very low price.
Both options are great for recovering assets, but whole lot purchases work best when looking to sell liquidation assets of a more specialized or unique nature. There are usually limited buyers or dealers for such equipment. So you may need to keep your assets in storage to give yourself enough time to track down the buyers and arrive at a fair value. Auctions, on the other hand, are recommended when you want to raise some fast capital with little regard of the selling price.