Helping Your Friend Liquidate a Warehouse Full of Inventory: A Comprehensive Guide

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Your friend finds themselve in a predicament – a warehouse overflowing with closeouts, overstock, and abandoned merchandise.Liquidating this inventory can be daunting, but with the right strategies and a helping hand from you, they can turn this challenge into an opportunity to free up warehouse space, generate cash flow, and move forward. This guide equips you with the knowledge and steps to navigate your friend through a successful warehouse liquidation. It won't be long before they no longer have to deal with dead stock and unwanted merchandise taking up space.

Understanding the Inventory

Before diving into sales tactics, take stock of what you're dealing with. Here's a breakdown of the different types of inventories your friend might have:

  • Closeouts: These are items discontinued by the manufacturer or retailer and often come at a significant discount. Companies have liquidation inventory for various reasons, but closeouts due to package changes, slow sales, not getting on the first page of Amazon or simply dead stock that isn't moving are the most common reasons.
  • Overstock Inventory: Products that haven't sold through regular channels due to miscalculations or changing market trends. Customers are finicky; what sold yesterday may become excess inventory and overstock merchandise today. Selling old inventory is essential to running an efficient business and this is the reason inventory liquidators have been successful buying closeouts and overstock products from importers.
  • Liquidation Stock: Inventory purchased specifically for resale at a discounted price. This is where overstock inventory buyers come into play. These closeout specialists have the ability to buy closeouts in bulk and resell them to liquidation buyers and closeout websites for distribution into a secondary market.
  • Excess Inventory: More stock than can be reasonably sold through regular channels. This is a common overstock problem, especially in today’s competitive sales environment. Let's be honest, not everything sells well so it is important to have product liquidation sales and offload dead inventory that didn't sell. Having closeout merchandise for sale is a common practice. Whether you are downsizing a warehouse and getting rid of inventory, or just keen to clear stock from the warehouse, contacting an inventory liquidator may be your best option to liquidate old merchandise.
  • Abandoned Merchandise: Items left behind by previous tenants or customers. With the large expansion of ecommerce closeouts this is a very common problem. When a business shuts down operations and goes out of business, it often is left with overstock inventory to get rid of. If it is too difficult to sell to a liquidation buyer, the company might simply abandon the inventory and leave it behind in the warehouse. This merchandise then becomes property of the warehouse owner to sell. This is the only way the warehouse can try to recoup some of the money owed to them for storage of the inventory.

Categorize and Assess:

  • Condition: Is the inventory new, used, or damaged? Damaged items might require a different sales approach. Generally speaking, inventory liquidators only buy brand new merchandise. They are looking for name brand closeouts and overstock housewares, closeout lawn and garden products, overstock inventory of pet products, discontinued or slow-moving children’s toys, etc. Surplus wholesale suppliers buy all categories of merchandise from importers of general merchandise to specialty companies.
  • Seasonality: Are there seasonal items that might be more marketable at specific times of the year? Any business that sells seasonal goods has to deal with overstock and closeout products leftover from the prior season. The question is whether it is better to liquidate old inventory and get rid of it, or keep it for the following year. This depends on whether you are bringing in new goods with new designs or selling the same thing year to year. If the designs or styles will change, there is no point in hanging onto the inventory. In this case, the best option is to find an inventory liquidator or other company that buys closeouts and excess inventory and liquidate. Keep in mind it may be better to offload the entire stock now than have it sit in the warehouse taking up space you need for new products. We all have the space issue and it is an everyday problem. Whether you need to room for new merchandise arriving, or your lease is coming due and you have to get out of the warehouse, or you are moving and downsizing warehouses. Whatever the reason, you still have to offload the inventory and get rid of it.
  • Salvaging Potential: Can some items be repaired or repackaged to increase their value? The short answer is “sometimes”. There is a difference between salvage and closeouts or overstock merchandise. Salvage products are often problem inventory with damages that are not easy to sell. Abandoned inventory or closeouts is simply dead stock that isn't selling anymore. It is much easier to offload overstock products when they are in perfect condition. Also, keep in mind with closeouts, you will sell them to an inventory liquidation buyer much faster if they are in color retail packages with UPC codes. It is becoming more and more difficult to offload bulk closeouts that don't have good ready for retail packaging. This often happens with ecommerce overstock that was sold direct to consumer through online sales.
  • Demand: Research similar products online to gauge current market interest. Most closeout buyers and inventory liquidators are going to compare your overstock merchandise to what is selling online. First, they are going to look for the exact same product to see how much it is selling for, compared to your liquidation price. They may find the same product on closeout websites or liquidation websites. If they don't find the same product, they will look at the value for similar products. Keep in mind, when talking to liquidation companies and other closeout buyers you must be priced below regular online retail.

Developing a Liquidation Strategy

With a clear understanding of the inventory, you can build a targeted liquidation strategy. Here are some key options to consider:

Direct Sales:

  • Liquidation Sale: Host a physical sale at the warehouse, offering deep discounts to attract bargain hunters. This is a good option for large quantities of mixed merchandise. In effect, this is similar to having an auction. It is an effective way to liquidate inventory and clean stock from your warehouse. You can invite closeout buyers, bulk inventory liquidators, regular customers, etc.
  • Online Marketplaces: Platforms like eBay, Facebook Marketplace, or specialized liquidation websites can reach a wider audience but require managing listings and shipping. Closeout websites have increased in popularity since the pandemic, and many bargain shoppers look to the internet for closeouts, excess inventory sales, Amazon liquidations, and other bulk overstock sales at discounted prices.

Wholesale Liquidators:

They specialize in buying large quantities of discounted merchandise for resale. This option offers a quick sale at a lower profit margin. If you are looking to offload your closeouts and don't know where to find buyers, a simple Google search online using these terms will help you: closeouts, shutting down warehouse, going out of business, overstock inventory for sale, selling excess stock, overstock items for sale, offloading bulk inventory, keen to clear stock from warehouse.

  • Donations: Donating to charities can provide tax benefits and improve your friend's brand image. However, ensure the items are in good condition and align with the chosen charity's needs. While it is always better to offload inventory as a bulk sale, donation may also be an option. When you donate, you don't realize and cash benefit but you may get a tax benefit. However, if you need cash to help run your business, you will want to make a sale. Getting rid of old inventory and dead stock can be challenging because it is often discontinued inventory or closeouts that is no longer in high demand. Other times there is nothing wrong with the inventory and it is only available because a business is downsizing its warehouse or moving to a smaller warehouse and downsizing. Sometimes a business has items stranded in a warehouse because the shipment arrived late or the company was bought out and there is excess inventory left over.
  • Manufacturer Buybacks: Negotiate with the original manufacturer to repurchase closeout items, especially if there's a strong existing relationship. Buybacks don't seem to be as common as they used to, but it is an option for getting rid of closeouts and overstock products. It is also possible a business may buy back your inventory from their competitor in order to replace it with their line. In other words, if you are willing to give all your business to a new vendor they may buy your old inventory from you. Then, they would approach closeout buyers and inventory liquidators, salvage the overstocked goods to them, and liquidate the warehouse this way.
  • Online Auctions: Platforms like Liquidity Services or Ritchie Bros. can be used to sell larger quantities or specialized equipment to a targeted audience.

Choosing the Right Method

The ideal approach depends on several factors, including:

  • Inventory Type: Specialized items might fare better in online marketplaces catering to niche audiences. Name brand closeouts and popular products are better for inventory liquidation sales than generic lines. Specialty items can be more difficult to sell as well. Keep in mind, closeout liquidators want overstock pet products, excess inventory of lawn and garden items, everyday liquidation stock of toys, games and party goods. You will probably have an easier time offloading excess inventory of pet leashes and pet beds than specialty items.
  • Time Constraints: Direct sales like liquidation events can move inventory quickly, while online options may take longer. Selling closeouts to inventory liquidators is easy if you have good products. Dead stock and unwanted products that don't have retail packaging can take longer to get rid of.
  • Profit Expectations: Liquidation companies offer a faster turnaround but at a lower margin. Direct sales require more effort but potentially higher profits. If you are getting rid of merchandise and offloading closeouts, the expectation is for an inventory liquidator to pay less than original cost. These companies can only get rid of the inventory if the prices are low enough to entice discount buyers and closeout distributors.

Preparing for the Sale

Once you have a strategy, it's time to get organized:

  • Inventory Management: Create a detailed list of all items, categorizing them by type, condition, and quantity. This helps with pricing, marketing, and tracking sales. Make a list of your closeouts you want to offload, include pictures, quantities, regular price and liquidation offers. Keep in mind you have to make it an attractive offer because inventory liquidators can only buy goods that are no longer in your catalog or not selling, if they are cheap enough. Companies that need to move goods whether closing down operations or just need to empty out the warehouse for other reasons should contact inventory liquidators and closeout buyers for the fastest results.
  • Pricing Strategy: Research similar products online and competitor liquidation sales to determine fair and competitive pricing. Consider closeout offerings with tiered discounts for bulk overstock purchases.
  • Marketing and Promotion: Advertise the sale online through social media, local classifieds, and liquidation websites. Create flyers and signage for physical sales for closeout websites and inventory liquidators that will allow them to help you promote a warehouse sale and merchandise for offloading. Liquidating a warehouse full of inventory can be a complex task, but with careful planning and execution.

Merchandise USA is an inventory liquidator specializing in buying closeout products, overstock merchandise, excess inventory, abandoned inventory and other unwanted products. We are interested in closeout toys and games, closeout pet products, overstock lawn and garden inventory, excess inventory of tools and hardware, etc. If you are shutting down your business, downsizing warehouses, moving warehouses, keen to move stock from the warehouse or just have unwanted inventory to dispose of, we can help you.