Avoid These Mistakes When Liquidating Closeouts.
Liquidating inventory to closeout brokers is a pretty simple thing to do. Too much inventory that you need to clear from your warehouse, too little cash flow, too little warehouse space. Move inventory, create cash flow, make room in your warehouse by getting rid of closeouts. Sounds simple, right? In theory it is, but in my years of being in a business where all we do is buy excess inventory, I see people make the same mistakes again and again. Here are just some of the liquidation problems:
1. Letting too much time go by. Closeout merchandise seems to have a lifespan that doesn’t last forever. Companies that buy excess inventory cannot use merchandise once the packaging looks old or the product has become obsolete. It is best to clear inventory from the warehouse while the opportunity is very good at the beginning, then pretty good for awhile, but after too much time closeouts and excess inventory can lose some of their appeal.It loses it's freshness because the packaging becomes outdated or discolored, or the product itself simply no longer fits into the marketplace the way it once did. Closeout brokers and surplus inventory buyers can help if you are shutting down a warehouse or disposing of dead stock. But keep in mind these companies that purchase closeouts have to get the inventory while it still has some value.
2. Only accepting the highest price. When you are selling closeouts and unwanted inventory you no longer want or need, the main goal is to empty out the warehouse and make room for new merchandise. This means you will take a loss to get rid of unwanted inventory and the closeout brokers or overstock buyers will make a profit on it. Let's say you used to import containers of toys, but today you have shifted your business and want to get rid of the old stock. You have truckloads of old inventory of toys sitting dormant, taking up expensive space in your 3PL warehouse. Isn’t it better to clear inventory from the warehouse even if you are losing money? Especially if it will allow you to concentrate on new brands and new merchandise? Your business may even be suffering because you don't have enough room to properly expand. Get rid of the old liquidation items for whatever you can get; before you know it you will makeup the losses from your new products. Don't lose an inventory liquidation sale because you want to wait for an excess inventory buyer who may be willing to pay a little more. It isn't worth it.
3. Choosing the wrong closeout liquidator. Sometimes I hear from sellers that they were promised something (special terms, great closeout offer, fast pickups, etc) from their buyer, but days, weeks and even months go by and then nothing happens and the closeout deal falls apart. In this business, and in today's fast paced environment, you don’t have to put up with this. If you are dealing with a closeout broker who is promising a deal but you aren't getting your P.O. or money, it's because there is no deal. Be sure to only do business with a reputable overstock buyer that knows how to liquidate excess inventory. If you are getting a lot of excuses, it is possible you are working with closeout brokers who are making promises they cannot keep. Companies that buy excess inventory should be able to make you an offer for your merchandise, explain terms and payment policies, and arrange pickup all within 1-2 weeks. If things begin dragging on longer that this, you may have a problem. Liquidation stock does not have to be an albatross around your neck and it should be relatively easy to get rid of unwanted inventory. The best way to keep your inventory low is to regularly and routinely assess your products for slow moving inventory or dead stock that isn’t selling at all. Once you identify these products you can begin making efforts to mark them as closeouts and get rid of them, offer them to some overstock inventory buyers, move them to 3PL warehouses where you can store them, or even consider donating them to clear out the warehouse.
If you wait too long and the inventory grows to where it is a large financial drain on your company, there is a chance it can put you in a position where you need to liquidate your business, shut down your 3PL warehouse, or even have your inventory taken over by the bank. None of this is necessary if you keep you eye on unwanted inventory and get rid of it as you go. You can always have a warehouse liquidation sale open to the public, or you can put your closeouts on closeout websites. Excess inventory sales are a part of every business, and a normal part of the distribution process.
Merchandise USA can help you with the closeout process because we have been liquidating inventory for more than 35 years. We buy overstock closeouts, unwanted inventory, surplus merchandise and all other merchandise you may want to get out of the warehouse.
