Closeout Liquidators Are About To Experience Hyperinflation. Buckle Up.
According to Wikipedia, hyperinflation is very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase. This causes people to minimize their holdings in that currency as they usually switch to more stable foreign currencies, such as the US dollar. When measured in stable foreign currencies, prices typically remain stable. Hyperinflation will decrease consumers spending power leading to recessionary conditions which typically benefit closeout websites, liquidation buyers and other users that buy overstock merchandise. Liquidation buyers specialize in buying closeouts from small and large companies that may be shutting down their warehouse or downsizing and have a need to sell excess inventory.
Hyperinflation commonly occurs when there is a significant rise in money supply that is not supported by economic growth. Closeout websites and sellers for surplus inventory may benefit under these circumstances because the consumer’s spending power is reduced and they look for closeout and overstock deals. The increase in money supply is often caused by a government printing and injecting more money into the domestic economy or to cover budget deficits. When more money is put into circulation, the real value of the currency decreases and prices rise. Businesses may need to sell excess inventory as a result of slowing sales, and companies that buy overstock and closeouts will benefit. One of the biggest problem with hyperinflation is a vicious cycle – as prices rise, people accumulate more goods, in turn, creating higher demand for goods and further increasing prices. If hyperinflation continues unabated, it nearly always causes economic turmoil.
Closeout distributors, closeout brokers and overstock buyers can grow in both good and bad economic environments. So even with hyperinflation these businesses are somewhat insulated because there will be bankruptcies, companies shutting down warehouses, 3PL warehouses disposing of inventory, and importers that must sell excess inventory. Slow moving products that take up warehouse space cannot be tolerated under high inflation because the cost to store inventory is too high. Closeout websites will flourish as consumers search for deals and other ways to buy overstock and closeout merchandise. Businesses will be faced with what to do with dead stock and liquidation buyers will benefit because of the need to liquidate inventory.
The Federal Reserve controls inflation through monetary policies. The Fed commonly dampens inflation through a contradictory monetary policy – reducing the money supply in the economy. As there is a decrease in the money supply, those with money tend to favor saving money more. This is why closeout websites, closeout merchandise and overstock wholesale buyers can survive during inflationary times. The Fed reduces spending, slows down the economy, and decreases the rate of inflation. Other tools used to implement a contradictory policy include increasing interest rates, boosting the reserve requirements for banks, and directly/indirectly reducing the money supply. Rising interest rates often put pressure on businesses that were already suffering with too much inventory and slowing sales. It costs them more to repay business loans which in turn decreases profits. Excess inventory buyers can be helpful to these businesses with too much inventory on hand. Products that sit in the warehouse take up too much room and cost too much in warehouse costs. Even companies in liquidation can be affected as businesses close 3PL warehouses and liquidate inventory to generate cash.
Merchandise USA buys and sells closeout merchandise and helps companies sell old inventory. We buy liquidation stock for sale, liquidation items and surplus inventory.
