What Are Liquidation Auctions and How Can They Benefit Your Business?

Why is excess merchandise bad for business?  Isn’t it a chance to make more sales and money?  This is an optimistic view to take, but unfortunately, overstock is not a money-maker.  In fact, how a business manages inventory can mean the difference between success and failure.  Ideally, a business orders only what it can sell, keeping inventory tight.  However, no one is perfect, and it is hard to predict spending habits a hundred percent of the time.  This is why liquidation auctions are tremendously useful for businesses.

Ted Hurlbut, a merchandise and inventory management consultant, says that having excessive surplus “will hammer margins and profits.  Many products become obsolete after a season.  They [retailers] have to get rid of merchandise in a timely manner.  They also need the cash by year-end because they have to pay their suppliers and creditors for next season’s merchandise.”

Traditionally, stores have held sales to move this older merchandise.  They offered steep discounts (which are great for consumers but not so good for business owners) in order to clear the merchandise out.  This is still very common.  Another option is to return merchandise to the manufacturer or distributor at a loss.  Both options substantially affect the business’s ability to make a profit. Another solution that has become quite popular of late is the online auction.  What is the advantage of this for your business?

You are able to move older merchandise at less of a discount.  If you had to offer a seventy-five percent off sale in your store to even get consumers interested, you are making little to no profit.  Online, you have a much broader market.  You can still offer a substantial discount to consumers but one that helps you recoup as much of your original investment as possible.

-Auctions clear out your storage room.  Besides taking up space where your new merchandise should be, overstock increases the likelihood that items will be damaged or stolen.  Moving it means profits and room for new inventory.

-Auction sites are tremendously popular: billions of dollars are spent annually on these sites as consumers turn more to the internet for commerce.  Especially in rough economic times, people are looking for deals and bargains, which auctions give them.

-There is a market for everything.  People bid on vehicles, furniture, jewelry, electronics, clothing, real estate, art, and much more.  This provides a much broader customer base, which can translate into more sales.

-It is easy to incorporate this function into your existing business model.

-You don’t have to be an “auction site” per se, but can instead open featured items for bid.  You can even modify your existing site to include auction functioning.

The benefits of online liquidation auctions are many, but perhaps the most important reason why it will benefit your business is because it is where consumers are.  When you can offer what your customers want, both products and the shopping process itself, you can turn surplus into cash.

Online liquidation auctions help business owners sell overstocked items