Inventory liquidators selling directly to consumers online are giant, hidden competitors. Retailers and manufacturers who supply these liquidators with low-cost overstocks and returns may be unwittingly enabling them to compete against their primary sales channels.
If retailers and manufacturers don’t have the proper contractual restraints in place to prevent their liquidators — and the liquidators’ resellers — from selling directly to consumers online, they’re setting themselves up for significant sales losses and lower margins. In other words, they’re literally enabling these giant, hidden competitors to take market share and margin.
Quality wholesale liquidators “police the market” and have the tools in place to protect their primary retail channel(s). The last thing retailers and manufacturers want is to compete with their own liquidation program. But it’s up to the liquidator to ensure this doesn’t happen. Unfortunately, many retailers and manufacturers use liquidators and online auction platforms without these critical controls in place.
A good wholesale liquidator sells to buyers who will, in turn, resell their product directly to consumers — but not online. They only sell to buyers that resell their wares through local brick-and-mortar stores like thrift stores, flea markets and bodegas. Sometimes these goods are even authorized for resale in out-of-market geographies. Additionally, these quality liquidators vet every buyer and conduct routine audits to ensure compliance and protect their clients’ primary sales channels.
Liquidation, when executed properly, increases value recovery from returns and is a cost-effective way to manage excess inventory. When well-monitored and controlled, this market can be quite profitable for retailers and manufacturers. By keeping products in commerce and out of landfills, liquidation can also help these businesses to operate more sustainably.
Looking for more insider information? Our liquidators e-book provides additional tips and best practices for managing returns and inventory overruns without jeopardizing your primary sales channel.
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