The Risks In Merchandise Liquidation Sale Through Auctions

Almost every business accumulates surplus inventory that is no longer performing in the market

. For some time now the most common method of disposing such excess inventories was via an auction-like merchandise liquidation sale. Liquidation auctions are no longer the preferred method of selling redundant stock for most manufacturers, wholesalers and retailers. This is mainly because the risks involved usually surpass any possible benefits.

The first drawback of merchandise liquidation sale in auctions to dispose surplus inventory is delay. To organize for an auction successfully, especially online, takes time effort and financial commitment. It usually takes time to get the entire inventory disposed and there is still no guarantee that all of it will be disposed off during the action. Liquidating companies are preferable since they are speedy and more reliable. Once they evaluate your inventory, they instantly pay in cash and without delays. The time-consuming demands of auctions are the reasons why most companies only conduct a single auction in a year, after accumulating a lot of expenses in storage, insurance, maintenance and security for the non-performing inventory.

A merchandise liquidation sale via online auctions also demands that you forfeit the control of the merchandise brand image and sales channels. Consequently, bidders at the merchandise liquidation sale become your potential competition, not just for the surplus merchandise but also for your regular business merchandise. In most cases auctions jeopardize the demand and integrity of your brand since a liquidation auction robs you of any control over the merchandise at all. The subsequent negative impact becomes lasting on your brand image and sales channels.

Organizing for an auction merchandise liquidation sale, as already noted, involves additional costs at a time when you have already undergone a loss due to stocking non-moving merchandise. Liquidation auctions involve a middleman effect whose percentage fee is billed to you besides other expenses. Liquidating companies are better off since they pay cash for your merchandise and market it on their own without any expenditure on your part.

Liquidation companies also do not delay in putting off your surplus merchandise since the merchandise liquidation sale is a one-time transaction. The surplus inventory is then distributed via protected channels that protect your established structures of normal pricing and brand image. There are no accompanying intermediaries involved and thus no additional expenditure on your part.

by: kathleen

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