Surplus Liquidators
A Comprehensive Guide to Selling Your Surplus
Surplus inventory is an inevitable byproduct of dealing with physical merchandise. At some point retailers, distributors, wholesalers, manufacturers, and even commercial offices can end up with inventory they need to liquidate. Often times companies with surplus will try to liquidate their inventory on their own. However, the process is often more complex than anticipated and consumes a lot of resources. Surplus liquidators are hired to sell off surplus inventory and extract the maximum possible value. In this brief guide, we’ll walk you through the ins and outs of selling your surplus and how a surplus liquidator can help.
What is a Surplus Liquidator?
A surplus liquidator is a company that sells surplus inventory on behalf of another company. Different surplus liquidation companies have different approaches to selling off surplus inventory but all surplus liquidators will try to get the most value of surplus assets. There is a direct relationship between time and maximizing value of goods. More often than not, the quicker you need something gone the less you will get for it. If you have more time then a surplus liquidator will have longer to shop around and find a buyer willing to pay top dollar.
Approaches to Surplus Liquidation
Single Buyer Consignment
All surplus items are sold to a single buyer. A surplus liquidator will typically work with the product owner to get final approval on all offers. They also often have lists of buyers and dealers to market consignment inventory to. They will take a commission on the final sale price.
Multiple Buyer Consignment
Product is sold in smaller lots to multiple buyers until the product is sold out. They will typically market to their lists of buyers and dealers and take a commission on the final sale price. With multiple buyer consignment the surplus liquidator usually has more autonomy to accept offers. It is uncommon to have all offers submitted to the product owner for final approval.
Auction
Items are lotted up and marketed for an online or live auction. This can be a time consuming process. Surplus liquidators will charge a percentage of the sale as well as a buyers premium to all buyers. This can result in a cheaper commission but auctions have a higher variance to them. This means they are riskier, and an auction can end much lower than expected.
Outright purchase
A surplus liquidators will purchase surplus inventory outright. This can be a great option if you need to get rid of surplus inventory quickly. Some surplus liquidators do outright purchases but many prefer to operate on a commission only basis. An outright purchase approach will free up valuable space immediately and convert your unwanted surplus into capital.
The Current Surplus Market
In the past decade a handful of surplus markets have emerged from behind the scenes and become main stream. Online marketplaces like BStock and Liquidation.com are becoming household names in the overstock and returns business. The primary users of these surplus liquidation platforms are large retail companies such as Home Depot, Walmart, and Amazon. And for good reason: they have a large volume of consistent returns or seasonal overstock items. These online surplus marketplaces do have a platform solution for companies with smaller amounts of surplus. However, for companies outside the retail space or with a smaller volume of surplus, these marketplaces are little better than eBay or Craigslist. The selling process is quite involved and the buyer pool is interested in buying at a rate of pennies or fractions of pennies on the dollar. Additionally, payment is not made up front, and only released upon delivery of the goods. Depending on the method of freight and location it can be quite a while before a seller sees any money. For companies with a moderate to small amount of surplus (~5000 skids or less), a surplus liquidator will often make a better offer and move more quickly than buyers from an online surplus marketplace.
Considerations When Liquidating Surplus Inventory
Inventory liquidation is one of last steps when trying to sell surplus assets. Here are a few considerations to make before contacting a surplus liquidation company.
To get to most value out of your surplus, you can try selling it yourself. Note that you will incur additional costs in the form of labor, storage, and shipping.
The costs of hanging on to surplus inventory are often higher than immediately apparent.
Surplus liquidators are wholesalers. This means they will be selling your product on to dealers or retailers. Expect surplus liquidators to pay between 5-30% of original price.
Be prepared to sell your surplus inventory below cost.
The longer you have to sell your surplus, the more you will be able to get for it. This is because a surplus liquidator will have more time to market your surplus.
5 Things to Try Before Contacting a Surplus Liquidator
Reduce Prices
If your products aren’t selling it may be that they can be found cheaper elsewhere. Try lowering your prices to beat the competition.
Sell to Your Existing Customers
If you’ve had some big buyers of your product in the past, try contacting them to see if they want to buy more of your stock. This is easier to do with a small number of SKUs. With many SKUs calling up past customers can be a full time job.
Sell Through Online Marketplaces
Amazon, Shopify, and eBay can be great platforms to try and sell off your surplus inventory on your own. If you have a small number of items in can be quite easy to list everything for sale. Keep in mind you will need to perform customer service, pack and ship your orders, and deal with any returns. It is recommended that you read up on the ins and outs of online selling before jumping in with both feet.
Wait For a Better Market
Some items sell better at certain time of the year or under certain market conditions. Depending on what surplus you have, it can make sense to hold onto the product until there is a more favorable buyers market for your inventory. For example, selling Christmas decorations in spring won’t be easy, but if you can hold onto that inventory for 6 months it will become much easier to sell. Keep in mind there is a trade off in storage costs and inventory value if you are considering holding surplus inventory for extended periods of time.
Hire a Specialty Auction Company
Many auctioneers are specialists in a field. If you have a lot of SKUs in a single category of product, an auctioneer may be interested in working with you. They will typically charge you a commission of sales. Auctioneers specialize in liquidating inventory quickly but auctions will rarely get the most value for your products. Keep this in mind when contacting an auction company.
5 Scenarios To Use A Surplus Liquidator
All companies considering the services of a surplus liquidator share one thing in common: they have stuff they need to get rid of. All companies find themselves with surplus assets at one point or another. Here are a 5 examples of different situations in which companies might use a surplus liquidator.
Retailer Overstock
A retailer may have surplus for a variety of reasons. Most often retailers end up with surplus when demand for their product does not meet expectations. Rather than sell through this low demand product, a retailer may want to make room for better selling inventory and use a surplus liquidator to get rid of their surplus.
Order Cancellations
Orders get canceled, it’s part of being in business. A distribution company can end up with a large amount of canceled orders that they now have to keep in inventory. Cancellations are a common occurrence and the inventory from canceled orders can build up over time. A deal with a surplus liquidator would convert those canceled orders back into capital.
Property Owners
A long term lease on a commercial property ends and the tenant may has left without clearing the space. These left behind items need to get cleaned out in order to prepare the space for a new tenant. A surplus liquidator can help clean out the space quickly and even recoup some lost rent.
Corporate Offices
Corporate offices are dynamic and always changing. Between staff changes and office upgrades offices of all sizes end up with varying amounts of surplus. A prime example of corporate surplus is furniture during a move. When a large company moves to a new office space they will often purchase all new furniture and fixtures (the old furniture and fixtures are worn and very expensive to move). Surplus liquidators can often help with a full office space decommission and deliver the old office space cleaned out to the landlord.
One Off Projects
One off projects can often end with some surplus assets that need to be cleared out. For example, after completing a project, a construction company is left with all the extra tools and supplies not used and no longer needed for the job. A surplus liquidator will often be interested in purchasing all these materials and be able to remove them quickly.
When Does Using a Surplus Liquidator Make Sense?
Facility Closing
There are many things to consider when closing down a facility. Often it makes sense to outsource wherever possible. A surplus liquidator can help maximize returns on all assets in a facility that is being closed down.
Business Acquisition
There are many moving parts during an acquisition. Often there are physical assets no longer needed after an acquisition. In order to avoid storage costs for unwanted assets, a surplus liquidator can be used to sell off those unwanted assets.
Moving Locations
As companies grow they often find they need more space. Rather than pay movers to pack up and transport everything from the old office to the new, many companies will take the opportunity to upgrade their furniture and equipment during a move. Surplus liquidators can help to recover value from the old unwanted assets.
Construction
Upon completion of a construction project there will often remain overbought supplies and used tools that need to be removed. Surplus liquidators may be interested in buying everything for a completed job.
Going Out of Business
The final stage of shutting down a business is often selling off all assets. Although surplus liquidators don’t typically deal with real estate, they can help clear out and extract value from other surplus assets. From heavy machinery to office furniture a good surplus liquidator will be able to help sell off all of a closing companies assets.
Running Out of Space
If there’s one that is always running out, it’s storage space. Companies may have product that is just not selling at the anticipated rate and is taking up valuable storage space. Rather than utilize their space for this slow moving inventory, many companies will opt to stock faster moving product that turns a higher profit. They can make use of a surplus liquidator recoup value from that slow moving product.
Product Expiring
Expired product has negative value. Not only can you not sell it, but it will cost money to destroy the product. If you have product that is expiring soon it might make sense to contact a surplus liquidation company. They can help market your product to get it sold before it expires. Note that many surplus liquidators won’t be interested a product with an expiration date.
What Are The Best Practices for Surplus Liquidators?
Inventory List
An inventory list is essential information for any surplus liquidator. Getting as accurate an inventory list as possible will ensure you get the most for your surplus. Manufacturer part numbers and line item quantities are very important to include in an inventory list.
Asking Price
Almost as important as the inventory list is your asking price. Let the surplus liquidator know what you are hoping to get for your product. This serves as a jumping off point for negotiation and will allow the surplus liquidator to make a fair offer.
Your Cost Per Unit
Sharing your cost per unit can help a surplus liquidator estimate the market value of your goods. Although this information is optional, including it is recommended.
Dimensions
Including the unit or case dimensions can help a surplus liquidator estimate freight. Note that this information can be difficult to gather if you have a large number of SKUs. Although this information is optional, including it is recommended.
Pallet Count
The total number of pallets and if the pallets are stackable is very useful information to estimate freight costs. Having this information handy will allow a surplus liquidator to make an offer on your items more quickly and reliably.
Pictures
A picture speaks a thousand words. Pictures of your surplus will help a surplus liquidator evaluate the condition of your items. It’s always a good idea to include a few pictures to help the surplus liquidator make a quick offer.
The Future of Surplus
Excess inventory isn’t going anywhere anytime soon. As long as businesses exist as we know them there will exist surplus and there will be a need to sell it. Although some surplus marketplaces have emerged, they are geared to large retail businesses with returns and don’t provide a quality solution for other surplus.
The future of surplus is in the hands of surplus liquidators. There is a buyer for almost any type of surplus good. A surplus liquidator often already knows that buyer and can help sell your surplus quickly.
If you or your company either have surplus or are anticipating having surplus it can be beneficial to begin reaching out to a surplus liquidator. By initiating contact and building that relationship now, you are setting yourself up for a smoother experience when the time comes to sell your surplus.
Ready to Work With a Surplus Liquidator?
Secondhand Supply, LLC is a surplus liquidator. We focus on a positive customer experience through prompt communication and by completing every job safely and to our customers expectations.
We offer surplus liquidation and asset removal services for commercial businesses of all sizes. If you have surplus stock that you want to sell or assets you need removed, contact us to get a free quote.