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Market Conditions Affecting Liquidation Products
The retail marketplace has been spread thin between Big Box Retailers, Second Time Around Retailers, Specialty Stores, and the always growing Online Marketplace. This has resulted in price wars that slash profit margins. Many are losing market share on top of that. Retailers can no longer afford to write off millions in unsold and clean returned inventory. The vast majority of retailers have addressed this issue with in house liquidations and online retailing their return and unsold inventory. That process results in poor leftover liquidation loads since many of the premium items get removed for retail sales.
In House Liquidation is simply having deep discount sales in house. This is practiced by many apparel retailers but has been adopted by retailers in almost every category. Some will discount as much as 90% off retail at the end of the season to get bargain conscious buyers to clean off the racks and generate cash flow. Most of the best items get snapped up leaving the liquidation lots full of the hard to sell items.
Online Retailing Returns and Unsold Inventory is used by many retailers to extract maximum prices. Certain categories like electronics, tools, sporting goods, and housewares do especially well on websites like eBay, Amazon.com, and Walmart.com. Many retailers now remove the majority of the premium items out of their Liquidation loads for online retail sales. The Liquidation truckloads become picked over leftovers. Undesirable and damaged items are hard to sell. These Leftover loads are difficult to profit from.
The move to auction-based liquidation
Many retailers have chosen to sell their liquidation inventory on auction sites. Some of these sites have become large with thousands if not tens of thousands of bidders. Many people do not understand liquidation inventory and some of the issues that are involved with it and run bid prices up to what would be considered closer to wholesale than liquidation prices. It becomes hard to make money when that happens. We hear this from customers all the time. We don't purchase liquidation loads from large auction sites and don't recommend it. Do you really want to compete with thousands of bidders for your inventory?
There are still niche loads out there that are not heavily processed. All Prime Products focuses on these loads. We have dropped many of the loads that have been very profitable for our customers for over a decade but are not profitable anymore. Also we don't get involved with loads that are sold on auction websites with thousands of bidders. You have to operate in 2020 and things are very different now than they were even two years ago.
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