Liquiditys blog post 'What is liquidation?'

What is Liquidation? - A Comprehensive Guide

What is Liquidation? 

It's not uncommon for businesses to face the possibility of liquidation, with one in five failing to make it past their first year. However, liquidation doesn't always mean the end of a business. Understanding the various types of liquidation and the processes involved can help you take advantage of the benefits it offers.

If you're in the market for discounted inventory, liquidation merchandise might be the perfect solution for your business. Liquidation refers to the process of selling off goods, often at a significant discount, to clear inventory or pay off debts. While many people associate liquidation with a business shutting down, there are actually different types of liquidation that can benefit your company.

Liquidation merchandise includes excess inventory, overstock, and customer returns, all of which can be purchased in bulk from liquidation companies or directly from retailers. Buying these products at a discount and reselling them can lead to significant profits.

Retail Liquidation - When a company liquidates overstock and returns as part of its reverse logistics strategy.

Retailers often face the challenge of having surplus inventory due to returns, seasonal items, overstocked goods, and damaged products. One effective solution to address this issue is liquidation. In liquidation, retailers sell off surplus and customer-returned items at discounted prices either in-store or by the pallet. It is a natural part of reverse logistics and is common practice among businesses.

Unlike the type of liquidation where companies go out of business, liquidation for offloading inventory is solely intended to make room for new merchandise. Retail liquidation pallets are similar to those sold off by closing companies, but the difference is that the retailer continues to operate. It is a cost-efficient way for retailers to clear storage space and earn profits by disposing of items they can no longer keep in their warehouses.

Small businesses can benefit from liquidation sales by purchasing name-brand inventory at a fraction of the original cost. By buying liquidation pallets, small businesses can obtain merchandise for a lower price and resell them for a profit. Ultimately, liquidation for offloading excess inventory is a beneficial solution for retailers and small businesses alike, providing an opportunity to make room for new stock and obtain a bargain at the same time.

Who buys liquidated inventory?

There are several types of people or companies that purchase liquidated inventory. These include:

  • Individuals who resell by the piece
  • Pallet sellers
  • Online resellers
  • Large off-price retailers such as 
  • Discount store owners 
  • Flea market vendors
  • Amazon FBA sellers

Liquidated merchandise come in all shapes and sizes, too. From apparel and consumer electronics to home & garden and health & beauty—everyone liquidates. The wide range in inventory available makes it valuable to many different types of buyers.