Many times, liquidations are a store’s last resort to avoid bankruptcy. However, many retailers will stay afloat by liquidating their name brand stock before they go out of business. This article will discuss the strategies used by these stores, and how they can be profitable.
The use of retail stocks to avoid bankruptcy is a common practice today in the wake of the recession. In this article, we’ll cover what liquidation is and how a retailer can profit from it in order to stay afloat!
A liquidation occurs when the store sells its own inventory, thus removing the cash from the store’s profit and loss statement. This can be done at any time, but it generally happens when the economy gets bad. Companies that go under must try to sell everything they own in order to stay afloat and continue paying back indebtedness. As a result, much of the surplus inventory that could otherwise be sold is simply thrown out to other companies for pennies on the dollar!
Kind of merchandise is typically sold in a liquidation sale
Not surprisingly, this depends on the company. Typically, liquidation companies will only accept name brand merchandise. Smaller liquidators will even accept candy spilled into the bottom of a vending machine in order to make extra money!
Money can I make as a liquidator
A lot! Liquidations can earn some great profits if done correctly, especially in the name brand industry. For example, a popular department store like JCPenney might need to get rid of some excess inventory before it can stay afloat. This means that, for example, a 50% off sale will be going on, and the same will be true for garments and such. But, a liquidation company can buy this normally marked up merchandise from JC Penney’s, mark it up 50% more than before, then sell it back to them at the much higher price.
In most cases, yes. However, to prevent the liquidator from selling things marked up too high (and thus losing money), they are required to fill out an inventory sheet so that you know what is being bought and sold. If someone tries to sell something for more than their actual profit margin or below their actual profit margin (i.e. a 50% off sale, but the price marked on the item is less than it actually is), then the liquidator can’t buy that item.
Look for in a name brand liquidation company
A. A good name brand liquidation company can be very profitable if done correctly. The important thing to remember, though, is that such companies are usually larger than usual, because they tend to have more money and more people working for them. Therefore, it’s important to look for a team of people that can take care of this type of business properly.
A name brand liquidation company should have the following:
1. A large network of buyers – because they need to sell the items quickly in order to get cash into the company.
2. A good reputation – because they need to be trustworthy and credible if they are going to strike deals with buyers in order to make the most money possible. They also need good ratings so that people can see who they are and what kind of company they’re working with (and, hopefully, a high rating will mean that all of their liquidations around the country are going well!).
3. A real-time inventory system – so that every deal is accounted for and no money is wasted.
There are many retailers out there who are struggling to stay afloat, and many of these are choosing to liquidate their name brand stocks in order to save money. Fortunately, this is a great way for a company with the proper resources to make a lot of money!