You’ve gotta buy before you sell--and it can all be done online
You can get anything you want on the web–-including inventory for an entire store. Liquidation Services Inc.’s Liquidation.com tells InternetRetailer.com that a Dollar Store franchisee in Washington state in November bought all the inventory for two new stores on its site by winning auctions on more than 40 lots of merchandise ranging from SuperGlue to 35MM cameras. The online purchase saved the new retailer significant time that otherwise would be required to register at and buy from multiple brokers and wholesalers, says the company.
On the buy side, Liquidation.com courts Fortune 2000 companies with excess goods; on the sell side, its targets are small to medium-sized retailers. “We expand the buyer base for our sellers by reducing the lot size. There are more small, professional buyers for surplus merchandise than there are large buyers,” says CEO Bill Angrick.
Other b2b surplus liquidation sites sell to small retailers as well, but Liquidation.com, unlike some, sells lots and pallets only at auction. Another twist is that Liquidation.com doesn’t buy the merchandise from its seller clients. Instead, it takes their merchandise on consignment and gets a percentage of 10% to 20% when goods are sold. The percentage also covers sales and marketing services, online auction management, and fulfillment and shipping. Winning bidders are responsible for shipping costs, though the arrangements are made by Liquidation.com. The site fulfills from 2 million square feet of leased warehouse space in six regional hubs and through drop shipment from the seller.
The auction dynamic and competitive bidding bring higher returns for the original seller and more on the percentage for Liquidation.com, says Angrick. “The auction sale model is a more effective sales methodology than a negotiated sale,” he says. “The other piece is where we are in the supply chain.” Angrick says those who bid on the auctions typically source from brokers and wholesalers one or two steps removed from the original seller, who charge a mark-up, eventually borne by the end buyer, at every turn. “In every step of that supply chain, there is margin, and that margin ought to go the first seller–-the larger retailer or the original equipment manufacturer,” says Angrick. “We are allowing the original seller to disintermediate those steps before the end consumer buys the merchandise.”
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