Buying Liquidation stock from businesses that wind up
When some businesses go bust after rising to dizzy heights, it becomes difficult to find an appropriate suitor who will acquire the business and carry on as a going concern. In such situations, an administrator appointed by the liquidator’s office takes charge and puts on sale whatever goods the business has left. In many instances, this is a great opportunity to buy such goods and sell it through retailers. The business going into liquidation often has built up a brand value and you can expect to cash in on that. This is particularly true of non-perishable goods such as apparels and clothing.
How liquidation proceedings work
Let us take the example of Pumpkin Patch, which built up a decent business in children’s clothing. A mum who was shopping for children’s clothing spotted an opportunity and she was right in her perception. Pretty soon, Pumpkin Patch grew from a one location store to multi locations and transnational. In less than a decade the business had grown to command turnover close to $800 million dollars. But, soon afterwards, it started an irreversible journey to doom bringing up the liquidation proceedings now.
Clothing business is fiercely competitive in the global arena and surviving competition is not everyone’s cup of tea. The challenges for businesses seeking to grow fast and spread wings, the path is arduous. But, from a consumers‘ point of view, these businesses offer great opportunities in picking up some quality stuff at great prices. Liquidation stock, particularly in consumer nondurables and perhaps even some durables is also an opportunity for smart traders to quickly move in and make smart profits. Your ability to understand the merchandise and the relative market would be one of the significant drivers of your success. If you take Pumpkin Patch as a case study, the liquidation stock may be offered either at one central location, or you only get the right to access the stock at one or more store locations.
Selling liquidation stocks
When you are buying liquidation stocks in large volumes, you should also do adequate home work to ensure that you can quickly sell off what you buy. Even at great discounts, some stuff like apparels, footwear etc. can fail to attract retail customers for varying reasons. Therefore, if you are saddled with stocks that you cannot sell off quickly, your own business could be heading towards stagnation or in worst case scenarios you could lose the business itself.
Know before you leap
To benefit from liquidation stocks, you must do a thorough home work understanding the commodity you intend buying, its brand reputation, the condition of the material offered under liquidation, repacking and re-classification that may be needed. Look for pre-inspection clauses and remember that you might get only one opportunity to examine the condition of the material that you are buying. Look for visible signs of potential damage to the contents of boxes or pallets and ensure that you are not saddled with garbage at the end of the deal.