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There is often confusion on how liquidation and wholesale differ (or if they do at all). In fact, there is a huge difference between the two. In this article, we’ll provide an overview of both liquidation and wholesale so you can make the most informed decision on securing the inventory that is right for your business.
Liquidation typically means an organization is trying to turn excess, overstock, or obsolete goods into cash, quickly. For retailers, this merchandise costs money because 1) the goods depreciate with age, 2) they take up space in the warehouse, and 3) they tie up capital. Most retailers will end up selling – aka liquidating – 95 percent of this excess inventory on the secondary market.
It’s a common practice, too! Liquidation is becoming a part of most retailers’ reverse logistics strategy. Not only does liquidating allow retailers to free up warehouse space and make way for new inventory, but retailers get to recoup some of their losses, for example, on out-of-season inventory. Another reason to liquidate is to tackle the amount of online customer returns retailers have seen in recent years. In 2021, more than $761 billion of merchandise was expected to wind up back at stores and warehouses.
Historically, large retailers and manufacturers have sold this liquidation inventory in bulk (and at a loss) through negotiated transactions with a handful of buyers. These sales are generally at prices well below retail MSRP. Over the past few years, however, a shift has taken place. Many retailers are bypassing traditional liquidation methods and incorporating technology-based programs for excess inventory into their overall business plan. This includes working with B-Stock to launch customized B2B online auction marketplaces that connect returned and excess merchandise directly to business buyers.
This creates a level playing field for all buyers, big and small, to compete for the inventory. Why? Because liquidation buyers now have access to highly discounted inventory that they were previously unable to buy without a middleman. What’s more, the inventory is generally listed at a fraction of MSRP and buyers only pay what they want in an auction setup!
Wholesale is the sale of goods and merchandise to resellers and businesses. The wholesale price is usually fixed and the amount of product can vary substantially. The goods are usually sold – by the wholesaler – in bulk quantities with the intention of being resold by the purchaser. Something else to note: true wholesaling is generally not available to the standard consumer.
Wholesalers frequently purchase liquidation bulk lots from large liquidators, break those lots apart, and then repack and redistribute them in smaller lots to smaller retailers and resellers. Often by the time the smaller retailer or reseller gets it, the merchandise has been through multiple middlemen and price markups. The transfer of goods isn’t nearly as direct, and businesses risk losing out on the most valuable items from a liquidation lot due to cherry-picking!
Liquidation lot sizes range from a parcel to multiple pallets and even up to truckloads! So if you’re still deciding which retailer’s liquidated goods appeal to your customers the most, you can bid on smaller auction lots first before going all in.
With wholesale, you are typically buying bulk quantities of the same item, and all at once. Liquidation inventory can include a mix of different items within a particular product category, or inventory can come in mixed lots—adding to the thrill of the find! If you haven’t found your niche yet, or like keeping your options open, then liquidation auctions are a great option.
Lastly, wholesale is more focused on brand new inventory. Liquidation inventory can range from customer returns and overstock to salvage. Say your appliance repair business isn’t in need of fully-functional, retail-ready merchandise…you can secure salvage inventory for a lot cheaper to get the pieces and parts that you need!
B-Stock is the largest network of B2B liquidation marketplaces connecting returned and overstock inventory from top retailers and manufacturers directly to business buyers. Resellers can bid on a few pallets to multiple truckloads of inventory across dozens of categories. This includes consumer electronics, mobile, apparel, home décor, appliances, and more. Start browsing live auctions and find the right inventory for your business today!