What Is B2B Liquidation?

Why Liquidate Surplus Inventory?

There are very compelling reasons for businesses to dispose of their surplus inventory. There are costs associated with storing surplus goods. The money spent on storage and tied up in inventory that’s not moving well could be put to better use. Many businesses don’t have enough capital to leave it tied up in inventory carrying costs instead of using it to fund their growth. Also, the longer that items remain in inventory, the more value they will lose, particularly if they are likely to become outdated due to new developments in product design or technology.

Selling off unused and surplus assets can free up cash for business expansion, renovation, relocation, debt reduction or other purposes.

While some businesses routinely liquidate surplus inventory on their own, many lack the resources to undertake inventory liquidation on top of their normal operations. Additionally, there are certain risks associated with a business liquidating its own surplus inventory.  For example, advertising a clearance sale can have a negative impact on the business’s brand image and raise suspicions that the business is in financial trouble. And knowing that prices are likely to be slashed at some point is a disincentive for customers to buy now.

For many businesses, the logical solution is to work with a professional inventory liquidation service, or B2B liquidation. Choosing the right liquidator is essential to getting the best prices for your surplus inventory.

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Why Choose a B2B Liquidation

Ultimately, you will need to decide whether to work with a liquidator that sells surplus inventory to other businesses (B2B) or directly to consumers (B2C). Key factors to consider are the amount of revenue likely to be recovered, how quickly it should be recovered, how B2B and B2C customers make purchase decisions, and the customer experience they expect.

Revenue Recovery

B2C sales to liquidate surplus inventory typically are online, one-off deals, with individual consumers purchasing single items through an online marketplace. Per-item B2C prices generally are higher than can be achieved through bulk B2B sales because B2B buyers are purchasing for resale and therefore aren’t willing to pay as much. B2C buyers are purchasing for their own use, while B2B buyers must make enough profit on the deal for it to make good financial sense. However, B2B sales permit price negotiation, so one sale might return more cash than another. Price negotiation is not practical or even feasible with one-at-a-time B2C sales.

Speed of Revenue Recovery

The urgency of the need to recover revenue through liquidation is another important consideration in deciding between working with a B2B or a B2C liquidator. Selling one item per customer also means that it will take longer to sell the full quantity being liquidated through B2C sales.  Inventory can be cleared out faster with B2B sales because businesses are buying in bulk for resale.

There is an exception, however, when the inventory in question is something like a large, costly piece of earth-moving equipment, or a sophisticated piece of computerized manufacturing equipment. The narrower and more specialized the target B2B market, the longer it is likely to take to make a sale. But there is an exception to the exception, and that’s when a B2B liquidation is handled through an online or physical auction scheduled for a specific date and time.

The Buyer’s Decision-making Process

Individual consumers tend to make quick, even impulsive, purchase decisions when they think they are getting a bargain. Businesses don’t. In the business world, purchase decisions often involve more than one decision-maker and require extensive research and multiple levels of approval for large dollar amount purchases. Individual consumers don’t think in terms of return on investment (ROI), but businesses do—one more reason that it can take longer to recover revenue through B2B liquidation of surplus inventory than through B2C sales.

The Customer Experience

Increasingly, B2B buyers are looking for the same convenient online shopping experience that has become the norm in B2C sales. B2C sales are quick and require little if any interaction with the seller. In most cases, potential customers arrive at a B2C liquidation site as a result of their own search process rather than by responding to a marketing message.

The B2B customer journey is longer and typically involves a lot of interaction with the seller. B2B customers require more service and support and expect more personalized attention.

Final Thoughts

If you think a B2B approach is best for your particular inventory liquidation needs, look for a liquidation service that can deliver what B2B customers expect.

Contact RepurposedMATERIALS today to find out how we can help you find a new home for the unwanted materials.