Online Liquidation Auctions Help Business Owners Sell Overstocked Items

Online auctions have become a huge business in their own right; as a whole, the industry has pulled in billions of dollars annually, making this a remarkably successful component of the ecommerce market.  Buyers can browse and bid on anything from vehicles and tools to board games and clothing.  Besides sites that were created specifically to hold auctions, there are also existing businesses that have recognized the potential of this area of the internet.  They can expand their profits and increase their online presence by offering what consumers want. Online liquidation auctions, too, can help businesses by relieving them of overstock items.

What defines a business?  Its inventory:  you are what you stock.  Managing inventory is one of the most important tasks that any manager or owner has to handle.  Ted Hurlbut, a columnist for Inc.com and head of an inventory and management consultant firm, writes:

Inventory costs money, and too much inventory costs a lot more money. The cost of slower turning inventory is much greater than the cost of faster turning inventory. And the costs are felt throughout the business, from lost sales, to reduced margins, to increased expenses. Those smaller retailers that actively manage their inventories, striking the right balance between having what their customer want and having too much, invariably are more profitable than those that don’t.

Hurlbut identifies several ways that overstock costs a business, including carrying costs (simply the cost of storing the items, which takes up space where new merchandise could be), shrink, damage, obsolescence, and lost sales.  When there is excess inventory, products become outdated, leading to huge markdowns.  Products can more easily be stolen or damaged when there is too much in the stockroom or on the sales floor.  There are so many variables, but as Hurlbut says, the bottom line is that businesses lose money when they carry surplus inventory.
Online auctions are ideal for businesses such as these because they can reduce overstock, expand profits – and do it relatively inexpensively on their own existing site or by building a site that is designed for these auctions.

Overstock auctions are helpful because businesses can offer their wares to a much broader audience than they would be able to with a brick-and-mortar store.  Auctions also allow businesses to highlight specific items in ways that are more appealing to consumers.

Typically, vendors recoup more of their investment by auctioning overstock.  In stores, markdowns must be incredibly substantial to move old inventory:  this is why winter coats are so inexpensive in July and bathing suits are cheap in January.  It is not unusual to find sales that offer as much as 75% off or buy one, get one free sales.  Auctions allow businesses to offer products at a discount to consumers but not so much of a discount that it negates their profit or causes a huge loss.

There is another benefit for businesses:  when they complete a sale, those customers are more likely to return if their experience was favorable and they feel like they got a bargain.  This provides repeat business and more potential for growth and profit.  You can alert customers to deals they may be interested in or send sale announcements via email.

It is good business to harness the power of liquidation auctions, especially for those businesses which need to liquidate overstock.  Buyers love them, and businesses profit:  it’s a perfect match – and one that will help businesses stay profitable.

Liquidation auctions are great for consumers and businesses too