The retail industry is, without a doubt, one of the most lucrative and profitable industries in the world. Global retail sales are projected to grow to 26.7 trillion U.S. dollars by the end of 2022. This is up from around 23.6 trillion U.S. dollars in 2018.
This means that there are massive opportunities for individuals and companies to make millions of dollars by investing in the retail market. But in today’s rapidly evolving world, where technology and e-commerce are reshaping the modern landscape of buying and selling goods, there is also a great deal of risk involved.
A large number of companies have failed to keep up with the changes in consumer behavior and have gone out of business as a result. And for those who are still alive, many are struggling with inventory and logistics issues during the course of the pandemic.
So what do you do if you have a pile of unsold inventory sitting around? How can you make money off it when you don’t want to lose your investment? The answer may lie in the hands of closeout inventory buyers.
Keep reading to find out how closeout inventory buyers work with retailers and other inventory-dependent business niches to help convert unsold inventory to profits.
What is Excess Inventory?
Excess inventory is the result of overproduction or overstock. It represents idle stock sitting on the shelf or in a warehouse that is not moving or selling. It can also refer to damaged stock or goods returned by customers.
Excess inventory can occur due to many reasons such as over-production, poor forecasting of sales and consumer demand, poor production planning and execution, and so on.
Excess inventory is a common problem for many companies, especially those that have to manufacture large quantities of materials and products to sell. It represents a cost to the business.
If no one buys the products which are in stock, it means that money has been spent unnecessarily. In extreme cases, money tied up in excess inventory can lead to businesses not having enough working capital to fund growth or meet their day-to-day operations efficiently. It also represents opportunity costs for a business as they might not have enough working capital to purchase other high-demand products which could be profitable for the business.
So, what can you do?
If you have excess inventory, it means you are producing more than you can sell and tying up your money on products that aren’t turning any profit.
You don’t want to keep making more of something that isn’t selling, but at the same time, you can’t afford to just throw away what you’ve already made either. The longer it sits, the more likely it becomes obsolete and worthless, so in general, the best thing to do is find a way to liquidate it as quickly as possible.
This is where closeout inventory buyers come in.
What Closeout Inventory Buyers Do
Closeout buyers (also referred to as surplus buyers, bulk inventory buyers, and inventory liquidators) buy stock and merchandise from retailers, manufacturers, or other parties for the purpose of reselling this inventory to smaller retailers or wholesalers at a discounted price. These discount inventories can be sold in bulk or bulk lots, called pallets.
The kinds of merchandise that closeout inventory buyers sell include:
- Overstock inventory. This refers to excess inventory which is left over due to over-purchase or inaccurate forecasts of the sales for the period followed by underwhelming figures.
- Shelf pull items. This means they come directly from the shelves of department stores such as Macy’s, JC Penny, Kohl’s, etc.
- Customer returns. This includes products returned by customers due to various reasons.
- Warehouse damaged goods. These are products that may have faced minor to significant damage during the shipping process, placing them in an unsellable condition.
A closeout buyer will come in at a discounted price and take away this unwanted merchandise. There are also many wholesalers that also specialize in selling closeouts and liquidations.
Benefits of Working with Closeout Inventory Buyers
If you’re not sure about why your business requires a closeout inventory buyer, you should be aware of the benefits of doing so.
It minimizes work
One benefit of working with closeout inventory buyers is that it allows you to minimize work. You do not have to spend hours listing items online or paying for ads.
The closeout inventory buyer will already have a system in place for selling the goods and will typically handle all the shipping as well. And because they buy so much volume, they may be able to offer a better price than selling them individually would net you.
Get cash quickly
Another benefit of working with these buyers is that it allows you to get cash quickly for your items. Depending on the type of product you are selling and its condition, it could take a long time to sell each item individually. If the items are taking up space in your warehouse or retail store, this could mean additional costs for storage and maintenance.
When you sell all your goods at once, you can get cash upfront, boosting your working capital flexibility.
Helps free up space in the warehouse
You can focus on storing more important and useful items that are flying off the shelf instead of irrelevant or out-of-season stock. Thus, closeout inventory buyers can help you clear the clutter and make room for new stock.
Get rid of obsolete inventory
Closeout inventory buyers also help you get rid of excess inventory or obsolete items, which in turn can generate cash for you.
You can use this cash to buy new equipment and machinery for your business. Or you can use it to expand your business and launch new ventures.
Improves your financials
Another benefit of working with closeout inventory buyers is that it helps improve the balance sheet of your company by increasing the liquid assets and decreasing the fixed assets.
This may help to increase your credit score so that lenders might be willing to extend loans to you at lower interest rates.
The Process of Working with Closeout Inventory Buyers
If you are a business owner who has a surplus of inventory and do not have the time or ability to sell your closeout inventory yourself, then hiring a closeout inventory buyer might be the best option for your business.
It generally involves the following steps:
- The seller contacts the closeout inventory buyer and tells him about the merchandise that he wants to sell and the price that he is asking for it.
- The closeout buyer will ask you some questions about the product the seller want to sell, the quantity, what condition the products are in, and whether they come with original packaging.
- The closeout buyer will use this information to make a preliminary offer for your merchandise. Depending on the inventory and deal structure, they may also send someone to inspect your products and make sure everything is as advertised before making a final offer for purchase.
- If the seller accepts the offer, then the closeout inventory buyer arranges a time to pick up the merchandise from the seller.
- The seller is paid for his goods (usually by cash) when they are picked up by the closeout inventory buyer or after they have been inspected at a later date, depending on how the deal was structured.
Closeout Express’s Process
At Closeout Express, we purchase inventory from local mom and pop stores, regional stores and sometimes work with national discount retail stores throughout the United States.
We accept a wide range of products including (but not limited to):
- Gift sets
- Home and beauty
- Cosmetics & Makeup
- Perfumes & Colognes
- Home goods
- Sporting goods
- Pet products
- Video Games
- Short-dated food
We pay using a credit card as soon as we agree on the terms for the transaction. We also cover all freight expenses to pick up the merchandise from your warehouse or another facility.
How to Know the Right Time to Sell Your Excess Inventory
Every business in retail, whether it’s a startup or a well-established company, will inevitably have to deal with excess inventory at some point.
It can be difficult to know the best time to sell the excess. Too soon and you could potentially lose out on potential profits. Too late and you risk losing money because of storage costs and lost value due to age.
To get the right timing, you need to use all available data and a little bit of intuition. Here are some things that you should consider when determining when to sell your excess inventory.
First and foremost, you need to know exactly how much of your inventory is identified as “excess.” To accurately track this number, you need to create an item-by-item forecast based on historical and projected sales data.
This will tell you what your current inventory needs are and what needs to be done with those items that aren’t being sold.
Determine the value of tied-up inventory
Next, you want to determine the value of the items that are not selling. A good way to do this is by checking how much it would cost for you to replace them if they were gone.
If it would cost more than what they would currently sell for on the market, then it is probably not worth selling them at all.
Go over the opportunity cost
The first step in getting rid of your excess inventory is to decide whether or not you need it for any other purpose. If you have extra packaging materials or raw materials that are useful in the manufacturing process, then you might want to keep them around until they are needed.
You must also decide whether or not there is any use for these items in other parts of your business before deciding whether or not they should be sold off.
Once you have decided that your excess inventory is no longer needed, it is time to get rid of it.
Examine the sales trends
The best time to sell your excess inventory is when you know you can increase the rate of flow and thus turnover, reduce the amount of cash tied up in inventory, and increase profitability. In order to do this, you need to analyze your sales trends to determine the best time to sell or liquidate your excess inventory.
Additionally, you should consider seasonality that might affect sales. For example, if you sell swimsuits then it does not make sense to liquidate excess inventory in February because there will be no demand for them at that time. As a result, it would be better to hold onto them until summer when people start buying them again.
In short, instead of selling your excess inventory because it is sitting around collecting dust and costing money to store it, it is better to wait until the point when you know that you can realize a profit by selling it.
Work with Us Today!
If you’re in the retail business, it’s likely you will have excess inventory that you need to dispose of. Perhaps you have a product that didn’t sell well, or maybe your store is closing and you want to get rid of your remaining products.
You can hold a fire sale or put a big sign in the window, but unless the items are deeply discounted, it might be tough to move them. So what can you do with all this excess inventory?
That’s where we come in.
Closeout Express is here to prevent your business from tying up capital in unmoving inventory and instead, help convert your stock into cash.
We are experts in managing and liquidating excess inventory and offer our services nationwide. Our experience means we know how to get you the maximum return on your investment.
From overstock to obsolete, we have the solution for you.
Get started by filling out a form on our site and getting your free price quote. All you have to do is provide your contact information, the quantity of units and share a short description of the goods.
Come in today and leave with cash in your pocket!