Solutions

INVENTORY LIQUIDATION

Everybody liquidates, but how it is done is what really matters

On an average 20% of an organisations inventory are products that are end of life, slow moving, over production, sales returns and defective.  

Companies holding such inventory for demand to soak it up is highly risky and has a number of implications. 

So liquidating inventory on a regular basis is necessary for any business to survive and it is critical to mitigating unnecessary overheads and financial losses. 

But how the inventory is liquidated is what really matters.

Traditional liquidation method

The management and liquidation of inventory can be time consuming, cost prohibitive, may require specialized skills, new processes and infrastructure. 

So traditionally companies accumulate inventory over the course of several months and even longer.

Then when volumes are large, it is finally offered for sale as a broad mix of products in varying conditions and unit quantities. Usually presented in an excel spreadsheet with no detailed descriptions or photos.

We believe this old-school method is inefficient and has implications on:

• Return on inventory
  A broad mix of products has limited appeal so only rock bottom returns are achieved.
• Cash flow
  When stock piling the sales cycle is slowed which consequently adds pressure on cash flow.
• Asset depreciation
  Inventory loses its residual value through time which minimizes the rate of return.
• Holding costs
  Holding inventory for months has implications on warehousing costs and space.

Liquidating inventory the traditional way can cut deeply into a company’s profits every year. It is therefore why vendors need to think differently about liquidation. 

If done correctly and efficiently, liquidation can be viable channel that can offset substantial losses on inventory.