In this article we are going to cover the reasons behind why companies get left with overstock inventory, and how much liquidators are willing to pay for this overstock inventory. As Well as a worked example, and a liquidator recommendation.
How much do liquidators pay for inventory?
Well.. It depends on the liquidator. You may be using an Amazon Liquidator, or a third party liquidator.
Typically Amazon Liquidators will pay 5-10% of the products average selling price, with third party liquidators like Pink Liquidation paying around 5-20% of your products average selling price. So for £30,000 of stock, expect £1,500-£3,000 from Amazon. And £1,500-£6,000 from Pink Liquidation.
What are the disadvantages of overstock?
Tied up cash
Cash is king. With your money tied up in overstock inventory, you will not be able to re-invest into other products, invest into marketing, or any other tasks that increase the businesses growth! Whilst it may not seem like a big deal having a few extra pallets of overstock inventory, it can make a huge difference to the business in the long run.
Reduced storage
By having reduced storage, you reduce the amount of new products you can bring in, lowering your potential revenue. Aswell as this you could increase your storage costs if you are using a 3pl service or similar, as you are likely paying for storage per pallet.
Increased risk of damage
As you have more stock on your floor, you inevitably have an increased risk of damage. Most businesses don’t take this cost into account, but it is very real one, whilst things can be put in place to try and negate it, it will almost inevitably happen at some point, and the more stock you have, the higher the chance.
Higher insurance costs
Lots of businesses pay insurance based on the value of their stock. If you have increased levels of stock, you could end up having to make higher insurance payments for stock that is not selling.
Products expiring
By having non selling products sat around, if they have an expiry date. You run the risk of products expiring, and being worth either significantly less or nothing at all.