How The Recession Has Effected Surplus Liquidators

It was just a couple of years ago when liquidators were celebrating the economic climate transition towards a deep recessionary period. Liquidation companies, were getting inundated with opportunities from manufacturers, distributors and retailers looking to unload inventory at pennies on a dollar. This buyer's market enabled liquidators to name their own price, since liquidity in the marketplace was not very prevalent, and cash was king. Since U.S. consumers were suddenly very price conscious due to the recession and job losses, there was no problem unloading this inventory to the growing off-price retailers and discount chains, as well as, Ebay sellers, flea market sellers, etc. If a liquidator had money to spend, the deals were simply amazing, regardless of product category.

Many manufacturers, distributors and retailers got caught by surprise when the recession hit, so they had to quickly unload their excess inventory, and adjust their supply chain forecast. The problem is that it could take as long as 4-6 months to actually reset a forecast with a manufacturer, due to lead times in Asia where most goods are made, primarily in China.

So here we are today, slowly coming out of the recession, with the buying opportunities now harder to come by and have basically dried up. Most companies that made those major adjustments to their supply chain have fully kicked in, which is now causing shortages versus surpluses in many product categories. This supply chain adjustment from the recession means less excess inventory for liquidators, which then drives the prices higher for liquidation companies to make a bulk purchase, with more competition as well. Many liquidators had to adjust their business models and also increase their cold calling and advertising budget, just to find buying opportunities that were much more frequent and attractive prior and during the recession, before all the supply chain cut backs.

In fact, something unique has happened in the last 6 months that substantiates this scenario. For the first time in 10 years within the liquidation business, buyers are calling looking for specific products and pricing, rather than liquidators calling them with product offerings. This would include major, publicly traded off-price retail chains with thousands of stores, all looking for the next large liquidation purchase.

It's truly fascinating how the cycling in and out of changing economic times effects all types of businesses, and how they have to adjust their business model, resources, marketing plans, personnel, purchasing plans and more to be able to survive and prosper during the next economic cycle, which is sure to come again, and again, and again.