Looking at big businesses like Walmart and Amazon, it’s easy to assume that they’re doing just fine on their own. Amazon, after all, has topped a jaw-dropping $1 trillion in market value — and it throws all of that weight around as it leverages its economies of scale, lobbies the government, and cuts sweetheart deals like the one that it made with the United States Post Office.
But the reality is that big businesses like Amazon don’t do everything themselves. In fact, there’s a lot that they let other businesses and organizations do — like the aforementioned shipping via the United States Post Office, for instance.
Amazon, Walmart, and the rest of the gang are focused on their business areas and on maximizing their profits. Efficiency is the name of the game. And, sometimes, that means not doing something — and outsourcing it to a trusted third party instead.
One area where companies like Amazon and Walmart make heavy use of outsourced services is in liquidation.
What is liquidation?
Liquidation is the process of selling off assets for cash. The term is used in many contexts — for instance, you might have heard of “liquidation sales” associated with bankruptcy and failing businesses. But companies don’t have to be failing to want to quickly sell off lots of inventory.
Amazon and Walmart are great examples of businesses that often find themselves in need of some big-time liquidation. These companies, remember, are making massive amounts of money because they’re operating on a massive scale. That scale means that they can afford to make relatively small profits on each item they sell — and, in fact, can even take losses.
But they still have expenses to worry about. These companies have to find places to store their inventory; and when new products come in, they have to clear space for them.
Also taking up space in the warehouses owned or rented by Amazon, Walmart, and their peers are returns. Thanks to their huge scale, Amazon and the rest are able to offer pretty generous return policies. But those returns become B-stock at best, and it’s often not worth the investment for these companies to put them back up for sale. To them, the project just isn’t on a big enough scale to be worthwhile. These returns, therefore, just take up space.
Liquidation auction companies to the rescue
This is where liquidators come in, explain experts who specialize in wholesale liquidation. Liquidators recognize the need for companies to get rid of inventory even if they’re perfectly healthy from a financial perspective; they also recognize that the products being liquidated have some value. So liquidators swoop in and get rid of the products for companies such as Amazon and Walmart. They do so for a price, but they get a good deal — Amazon and the rest, after all, just want this stuff out of their hair.
And that means that liquidators can afford to offer those same liquidated products to others. Liquidators resell entire pallets of returned and liquidated merchandise, usually in an auction format. And the winning bidders are often small business owners to whom these pallets represent a worthwhile project and potential profits. What was small change for big businesses really matters to smaller retailers who can afford to compete with Amazon’s pricing when they’re paying so little for quality prices.
In the end, it’s a win-win for big and small businesses: Amazon and the rest quickly and efficiently offload the goods they don’t want, while small business owners get a chance to compete in a retail landscape where low prices are king. And in between are the liquidators that make it all happen.