Surplus Inventory Best Practices
If your business is one of the numerous enterprises that have been adversely affected by the current economic downturn, it is quite likely you are contending with liquidity issues. Due to declining consumer spending, your surplus inventory builds up and your cash flow declines. In this situation it makes sense to consider liquidating your surplus inventory as an immediate solution for increasing your cash flow.
Employing a professional liquidation company to help with this process can give you the added benefit of leveraging their specialized knowledge and experience with selling surplus inventory in secondary markets, but proceed with caution. You have to be cautious of their established channel control practices, if any, and what strategies they have in place to ensure that your existing sales campaigns and product lines are not affected in a negative way by your newly liquidated merchandise.
The Importance of Channel Control
Suppose you operate Wally’s Widgets and your only product is Widget A, which sells for $20. When you release Widget B, your new and improved widget which sells for $25, you may choose to halt the production and distribution of Widget A and liquidate a, you need to make sure that it doesn’t end up in the same market as Widget B, or else you risk stealing sales from your new and improved Widget B, by your newly discounted Widget A.
Channel control is a vital piece of the liquidation puzzle. In addition to protecting your existing sales channels other important issues include:
- Making sure your liquidated merchandise doesn’t become your own competition.
- Protecting your company against fraudulent customer returns.
- Keeping your brand name from being associated with a company that may not operate by the same standards that you do.
- Ensuring that your brand isn’t perceived as a discount or bargain brand due to a liquidation of merchandise.
- Protecting your brand, sales, and reputation by keeping your inventory out of the hands of your competitors.
As you can see, channel control very well could be one of the most important issues involved in inventory liquidation. Getting quick cash for your surplus inventory might be a viable short term solution but if you don’t employ proper channel control practices your short term solution could become a long term problem.
Inventory liquidation is one of the easiest and fastest ways to increase your company’s cash flow. Not only can you get cash immediately, but you can save money on warehouse space, maintenance, and inventory depreciation. However, without finding a professional liquidation company that can guarantee proper channel control measures, there are just as many risks as rewards. I highly recommend finding a trusted liquidation company, but make sure they can keep your inventory and your name safe.
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