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Who is a Liquidator?

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Estimated reading time: 4 min

Who is a Liquidator?

A liquidator is a person or a business that has the legal right to take over an existing business and sell all or some of its inventory at reduced prices for the aim of generating funds. I like to think of liquidators as organizers of trade fair sales- in a weird way, though. But that is like what they do; they create a market of buyers and sellers of a variety of products that make transactions at prices that are well below the real cost of the products. An example of a liquidator is Going.co.za, an Australian E-commerce liquidator.

A company’s need for a liquidator comes to play ideally at points when the company is about to shut down. So, in the strict parlance of Liquidation, it is usually a pointer to the shutdown of a business and the sales of stocks and assets at ridiculously discounted rates. Meanwhile, Liquidation in an Accounting discussion will mean the urgent need for a company to sell off its assets to generate funds to settle creditors and loans. But in the loose sense of the word ‘liquidation,’ a company might not necessarily need cash for settlement of debts or its closure before it liquidates. A company that is looking to move entirely to a new location and doesn’t want to incur so much cost on the transportation of its inventories could need the services of a liquidator to help sell off its existing goods at low prices or outrightly sell these goods to liquidators at low prices so that moving can be seamless.

In cases where companies are not moving it trying to settle a debt, then they are trying to dispose of excess stocks, returned inventory, and outdated products. With the advent of the money-back policy, most people send back their orders with no specific reason and request refunds; most such goods cannot be sold to other customers again and, as such, are left fir liquidation. Another case is the case of outdated products. Sometimes probably due to change in trends, taste, or excess production, goods with low shelf life do not get sold off before the expiration and eventually become waste of production resources, storage space, and disposal cost. To prevent this from happening, producers will usually sell these goods just before their expiration at low prices, so as not to incur a total loss of the products.

Forms of Liquidators

Liquidators operate and reach their sellers using different platforms. Hence the various forms of liquidators are based on their method or platform for sales.

Traditional liquidators

Traditional liquidators are the form of liquidators that we are used to. They run with a system that allows them to buy from companies looking to liquidate or help sell of their goods, take these goods to a physical location; a warehouse or store where they then begin to create

awareness about the deals, moving from store to store, individual to individual, until their stocks get sold out.

They employ traditional methods of communicating their deals and transact via conventional means. Traditional Liquidation requires a target audience with whom you’ll have built a relationship, to encourage future transactions with them. This factor helps liquidators sell out fast. But the danger of this is that it reduces their frontiers of reach. They stick to particular buyers and most likely cannot get words out about their deal to the general public for marketing purposes (for existing companies that want to dispose of old stock).

E-commerce liquidators

E-commerce liquidation sprung up much later than the traditional Liquidation. E-commerce is such a large force that is changing the outlook of commerce at a rapid rate. Commerce is now a lot different from what it used to be, and not an industry that deals with the trade are being left out on this move.

E-commerce liquidators are liquidators that take the inventories on online platforms to find buyers. E-commerce liquidation is faster, more efficient, wide-scoped, and less costly to run as compared to the traditional liquidators.

Hybrid Liquidators

Like you can already tell, this category of liquidators sells goods both via online platforms and in physical locations. Hybrid Liquidation is the trend within the industry. Most traditional liquidators are transitioning into Hybrid Liquidators while some are moving exclusively into the online liquidation space. And this move or pattern is not just peculiar to the liquidation industry, it is the rave all around commerce now, and this is primarily because of the continued growth and acceptance of E-commerce by consumers.

Types of Liquidators

Retail Liquidators:

Liquidators here are existing retail businesses. They buy from producers are low prices and fill their store with these wares and sell the liquidated goods at reduced costs compared to their other standard products. Examples of retail Liquidators are Big Lots, Tuesday Morning, and Ollie’s.

Dropshipping Liquidators:

Dropshipping liquidators do not necessarily have warehouses where they store goods. They only serve as links between buyer and seller and make arrangements for delivery of orders from seller’s warehouse to buyers’ doorstep. They do not have physical contact with either the seller, buyer, or the goods.

Agent Liquidators:

Agent Liquidators buy goods from sellers or manufacturers and sell to retail stores or other intermediaries. They do not sell directly to consumers, so this way, they sell varieties on large-scale to those middlemen.

Marketplace Liquidators:

Marketplace liquidators are platforms where several liquidators pool together to sell their wares. Marketplace liquidators exist in E-commerce and traditional forms.

As a Liquidator, who can I Buy From?

Companies, retailers, or wholesalers with surplus stocks, returned goods or goods they cannot sell.

Check out records of courts that deal with bankruptcy companies and cases.

The Customs service in your country. They sell unclaimed goods and stolen properties whose owners have not come to recovered.

Buying liquidated goods is tricky. Be sure that the liquidity goods you are purchasing are from a legal source, understand their policies when it comes to Liquidation, and be specific about your line of business, create a niche for yourself. Do not just sell all kinds of goods.

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Latest comment
  • No inventory is too small to save a financial situation for your business. If you are faced with the insolvency situation and you have excess products or stock you should consider selling it off as fast as you can to free up some money. By looking at balance sheets, it is easy to tell which stock is not bringing in any profits and you can sell it fast and use the money to get more successful and profitable stock that can help save your business from liquidation.

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