How do we do deal with large quantities? Large amounts of a product can be seen as either an opportunity or a trap. In the economic market, supply and demand are often locked in a back-and-forth wrestling match. Often manufacturers don’t want to create too much of something, as it can dilute the market, which means they can’t charge as much as they believe the product is worth. On the other hand, a surplus of inventory can lead to drastically reduced prices, which can provide an opportunity for some consumers to cash in and buy products they couldn’t afford otherwise.
Enter liquidation. If a company announces they’re liquidating everything, that’s not good. It generally means there’s no clear path forward for the company, at least not if they want to make money (and believe it or not, most companies want just that). So they decide to slash prices on all their inventory to try to convert their remaining assets into cash. That cash might allow them to pay off their debtors. And they really want to pay off as many of their debts as possible, since bankruptcy proceedings can be a real pain in the rear.
In other cases, companies like Walmart will liquidate merchandise without going under (Walmart is the biggest retailer in the world, so they’re doing just fine right now). A lot of times, a company overestimates demand and makes too much of a certain item. For instance, let’s say an A-list celebrity signs a deal to write his life story. He gets a six-figure advance, and the publisher announces that the first printing of the book will be massive. But then, a few days after the book is released, something scandalous and sordid comes out about the celebrity. It’s hard for him to find work anymore, and it’s even harder to sell a book all about his life. In a few months, there’s a good chance copies of that disgraced celebrity’s memoir will end up in the bargain bin of your local bookstore. The publisher has decided to cut its losses and just try to sell the books at a major discount, since they ended up printing way too many copies.
That happens with plenty of things besides books. A retailer can also liquidate merchandise that has been returned or refurbished, especially if there’s a lot of it. Wholesalers will often purchase such products, then turn around and sell them via auction. Since most people aren’t looking to buy twenty laptops at once, it’s likely that dealers are buying the items so they can separate them and sell them to regular customers.
Of course, there are exceptions. Companies interested in managing enterprise mobility may seize upon the opportunity to buy a couple of dozen smartphones and turn them into company-issued devices for their employees. That’s especially true if the price is better than the one they can get from a telecom company. Juggling all those phones and tablets and computers isn’t exactly cheap, after all.
Most of us probably don’t think of liquidation as very exciting, and that’s understandable. But while it can mean the end of a company’s story, they’ll probably get a lot of sales as they go out of business. People love a good deal. They won’t always care about the story behind the deal, but they will go crazy for the price on the tag.
