Liquidation and wholesale are both potentially a way of reducing customer costs. Basically, if you want to spend a tight budget, without compromising in terms of quality, then both of these can come in handy. However, what is the difference between liquidation and wholesale?
Which one should you prefer and in what scenario? If you’re seeking answers to such questions, then you have stumbled upon the right corner of the internet. Today we are going to discuss liquidation and wholesale in detail and then draw a comparison between them both. So without further ado, let’s jump right into it.
Well, to start off, let us take a look at liquidation pallets first. Liquidation is the process of letting go of excess stocks, returned products, and even discontinued items for a much cheaper value than the MSRP. This is done purely to reduce the amount of loss the company is taking.
For people who can’t really understand the gravity of the situation, over time these surplus stocks become a liability to the business owner. This is because the inventory cost adds up, and the product depreciates over time.
To prevent spending money on useless products, companies decide to take a loss once and for all. Hence they organize liquidation auctions and even sell them off at liquidation stores across the country.
The reason why it is called liquidation is that the business owners are selling their products for a loss, to liquidate the capital they have invested in the manufacturing of the products in the first place. However, a lot of companies have to face major losses while liquidating.
This is why a lot of companies now use B stock to let their stock be auctioned to business buyers, which levels the playing field for all small and big buyers to get the possession of the inventory. Since inventory is valuable if marketed properly, making sure it gets into the right hands is also very essential.
This is where liquidation companies come into play. A lot of liquidation pallets across the country are connected with these liquidation companies, so they can reuse these products with a bit of rebranding, repair, and touch-up.
This is what we call liquidation. Most of the liquidation companies work directly with big-name brands and retail manufacturers. These include furniture brands, appliances, cutlery, and much more. This is why stores like Dollar Tree have such inexpensive products at all times. They are also a liquidation/ discount store at their core.
Now that we understand what liquidation is, let us take a look at what is wholesale and what wholesalers do. Wholesale, as the name suggests, is the princess of selling manufactured products to other wholesalers or retailers. This is very different from liquidation. Unlike liquidation, the products that are sold in wholesale markets are not surplus.
These are finished products that are market ready but are usually sold by wholesalers to increase the supply of these products in the market. Wholesale traders usually give a ton of discounts, because they insist you buy huge quantities. Since their margins are low, they can only profit if you buy huge quantities from them.
Apart from that, wholesale is multilayered. This means a ton of the margin is lost when it gets to the retailers. Wholesale is great for the general consumer and customers when they require certain things in huge quantities. For example, if you need a particular energy drink for a month, then you can go to a wholesaler asking for the same. However, the wholesaler will deny any smaller quantities than standard.
Liquidation stores usually sell off surplus or overstock items that are not being retailed to the general public whereas, wholesale is not the sale of surplus products, as they are retail products instead. Liquidation does not guarantee a fixed price of the product, whereas, wholesale markets have certain fixed rates at different levels of wholesalers.
Liquidation is far more beneficial for the liquidation stores, whereas wholesale cysts profit the retailer. The general public can visit liquidation stores to buy single products, whereas, wholesale products cannot be purchased without the need for bulk products in the market. Liquidation is done to prevent losses for a company, whereas wholesale is usually used to increase the distribution of products for a company.
We’re sure now we have clearly set the differences between liquidation and wholesale. If you want to get into either of these businesses, we insist you check our articles on the same. We’re sure you might have understood the key dissimilarities between these two types of sales. Till then, keep scrolling, and spread the word.