What happens when businesses have excess stock they need to liquidate? They choose one of two options: liquidate their assets or sell their stock to stock clearance auctions. If you’re wondering how the stock auction process works, we’re breaking down everything you need to know in this helpful guide.
First of all, how does stock clearance work?
Stock auctions are a form of liquidation that occurs when companies need to sell large quantities of assets. What kinds of assets are sold? Anything goes in the world of stock clearance auctions — from furniture to antiques to jewellery to collectibles and more.
Anything can be sold at a stock clearance auction, so long as the asset holds value. For business closures, companies can sell everything from products to office furniture to the physical land of the retail or manufacturing location.
If companies have ample inventory supplies, such as artwork, home goods, décor, automobiles or antiques, they can sell these assets and use the funds collected to buy new stock or pay investors back on loans. If there are excess proceeds, the owners and shareholders will distribute the profits.
All assets auctioned are final sales, and that’s why there is usually a generous bidding period that allows time for buyers to thoroughly research and assess the quality of the goods being auctioned.
Ultimately, a stock clearance sale is the selling of goods to the highest bidder. However, there are different facets involved in the process, and it can go a multitude of ways.
For starters, liquidations aren’t always voluntary. Sometimes a business runs into legal issues or goes bankrupt, in which case they liquidate all of the remaining assets for discounted prices. The goal is to sell everything and try to scrape whatever the company can from the auction.
In other cases, a company will liquidate goods to gain capital to reimburse creditors, while some other cases involve selling all current stock to make way for new inventory.
In that event, companies sell clearance stock to get rid of the old and make way for the new. You may see this advertised as a clearance sale, closeout sale, or liquidation. But these auctions don’t always mean a company is going out of business.
We’ve used these terms interchangeably, but there are differences between the two. Companies need to understand the differences between liquidation sales and stock clearance auctions because one may be more fitting for their goals than the other.
You’ll most often see companies hosting liquidation sales when they’re going out of business or rebranding. In this case, a liquidation sale involves selling all assets and inventory, including products, land, and any equipment involved with the company. These types of deals can take place over long periods because the goal is to attract as many buyers as possible.
By selling over a period of time, the business has a broader opportunity to liquidate their assets relatively close to the going market value for those goods. With time, they can attract more buyers. The more buyers interested, the higher the prices.
In other words, time gives the seller the upper hand to maximize their profits. Once they settle on a buyer or multiple buyers, the business and buyer negotiate the terms of the liquidation, including total price and items being sold.
How does a stock clearance auction stack up? Interestingly, liquidation sales often become auctions. How? Let’s take a look.
If a business has sold the most expensive items through a liquidation sale, they may proceed to sell large stocks of smaller items at a stock clearance auction. By doing this, large companies ensure that every asset is sold.
However, this isn’t always the case. In many instances, companies bypass the liquidation process altogether because it takes too long. Instead, they jump into the fast-paced arena of stock clearance auctions.
Unlike lengthy liquidations — which can take years to process — stock auctions sales are quick and zippy. So, who is selling at stock clearance auctions?
Typically, companies with surplus assets and inventory seek to sell the excess products quickly. Rather than aiming for the best market value for goods, the business attempts to sell everything at slashed prices rapidly. The benefit of stock clearance auctions is their expedited selling process.
From start to finish, stock clearance auctions move fast and can be wrapped up altogether within a few weeks to months maximum. However, to host a successful auction requires an effective marketing strategy to attract a broad range of bidders.
If you’re a business with excessive stock you’re looking to sell; you may want to consider stock clearance auctions online.
As you might guess, online auctions attract the most bidders because they come from all areas across the globe. Rather than liquidating only to local buyers, stock clearance auctions attract bidders across the web.
One of the most significant benefits of hosting stock clearance auctions online is that competitive bidding drives up the prices. So, let’s say you listed your business’s assets on the cheap to make quick sales; well, you may end up getting a solid bid that drives up the discount to yield a higher profit margin.
Not a bad gig, right? Of course, both stock clearance auctions and liquidation sales have their drawbacks. Namely, you might end up selling the bulk of your stock for a lower price than anticipated if there isn’t bidding competition. With stock auction clearances, you’re relying solely on bidders to compete to elevate the final selling price, and that’s a gamble. But where there’s risk there’s reward!
Ultimately, t’s vital to choose an auction company with a well-regarded reputation and bidding base. There are many benefits of both selling and bidding on stock clearance auctions. But where will you buy the items from?
If you’re looking for the most trusted auction company in Australia, look no further than Treasures Auctions.
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