How My Closeout Business Survived Covid
COVID-19 has made 2020 a year of adaptation, pivots and changes for small businesses across the country. While some were forced to close and many struggled to stay afloat, small businesses have dug deep for creative ways to rise to the occasion, from virtual services to new products and processes. There were a lot more opportunities to liquidate Amazon FBA sellers because so many online retailers closed. Liquidation buyers and excess inventory buyers were busy due to extra demand for goods from customers. Closeouts may have been limited in supply due to supply chain weakness, but demand was strong. We also began selling closeouts online with Amazon, Ebay and other ecommerce platforms because we had so much inventory to liquidate, we needed to find alternate places to sell surplus inventory.
According to a recent survey by TD Bank, roughly half of U.S. small business owners (SBOs) didn't have to close at all during the pandemic, thanks in large part to their ability to adapt. Over a quarter of respondents were able to maintain their current revenue through the end of the year following the pandemic. Now that restrictions are easing, we are hopeful closeouts will return to a more normal pace and there will not be so many online sellers wanting to liquidate Amazon FBA inventory due to excessive storage fees.
So, what are these small businesses doing right? While the Paycheck Protection Program was a big financial factor (43% of SBOs surveyed received a PPP loan), the businesses that have thrived have worked to make customers feel comfortable and safe doing business with them during this time of uncertainty, said Jeff Fazio, head of small business specialists at TD Bank. Online closeout sellers had a huge advantage a the consumer adapted to shopping from home. Liquidation buyers that sold online and excess inventory buyers that were able to work through ecommerce channels did okay. Brick and mortar stores struggled if they didn't learn how to adapt to changes in closeouts and surplus inventory markets.Some closeout businesses overcame challenges by creating strategic alliances with other excess inventory buyers. In Vermont, a restaurant was forced to close its doors because it lacked an outdoor patio. The bookstore next door had the outdoor space, but no foot traffic. So the owners of the two businesses partnered up to share their spaces with the caveat that the bookstore would put its books on display outside. Some liquidation buyers either closed down warehouses or combined warehouse space with other excess inventory buyers. This gave an economy of scale and made liquidation companies able to survive the pandemic. Companies that buy closeout inventory were challenged by the supply chain disruptions and all the other problems including 3PL warehouses shutting down, businesses that had to liquidate Amazon FBA warehouses and other sellers of closeouts due to overstock inventory situations.
Companies should avoid depending on the same suppliers or closeout buyers, but instead cultivate an alternate distribution network, That way, if there’s a problem with one supplier or a political issue with the country in which the supplier is based, companies can avoid disruptions to their supply chain and access to necessary resources. Import containers from China were as high as $25,000 so businesses began looking at building factories in other countries. Buyers of closeouts were also hurt by huge shipping cost increases as it affected availability and margins.
It may seem evident, but if a firm does not preemptively develop this network of suppliers and buyers, it will be much more challenging to do so once a serious disruption occurs. Building and strengthening those relationships ahead of time has other benefits. At the height of the pandemic, many businesses struggled to keep up with the ever-evolving regulatory requirements. To address that problem, some domestic and multinational corporations set up learning groups in which they took turns keeping an eye on regulatory changes within their sectors. Companies that liquidate excess inventory were forced to make policy changes and adjust inventory levels accordingly. It was easier to sell closeouts during the pandemic because of unprecedented demand for overstock inventory and obsolete goods.
Helping your business survive COVID-19 involves making some tough decisions. But if you adapted to new conditions, partner with other businesses, and reached out to new markets, you’ve likely come out stronger than before. Discontinued inventory will always be a problem for importers and they will have the need for selling obsolete inventory. 3PL warehouses will be shutting down long after the pandemic, and they will look for companies to sell overstock and liquidate merchandise.
What’s more, if you stay connected with your customers and continue caring for your employees, you’ll get through this uncharted territory a lot better. You’ll inspire loyalty and forge strong relationships that may last a lifetime. No one is saying it’s going to be easy. But it will be much easier if you follow these tips. They’ll help you add value to your community, which will bring more value to your business. Closeouts are a fundamental part of running any distribution warehouse. Excess inventory buyers are always looking to take advantage of profitable opportunities on overstock inventory, obsolete merchandise and excess stock.
The Covid-19 pandemic was primarily a global health crisis, but it has had vast economic and social repercussions. Even with certain economies slowly and cautiously reopening, the combined effect of the pandemic and the necessary mitigation measures, such as prolonged lockdown and physical distancing, was feared to lead to a global recession largely because of the rare twin supply-demand shock. Closeout buyers and liquidation companies were able to hold their own through the pandemic, but at times buying the right closeouts at the right price was a challenge.
Online retailers have indeed fared well during the pandemic. Amazon continues to be a juggernaut. While the company’s sales growth has been impressive for the past decade, Amazon received a big boost from the quarantine as consumers could not go to stores to make purchases. On March 12, the beginning of the COVID-19 lockdown, the company’s stock price closed at $1,676.61. By the end of June, it was nearly $1,000 higher than it was just a few months prior.
Merchandise USA is a liquidation company specialists in buying closeouts, selling excess inventory and liquidating inventory. If you are shutting down a 3PL warehouse or dissolving your business we can help
