Liquidation Buyers And Closeout Companies Face More Challenges.

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We all agree, 2020 was an exhausting, chaotic, surreal and almost unbelievable year. But now that we have made it through, it isn’t as if a switch gets thrown and everything goes back to how it was. In fact, for those of us who sell surplus inventory distribute closeouts for a living, this year we are facing a whole new set of challenges. Just when we thought we would finally begin returning to how things were, we discover liquidation buyers get to deal with a “new normal”. And so far it doesn’t look like much fun.

1. Import Container Costs. The cost of import containers has increased by 400%. Cans that used to cost $2500 from ShenZhen to Los Angeles are now $10,000. Today’s $14,000 China to Chicago container used to cost $3,500. What in the world is going on and what’s going to happen to prices and liquidation buyers? Well for starters, prices will most definitely go up. There is no way to absorb these huge costs without increasing prices. Unfortunately, this will eventually result in a slowdown in business, and those companies getting stuck with and having to liquidate excess inventory. It may also lead to contraction rather than expansion, and there will be some companies that will downsize their business.

2. Inflation Fears. With unprecedented levels of Federal stimulus money being dumped into the economy, we will continue to see soaring consumer demand followed by massive price increases. It won’t take long before things begin slowing down and backing up. Housing costs will stabilize, consumer spending will level off, and inventory levels will replenish. Companies will again find themselves in a position where they have to sell surplus inventory to liquidation buyers.

3. Shortage Of Employees. Another big challenge today is hiring. Whether you believe it is due to too much stimulus money encouraging people not to work, people needing to stay home and care for elderly parents or children, or just too much pent up demand for business, doesn’t matter. At the end of the day there aren’t enough people to fill jobs. This is forcing some companies to downsize their business or even close because they cannot get help. When stores can’t hire even a skeleton crew of employees to work, they are forced to sell surplus inventory, clean out their warehouses, and close down.

5. Downsizing Business. Many companies are choosing to downsize. Shipping costs are up, hiring is nearly impossible, inventory levels are difficult to maintain, and running a business in general is difficult. These companies are choosing to call in liquidation buyers and liquidate excess inventory, They can make the same or even more money on a smaller scale with fewer headaches. Navigating through today’s crazy environment is a challenge, to say the least. And in some cases it just makes more sense to sell surplus inventory, scale back, do less and be happier.

6. Buying Frenzies. Today’s consumer is empowered by, hope, promise and money. They are feeling better about where we are with Covid-19, they are ready to get out and buy stuff, eat in restaurants, go to bars, travel, and enjoy life again. Their savings are way up and they are ready to start spending. Airplanes are filling up, stores are crowded and food establishments are busy. Housing inventory is low because the consumer has pushed up prices in bidding wars and over-asking prices. Stocks are at an all time high with no sign of a slowdown in sight. It’s a buying frenzy. Unfortunately these won’t last forever and they don’t always end well (think Roaring 20s).

Companies may have to liquidate excess inventory to remain as lean as possible through these crazy times. Building up excess inventory at today’s prices would be more costly than ever.