What if you could get inside the head of your inventory buyer before you even picked up the phone? What if you could somehow read their mind? Would that help you choose the buyer that was right for you?
Finding the right inventory buyer is the secret to getting maximum returns for your inventory disposition. But as simple as it may sound, finding the right buyer is about finding the buyer that’s the best fit for your inventory.
So, how do you know who the right buyer is? Many variables influence the decision making the process of the buyer, so the better you understand those variables and how your inventory fits into the equation, the closer you will be to getting the maximum return your inventory will bring.
Most inventory buyers will tell you that they will give you the maximum return for your inventory, but let’s face it, a beach supply inventory is probably going to be worth more to a buyer in Florida than a buyer in Chicago.
So, here’s the short version of my top ten list of variables that will help you squeeze every penny out of your inventory disposition-
- You’ve got to know who the end-user is going to be. By knowing who the end-user is, you can better assess the value of your inventory. If you are selling your inventory to a wholesaler, they would probably offer you a different price than if you were selling it to a retailer. The margin is different, the volume is different, and the amount of time to move the product would be different as well. If you’ve got a larger volume of problem inventory, you may want to use a wholesaler, but if you only have a truckload or two, you want to go with a retailer instead.
- What kind of product is it? By knowing who the end-user is, you can decide if your product is a good fit. The first thing to remember is that it’s going to vary in value from the company to the company simply because of demographics and location. Like I said earlier, a beach supply inventory is probably going to be worth more to a buyer in Florida than a buyer in Chicago.
- Understanding the demographic is also vital. The demand for the products varies from one place to another significantly. The product must match the market to get the highest return.
- What category of product is it? If it’s something like toilet paper, then it’s probably a safe investment. If it’s a high-end lip liner and makeup, it may not be as secure of an investment, thus lowering its value.
- The condition of the merchandise is another significant factor. If it’s right off the showroom floor, it will be worth more than if it’s been in your humid warehouse for the last three years.
- The depth of quantity is going to be another issue. If you’ve got 10,000 coats that are straight from the factory, that’s one thing. But if all 10,000 coats are the same model and style, it becomes less valuable than if you had a solid mix of styles, colors, and sizes. Having a large quantity of one item makes it harder to move because the buyer would need a larger distribution network in place to dissolve the quantity issues.
- Location is another vital factor in determining the return your inventory will bring. If you have a warehouse full of furniture that is located next door to your buyer, the logistics and shipping would be a relatively simple process. However, if you were in another part of the country, the desirability and value of your merchandise are going to be far less.
- Seasonality is another major factor. Patio furniture in the summertime is going to be a lot more valuable than in the winter. Same with Christmas décor.
- Restrictions due to channel control or brand control issues are going to be another major variable. If there are multiple and extensive brand or channel control issues, it would certainly decrease in value, simply due to the increase in labor and expenses.
- And finally, the age of your inventory. Is it the last season’s goods or out of season goods from three years ago? The age of your inventory will also play a pivotal role in determining the return that it produces.
This may not be an exhaustive list, but hopefully, it will give you some insight into the appraisal and valuation process that an inventory buyer goes through. By knowing these things beforehand, it can help you match up your inventory with the right buyer. And by matching up with the right buyer, you will always get a higher return.