{"id":37912,"date":"2022-12-05T23:30:00","date_gmt":"2022-12-05T23:30:00","guid":{"rendered":"https:\/\/businessyield.com\/?p=37912"},"modified":"2022-12-06T10:30:02","modified_gmt":"2022-12-06T10:30:02","slug":"what-is-the-difference-between-liquidation-sale-and-auction-sale","status":"publish","type":"post","link":"https:\/\/businessyield.com\/business-planning\/what-is-the-difference-between-liquidation-sale-and-auction-sale\/","title":{"rendered":"What Is The Difference Between Liquidation Sale and Auction Sale?<\/strong>","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"

There are a number of ways to dispose of excess inventory. One option is to liquidate the excess inventory<\/a> with a clearance sale. Another is by selling it at an auction. In some cases, the item may be sold at both types of sales.<\/p>

Knowing what you’re getting into ahead of time will help you decide which type of sale to pursue in your particular situation. This post will address how liquidation and auction sales differ and what you need to know before pursuing one or the other for your situation.<\/p>

Are you unsure whether to go with an Auction Sale or a Liquidation Sale? Here’s a step-by-step guide to walk you through both processes:<\/p>

What is a Liquidation Sale? <\/strong><\/span><\/h2>

A liquidation sale is another selling method used to sell products that have been discontinued or are considered damaged or obsolete. Items such as computers, electronics, furniture, and home goods are commonly sold at liquidation stores<\/a>. It is usually organized by the manufacturer of the item so you might see one of these events advertised on television.<\/p>

The big difference between a liquidation sale and an auction is that a liquidation sale will proceed only if the quantity available to be sold at the event exceeds the quantity available at the auction. This means that manufacturers may choose not to hold liquidation sales for items they no longer want in their warehouse because they don’t anticipate more than 50% of the items being sold at this type of event.<\/p>

What is an Auction Sale?<\/strong><\/span><\/h3>

An auction is a method of selling that involves the sale of products to the highest bidder. It is a public sale open to the general public and anyone who wants to bid on the product. Manufacturers often hold liquidation auctions in large venues like convention centers, airports, and exhibition halls.<\/p>

Bidders use their smartphones or laptops to make bids during the event so they can see how other bidders are bidding on their items and whether they are inching up or down. After a designated period of time, which varies by competition, the number of bidders is reduced until there’s only one bidder left as opposed to 50 bidders at liquidation sales.<\/p>

Liquidation Vs Auction: <\/strong><\/span><\/h3>

The difference between liquidation sales and auction sales is the price of a product before selling.  <\/p>

Liquidation is the process of selling off the stock in an entity at reduced prices so that it can be bought by someone else, while an auction sale is a transaction that typically takes place over a relatively short period of time with an item’s current owner or owners putting the item up for bid or soliciting bids from potential buyers who wish to purchase it.\u00a0<\/p>

“A liquidation sale is typically used when an insolvent business or a corporation wants to sell off its assets. <\/p>

“An auctioned item will have high bidder buy-in value as well as freight costs,” <\/p>

Having described the differences, it’s important to remember that a liquidation sale is an event organized by a manufacturer in which the manufacturer does not expect to sell more than 50% of the available inventory. In other words, the manufacturer expects to take the remaining unsold inventory and ship it back to its warehouse.<\/p>

The fate of surplus inventory following an auction is usually unknown until after the bidding has ended. An auctioneer will usually advertise that he or she doesn’t know where or how bidders will use surplus inventory. After the auction ends, however, auctioneers often have a buyer lined up for the items. This bidder will then unload the unwanted inventory at a discount so it can be used for another purpose by another party.<\/p>

Tips for Successful Liquidation Sales:<\/strong><\/span><\/h3>