What is a Liquidation Sale?

by Patricia Bell; Updated September 26, 2017

Businesses sometimes decide to close their doors permanently and instead of holding onto the inventory, they choose to conduct a liquidation sale, in which all products are sold at a heavily discounted price. This is sometimes advertised as a big sale where “everything must go.”

The only disadvantage to the consumer is that there are no warranties or ways to get a refund. So you purchase at your own risk. As the sale goes on, the items remaining are often of low quality.

Staged Event

Most consumers are not aware that liquidation sales are staged and considered a business in itself. The company may be suffering financially, but they hire experts to come in and manage the sale. These experts set the prices for goods, market and advertise the sale and hire salespeople. They will add mediocre products to the inventory as well as leftover products from previous sales.

State Licensing

These liquidation sales are governed by state and city licenses that require the business to put in an application and submit a list of the inventory. Some businesses will still bring additional products to the sale despite the mandate of submitting a product inventory list. The state or city will put a limit on how long the sale will last.

No Refunds or Returns

Most of the items at a liquidation sale are tagged “as is,” which means there will be no refund or returns allowed. Because this type of sale, in some cases, is just a ploy to get more business, the prices are not competitive.

Big Business

Some businesses will conduct a liquidation sale so they can close that particular store and open a new store elsewhere. They will mark down the prices heavily if they are working with time constraints.

Making the Money

Most liquidation sales are about making money for the business and not about providing discounts to the consumer. A store that is going into bankruptcy will conduct a liquidation sale by offering small discounts at first. The heavy discounts usually come when the only items remaining are the ones you would not normally purchase.

No Customer Service

During a liquidation sale, there is hardly any customer service or customer satisfaction provided. Most of the staff will be manning the cash registers. The idea is to move inventory out of that particular location and collect as much cash as is possible. The type of payment accepted is limited to cash and sometimes credit cards. Checks and gift cards are not usually accepted.

About the Author

Patricia Bell has been a full-time writer now since 2001. Her professional experience includes work done on various websites, covering relationships, self-improvement, business, finance, career, health and fitness. Ms. Bell holds a Bachelor of Arts in business from Florida Atlantic University.

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