Liquidation is the process of converting assets into cash. Liquidated items are usually sold at auction for pennies on the dollar, so that cash can be obtained as quickly as possible. Although many people think of liquidation as the sale of a bankrupted individual’s, or business’s, assets to repay debts, in the wholesale industry, the meaning it is often used interchangeably with the term closeouts to refer to merchandise sold off cheaply by retailers at the end of the year or season.
Liquidation or closeout merchandise can include damaged items, customer returns, end-of-season stock, shelf-pulls and surplus. Whether they are going out of business or just preparing for the new year, the retailer’s goal is to get rid of anything they can’t shift in return for some fast cash. And because profit isn’t the aim, liquidations can be a great way of getting hold of some very cheap merchandise to resell. However, as the contents of each lot can be very mixed, there is always a certain percentage only fit for the skip.
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