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Let us take a look at the third business model in the 5 Basic eCommerce Business Models nowadays:

No. 3 Business Model: Liquidation

These are the people who sell off stock that can’t be sold for full price. They will usually sell the products off in bulk and at a discount. There are several reasons why stocks might be liquidated, including:

  1. Older batches: products that may have been replaced by a new version, or be from a past season.

  2. Returns: products that have been sent back by buyers. The boxes may have been opened, and the packaging could be missing or damaged.

  3. Damage or faults: products that are not in perfect condition, but most will be tested and “refurbished”.

  4. Bankruptcy: products that are sold off to pay the creditors of failed businesses.

Discounts for clearance stock can be high, such as 90% off a product’s full retail price. Though that sounds like a highly profitable bargain, the quality of liquidation stock can be variable, thus one needs to assess them carefully. An effective way to source for quality liquidation stock is through building close relationships with other businesses. You will be ahead of the competition for their clearance sales while getting somewhat more reliable stock sources.

On the other hand, sellers who choose this business model will always have a constant need to find new sources. After all, a clearance-based business cannot simply keep reordering their ‘bestselling products’ – it will definitely run out sometimes.

Want to know more? Stay tuned for the next Fundamental Ecommerce Business Model!

Check out the series on the 5 Basic eCommerce Business Models Posts Here:

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