Liquidation is a great strategy for suppliers to get rid of excess inventory or stock and for buyers to purchase inventory at a discount. However, it’s important that both parties understand what they can expect going into the relationship. You can set yourself up as a liquidation supplier or buyer of choice by making sure you prioritize your relationships and have a mutual understanding of each other’s needs.
On July 14, 2022, Spoiler Alert partnered with Johnsonville and Natural Choice Foods to host a webinar event to discuss best practices and tips on how to prioritize liquidation relationships to improve your bottom line. Spoiler Alert’s Director of Customer Success, Ari Hopkinson, and Buyer Engagement Specialist, Kai Mitchell, were joined by Johnsonville’s Inventory Control Manager, Jeremy Gabrielson, and Natural Choice Foods’ President & COO, Brian Jones. Both Johnsonville and Natural Choice Foods have been users of Spoiler Alert’s platform since 2021 and 2019, respectively.
In this blog, we’ll recap some learnings from the Building Relationships in the Secondary Market: Strengthen your network to maximize liquidation value recovery webinar. You can watch the full recording of the webinar here.
1. Setting expectations
There are many ways to build relationships with liquidation partners, but one of the most important things to understand is your partner’s goals and business model.
As each company has its own set of goals, it’s critical to set expectations early on to understand what the unique partnership will look like. Brian noted, “It starts with really understanding what the company’s rules are and how they want to work in regards to timing, if bids are for individual items or entire locations, where the products are sold, and if there are any restrictions such as regional locations and type of customer. We tell our partners everything in advance about what we do and then listen to how they’d like us to work with them since it varies dramatically from company to company.”
You should also be clear on your own goals and company’s unique situation. If you’re looking for a buyer or supplier that can fill an immediate need, it’s important that you communicate this up front so they can assess their capabilities in terms of meeting those demands.
To start building trust and mutual respect between parties, set expectations on what will happen next after your first initial meeting. Communicate timelines so everyone knows when they should expect another update or meeting, if applicable. This will help prevent any miscommunication or confusion down the road as well as keep things moving forward quickly without unnecessary delays caused by waiting around for someone else’s response without knowing when one might come through.
Additionally, make sure any restrictions are discussed, such as categories of product or location restrictions.
2. Communication is vital
Communication is vital in any business relationship, and it’s especially important in the liquidation industry, which tends to be quite messy. It’s easy to get caught up in offers and bids, but communication is key to forming long-lasting relationships with buyers and suppliers. That means having a consistent cadence in communicating with your entire network and stakeholders.
So what exactly should you be communicating? You’ll want to share information about any new products or services that are available, provide notice about any high volume inventory expected, any possible restrictions, mistakes that occur, expectations, any feedback, and results just to name a few.
Jeremy noted that he always lets his buyers know about their weekly listing cadence, and Brian recommended trying to meet face to face as often as you can and prefers more communication over less.
3. All in the details
When you are selling or buying a product, providing as many details as possible is important to avoid any mistakes or confusion. If your buyer doesn’t know what they are buying, they are less likely to bid on the inventory. Additionally, you don’t want to mislead your buyer into thinking that they are getting a certain product but then delivering something that doesn’t fit their expectations. Basically, the more information you can include in your offer sheets, the better off both parties will be.
When you’re listing products, make sure to include details such as:
- Expiration dates
- Logistics and freight
- Marketing collateral
Providing correct expiration dates and context around them is central in the liquidation space; “We clearly explain what each date means, especially working with perishables, to have a clear understanding of how long of a shelf life the product has so that they can pass that off to their consumer as well,” Jeremy explained.
4. Navigating logistics
Relationships between buyers and suppliers are essential to the secondary market, particularly because of all the complexities liquidation and the supply chain bring about. Logistical constraints can be a major pain point; trying to build out full truckloads and deciding between offering delivery or picking up shipments can be especially tough at a time when fuel costs are high.
At Johnsonville, Jeremy always ensures he is upfront if there is a minimum threshold for how many pallets there have to be on the truck for them to deliver. When offering pickup, “we’ll have that flexibility and work with the buyer on price because they are paying for the freight.” Jeremy will also work with buyers in case they are picking up other products in the area to help them fill their trucks up.
It’s important for buyers to have as close to a full truckload of product as possible. Brian noted that at Natural Choice Foods, there is an entire team dedicated to figuring out the logistics of truckloads and may bid differently depending on truck sizes.
Picking up versus delivery, shipping days and times, packaging and temperature requirements are all examples of logistics that impact your ability to receive or deliver product in a timely manner and maintain a positive relationship with your liquidation partner.
5. Speed to market
Focusing on speed to market is critical in the liquidation space, especially when dealing with perishable goods. After all, the more shelf life that a product has, the more value and higher cost recovery it has.
With less shelf life, secondary and discount buyers are less willing to pay for excess inventory, as illustrated by the graph above. Suppliers shouldn’t waste critical time selling excess inventory to secondary channels. The quicker suppliers can sell excess inventory, the more chance the buyer can sell it to their customers. By digitizing and automating your liquidation processes, you can save time - which means you're saving money.
On this topic, Jeremy from Johnsonville said, “Prior to partnering with Spoiler Alert, we were doing everything manually, essentially in Excel, and even exploring adding another person to the team because of how time-consuming it was. Being able to join Spoiler Alert’s platform has helped us send offers to all of our customers at once versus using a waterfall approach where we had to deal with different customers on different days. The platform definitely has helped speed things up - it’s a much more robust process today than it was before we were using Spoiler Alert.”
6. Give and take
In business relationships, the concept of give and take is necessary. The liquidation market can be disjointed and fragmented, so strong relationships can help cut through the noise and reduce time-consuming work.
Mistakes can happen, as with any industry, and when buyers see a mistake from a supplier, such as receiving incorrect product, Brian discussed how responding quickly and amicably can benefit both parties. “As long as we’re upfront with them, we’ll call the supplier and tell them a mistake happened - they’ll usually help us out next time so we can avoid paperwork and save everyone time. It’s a lot of work, logistics, and paperwork so I ask myself, ‘how can we make the least amount of noise as a buyer?’”
Jeremy also talked about how food manufacturers may not always view secondary customers as the highest priority, but at the end of the day, they are providing a service to us and selling the product and having it consumed rather than having it go to the landfill. “As we’re both running a business, developing an effective partnership is more important than trying to beat people up over price.”
7. Open feedback
Feedback allows you to continuously improve upon existing relationships. As with any feedback, make sure you don’t take it personally and instead view it as an opportunity to learn and fix what isn’t working.
Brian talked about handling mistakes and feedback quickly instead of lingering on them, “The best thing to do is to deal with it immediately if you have a problem. We don't find a lot of real strained relationships as long as we handle it straight away. Generally, if we’re calling them, they’re just as surprised at what happened. Most of the time the seller doesn’t know about the mistake either, so you deal with it fast and you move on.”
Becoming a supplier or buyer of choice
Being a liquidation buyer or supplier of choice is no easy feat. It requires time, patience, and commitment to your relationships. You need to be on top of the details and have a great deal of flexibility when dealing with different situations. But by prioritizing and improving your relationships with those around you in this industry, it can lead to fruitful engagements, results, and improve your bottom line.
To learn more about improving relationships in the liquidation space, check out Spoiler Alert's latest e-Book.