HOW TO SELL YOUR SURPLUS A Straightforward Seven-Step Guide from Liquidity Services
On average, 20% of an organization s assets are surplus to its needs 1. In other words, a full one-fifth of your assets is just sitting around. Depreciating. Taking up space. And most importantly, not making you money. You don t have to let this surplus sit idle. You can turn it into capital to help you ensure profitability, fuel core business, and drive the innovation that keeps your organization at the head of the pack. How? By selling your surplus in the secondary market. If you re thinking How do I do that? or even What is the secondary market?, we understand. That s why we ve put together this seven-step guide to help you sell your surplus. Let s get started. 1 Source: Investment Recovery Association 2
Step 1: Identify Your Surplus Before you sell your surplus, you must know what and where it is. To find this out, you ll need a fullscale asset audit of your facility or facilities. Create an asset register and record vital data asset name, type, condition, location for every asset. In this process, you will discover which ones are redundant or otherwise no longer needed. If you update this on a regular basis going forward, you ll always know the status of your assets and which ones are available to sell. Manually updating asset information on a regular basis might sound tedious. That s why we recommend investing in cloudbased asset management software or partnering with a vendor that has this technology. Asset management software allows multiple users across your company to update, track, redeploy, sell, and request assets in real time through an easy-to-use interface. It s much quicker and more convenient than manually updating an analog asset register. NEXT: Determine what to do with your surplus once you ve identified it 3
Step 2: Decide What to Do with Your Surplus You don t necessarily want to sell every surplus item. Some may be too depreciated to earn you much recovery in the secondary market, and some might be better off redeployed elsewhere in your company. Since what you do with your assets will depend in large part on their potential value, you should appraise them. If you don t have this specialized knowledge in house, consider outsourcing this function to a trusted partner. An accurate appraisal will empower you to make smarter asset management decisions and set sale prices that ensure you get the recovery you deserve. Armed with insights about the value of your assets, you can decide whether to sell them, scrap/recycle them, or redeploy them to another facility within your organization. Items with marginal sale value can often be scrapped or recycled. But when should you redeploy instead of sell? There s no hard-and-fast rule, but generally you should consider redeploying high-value assets with long expected lifespans. On the other hand, lower-value assets whose removal, shipping, and installation costs add up to higher than the cost of buying new may be sold. NEXT: Discover how to select the optimal sales channel for your surplus 4
Step 3: Select Sales Channels Many sales channels are available for selling your surplus, each with distinct advantages. Focus your efforts on the four channels below: Online Auction Private Treaty / Direct Sales Buy It Now Principal Deal This effective method has With this method, you The online auction s speedier By selling your assets outright many advantages. Auctions negotiate directly with a buyer cousin gives buyers the option to a third party, you get can be targeted by industry or a small group of buyers to to immediately purchase immediate cash and avoid and asset type to maximize agree on a purchase price. This assets directly from your risks associated with selling interest. The competitive approach is ideal for unique or website. While this option is in the secondary market. But bidding environment of specialized assets with smaller quicker and less risky than you also risk losing out on auctions increases prices, potential markets. an auction, the set price caps additional capital if the item generating higher recovery. your potential recovery. sells for more than expected. Plus, online auctions allow you to reach potential buyers anywhere in the world! Which channel should your organization use? It depends on the asset, market, recovery goals, and other factors. Often a mix of methods is best. NEXT: Learn how to attract buyers to your surplus 5
Step 4: Find Buyers Through Targeted Marketing Methods The secondary market is the (surprisingly robust) market for previously-owned and overstock items. Plenty of buyers are ready to purchase your items, but you have to find them first. The Internet is a good place to start. The average person spends over 20 hours a week online 2. Internet marketing can be relatively inexpensive and is a natural fit for online auctions, since you can drive bidders directly to listings. A recent Liquidity Services survey found that the three methods below are most effective in reaching surplus buyers. Not coincidentally, they all involve the Internet. Email marketing An attractive and compelling email promotion, aimed at the right audience, can be highly effective at driving bids and purchases for your surplus. Online advertising Online ads are usually less expensive and reach further than their print counterparts. They let you promote your auctions to targeted groups of Internet users browsing search engines and websites. Search-engine optimization (SEO) SEO best practices help your auctions attract a steady volume of relevant visitors from search engines like Google and Bing, which are common starting points for users looking to buy surplus items. 2 Source: Telegraph Online NEXT: See what information you need to give buyers to ensure they bid and buy 6
Step 5: Give Buyers the Information They Need The online auction and buy it now methods let you connect to potential buyers all over the world. Since these buyers usually can t view your assets in person, however, they need listings containing descriptions, photos, and videos about your assets to evaluate before making a purchase. Include this information to build trust with buyers and encourage them to bid. Liquidity Services recently polled nearly 2,500 surplus buyers to see what information they most needed to see before bidding. The results are listed below in order of importance. Asset condition Detailed descriptions Photos and videos Asset age Original manufacturer and seller brand Original price Other bids and bidders Include as much of this information as possible. You ll get more bids and more money for your surplus as a result. NEXT: Learn about potential risks in the secondary market and what to do about them 7
Step 6: Address Compliance Concerns When selling your surplus assets, you should be aware of certain risk factors. You must take proper precautions to ensure your items aren t inadvertently sold to sanctioned countries such as Syria or North Korea, or to known criminals or potential terrorists. Certain countries have restrictions on which asset categories can be sold. And if you re selling used items that may contain sensitive information from their previous users such as electronics or medical equipment you must remove this data before sale. Violating these and other regulations, even inadvertently, can lead to fines and damage your company s reputation. How do you ensure your surplus is sold compliantly? You need legal expertise to identify and mitigate all compliance risks as they arise. You also need a strict vetting process in place to ensure your surplus is only sold to appropriate buyers. Unfortunately, you may not have the internal resources to provide these solutions. But a trusted partner with expertise in trade compliance and data privacy regulations as well as a proven buyer vetting process will keep you safe from risk while requiring minimal resources from your business. NEXT: Find out how you can wrap the sale up efficiently and ensure you get paid 8
Step 7: Complete the Sale After a buyer has agreed to purchase your surplus, consider these factors to ensure the sale wraps up smoothly. Payment You may want to set up a virtual payment option to ensure you get paid quickly. Be sure you receive payment before the buyer picks up the item if possible. Removal To avoid damage and ensure safety, consider enlisting an experienced contractor to remove all large, sensitive, or valuable items carefully and compliantly. Fulfillment Large capital assets such as manufacturing equipment and oil pipe have to be picked up in person. To ensure your sale concludes expediently, set a postremoval timeline and inform buyers of it before they purchase. NEXT: Read a case study about a well-known organization that generated millions from its surplus 9
CASE STUDY Case Study of a Successful Surplus Sale: BAE Systems Background BAE Systems is a multinational defense, security, and aerospace company. Recently, Liquidity Services helped BAE Systems sell hundreds of surplus assets at its Owego, NY facility for maximum return. Next: Learn how a partner makes selling your surplus easy. 10
CASE STUDY Solution Liquidity Services visited the Owego site to identify all surplus assets, which covered a wide range of asset categories from Humvees to electrical and power equipment. After cataloging the assets, we tapped our vast market database and industry expertise to appraise them. Knowing the value of BAE Systems surplus helped us make sale vs. disposal decisions and set accurate recovery targets. Using the asset information gathered, we created comprehensive, accurate auction listings on one of our online marketplaces for capital assets. Assets were either lotted in groups or sold individually based on factors that would optimize recovery. Certain aerospace assets are restricted from being sold on the secondary market. Before BAE Systems assets were lotted for sale, our expert compliance team conducted a complete review and removed sensitive items. Because of the sensitivity of its business, BAE Systems also needed to make sure that its surplus was only sold to buyers in certain countries. Our buyer vetting services screen all buyers against more than 200 global restricted party lists and additional client-provided lists, ensuring BAE Systems surplus is never sold into inappropriate countries or to illicit buyers. Leveraging proven multichannel marketing strategies and our vast global base of surplus buyers, Liquidity Services maximized bids for BAE Systems auctions. We also sold many assets through private treaty sale, the ideal sales method for specialized assets. Using both methods ensured maximum return. Results Liquidity Services achieved a 100% sell-through rate for BAE Systems nearly 200 lots, generating $1.7 million in recovery value. Most notably, we achieved recovery more than 50% above client expectation for 13 Humvees. NEXT: Learn how a partner makes selling your surplus easy 11
Conclusion: An Expert Partner Makes Surplus Sales Easy The sale of surplus is a complete business function in itself. To effectively identify, value, manage, lot, sell, and fulfill surplus on a regular basis while remaining compliant with all applicable laws and regulations takes a significant amount of time and resources. And it requires specialized skills and knowledge your organization may not have. Your organization likely uses contractors to handle areas outside its expertise. Consider doing the same for surplus sales. Seek out a partner that provides a holistic solution by handling every aspect of the surplus sales process described in this ebook. Outsourcing this function will greatly benefit your business. Because your partner has expertise and experience in surplus sales, it will manage every aspect of the process more effectively and efficiently than you could on your own. As a result, you ll get more money for your surplus, experience efficiencies from a streamlined asset management program, and rest assured that your surplus is always sold and removed compliantly. Outsourcing will also free up significant resources that you can now redirect toward core business. Right now, potential buyers are looking for the unneeded assets you have in storage or on your warehouse floor. So what are you waiting for? Take that surplus, and turn it into fuel that can power your organization s continued success and growth! footer 12
About Liquidity Services Every organization has surplus assets or inventory no longer required. Liquidity Services (NASDAQ: LQDT) works with clients to ensure surplus is intelligently transformed from a burden into a liquid opportunity that fuels the achievement of strategic goals. Our superior service, unmatched scale, and ability to deliver results enable us to forge trusted, long-term relationships with over 8,000 clients, including Fortune 1000 and Global 500 organizations as well as government agencies. With $6 billion in completed transactions, nearly 3 million registered buyers, and reach into almost 200 countries and territories, we are the proven market leader in delivering smart surplus solutions. Let us build a better future for your surplus. Visit us at LiquidityServices.com.