Liquidation sales are used to generate cash to pay off a business’s outstanding debts.
However, you don’t need to file bankruptcy to have a liquidation sale.
Liquidation sale discounts can reach up to 80-or-90 percent by the end of a sale.
By that point, there usually isn’t much high-demand stock left. What's more, discount programs and coupons are discontinued, and gift cards stop being accepted after a certain point in the sale.
Items that are typically slow to sell start with steeper discounts.
Meanwhile, popular, hot-ticket items start out with modest discounts and become more heavily discounted if they don't move.
With thousands of physical retailers shuttering across the nation, liquidation sales have become a massive business in and of themselves.
A business owner can only profit from a liquidation sale once debts have been settled and shareholders have been paid out.
One important thing to understand about liquidation sales is that you can sell more than just your products and inventory.
If a company is otherwise unable to pay its debts and isn't able to close the business in another way, a liquidation sale is the last ditch effort to drum up some cash to smooth the process.
All proceeds from a liquidation sale must go to creditors and shareholders.