Maximize Recovery for Your Surplus by Building Buyer Trust

LiquidityServices.com

Table of Contents Introduction

3

About the Survey

4

What Do Buyers Value?

5

Be Transparent About Your Asset’s Condition

6

Include Detailed, Accurate Descriptions

7

Provide Compelling Images and Videos

8

Mention Your Asset’s Age

9

Include Original Manufacturer and Seller Name

10

Display Other Bids and Bidders

11

Be Open About the Asset’s Original Price

12

Feature Similar and Related Lots

13

Conclusion

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Introduction Until recently, the management, valuation, and sale of surplus assets and inventory – known as the reverse supply chain – was an afterthought for many organizations. Pressured to continually improve and innovate their core businesses, organizations let billions of dollars of surplus and idle assets lie fallow within their reverse supply chains. Today, the reverse supply chain is a $150 billion and growing industry, and savvy organizations are focusing on this area.i Leveraging their reverse supply chains, organizations can unearth hidden value by maximizing return and velocity, simplifying operations, enhancing productivity, informing business decisions, and mitigating risks. Key to the success of an organization’s reverse supply chain is its ability to sell its surplus for maximum recovery. As the reverse supply chain industry has grown, however, the secondary market for surplus has become fiercely competitive. Buyers have options and can afford to be choosy. To ensure your surplus stands out from the clutter and generates high recovery, your organization must meet buyers’ lofty expectations. But what do they expect, and how can you deliver? Liquidity Services’ latest survey of surplus buyers sought to answer this question.

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Maximize Recovery for Your Surplus by Building Buyer Trust

About the Survey Liquidity Services is a global solution provider in the reverse supply chain with the world’s largest marketplace for business surplus, with nearly three million registered buyers and counting. Every quarter, we survey the global network of secondary market buyers to gain a deeper understanding of their needs, priorities, and behaviors. We use this information to continually enhance our online marketplaces and to help organizations improve their own reverse supply chains. Last quarter, Liquidity Services surveyed nearly 2,500 buyers of surplus assets regarding their purchasing behavior, preferences, and what they value in a surplus asset buying experience. The survey achieved a response rate well above the industry average. Buyers of virtually every asset category were represented, from biopharmaceuticals equipment to transportation assets to retail goods (see table for the full respondents list broken out by asset category). Both end users and resellers/dealers were included in the survey, representing 70% and 30% respectively of total respondents. The survey responses provided crucial insight into exactly what your organization needs to provide to ensure buyers feel confident in their purchasing decisions.

ASSET CATEGORY

# OF RESPONSES

Biopharmaceuticals

1887

Mining and Construction

1483

Energy

1576

Manufacturing

1196

Retail

349

Transportation

582

GRAND TOTAL

7,072

Survey Overview • Nearly 2,500 Buyers of Surplus • 20+ Questions • End Users and Resellers/Dealers Page 4

Maximize Recovery for Your Surplus by Building Buyer Trust

What Do Buyers Value? Last quarter’s survey found that surplus buyers are highly motivated by the desire to reduce risk in their surplus purchases. Why is this so important? Online marketplaces benefit buyers by allowing them to seamlessly view, bid, and buy surplus items from sellers around the world. Because online buyers often can’t view and inspect the surplus in person, however, this convenient method entails a higher level of risk than buying in person. Also, many surplus buyers are resellers with annual sales of less than $250K, and their success rides on a relatively small number of bulk surplus purchases. Buying surplus is a relatively risky proposition for them as well.

Surplus buyers are highly motivated by the desire to reduce risk in their surplus purchases

According to last quarter’s survey, your organization can reduce buyers’ perceptions of risk by providing accurate, comprehensive information about the surplus you’re selling. The more information buyers have, the more confident they feel in their decision, and the more they trust in your organization and the assets they’re purchasing. As a result, they’ll pay more and bid higher and more frequently, resulting in maximum recovery for your surplus. Although it may sound straightforward, it takes substantial time and resources to provide this information for every asset you sell. Since the reverse supply chain, by definition, is a non-core function, your business likely lacks the time and resources required to deliver the merchandising experience buyers desire. The ideal solution is often to select a trusted partner to manage and optimize your reverse supply chain. The right partner will maximize total value across your reverse supply chain while requiring little time and effort from your organization, freeing up resources to focus on your forward-flow business. Read on to discover how your organization can build trust and consequently maximize recovery and loyalty by providing complete, accurate merchandising information about your surplus.

Your organization can reduce buyers’ perceptions of risk by providing accurate, comprehensive information about the surplus you’re selling

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Maximize Recovery for Your Surplus by Building Buyer Trust

Be Transparent About Your Asset’s Condition Virtually all (96%) buyers of surplus desire accurate information about your asset’s condition. This information reduces buyer risk by giving them confidence in the asset’s quality. If your asset is in less-than-stellar condition, mentioning this builds buyer trust by showing your willingness to be transparent about potential issues. This increases the chances buyers will bid or purchase your assets, now and in the future. Make sure your surplus asset management provider always includes your assets’ conditions as part of lot listings. If you’re a retailer or consumer brand, look for a partner that can expertly refurbish your electronics and appliances, as this improves their condition and increases recovery. There’s a robust market for surplus of fair, poor, or even scrap quality. In fact, Liquidity Services has sold nearly three billion pounds of scrap metal for the Department of Defense alone. A professional partner will leverage an extensive, diverse buyer base to sell your surplus regardless of its condition.

of surplus buyers desire accurate information about your asset’s condition

A professional partner will leverage an extensive, diverse buyer base to sell your surplus regardless of its condition

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Maximize Recovery for Your Surplus by Building Buyer Trust

Include Detailed, Accurate Descriptions Nearly all buyers of surplus (95% according to our survey) want to see accurate, detailed descriptions of assets for sale. The “story” of how the asset ended up on the secondary market also interests buyers, as 61% of survey respondents find this important. This information helps buyers better understand the asset, reducing their perceptions of risk and increasing the chances they’ll bid higher. A dedicated asset management provider will include detailed descriptions of every lot for sale, from dimensions to location to important legal details such as payment, seller, and auction terms. If there’s an interesting story behind why your asset is on the secondary market, including this can whet buyer interest. For instance, an insurance company and Liquidity Services client decided to sell on the secondary market several Rolex watches that were recovered for its jewelry store client. The story of these watches – that they were stolen in an ultimately unsuccessful heist – added intrigue and helped drive bids and recovery.

of buyers want to see accurate, detailed descriptions of assets for sale

If there’s an interesting story behind why your asset is on the secondary market, including this can whet buyer interest

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Maximize Recovery for Your Surplus by Building Buyer Trust

Provide Compelling Images and Videos 94% and 65% of buyers, respectively, deem photos and videos important to asset listings. Compelling photos and videos establish buyer trust – and drive higher bids and recovery – by providing clear evidence of your assets’ quality. Include several photos from multiple angles to show that the asset is in good working condition. And be sure to provide short videos of machinery assets to verify that they still run.

of buyers deem photos important to asset listings

Look for a provider that can skillfully capture, edit, and post compelling photos and videos of your surplus. A trusted provider will display your surplus in the way most appealing to buyers, maximizing recovery while enabling you to focus on core business.

deem videos important

A trusted provider will display your surplus in the way most appealing to buyers, maximizing recovery while enabling you to focus on core business

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Maximize Recovery for Your Surplus by Building Buyer Trust

Mention Your Asset’s Age 85% of buyers want to see the asset’s age included in lot listings. Older assets are more likely to need frequent maintenance or be obsolete or out of warranty. Knowing an asset’s age helps buyers screen for such issues. An asset’s age isn’t always a deal breaker, however, and you can build buyer trust by transparently including this information even when it isn’t favorable. Look for a provider that includes asset age as a general practice in lot descriptions. For retail inventory, an expert provider can raise buyer confidence by providing warranties for older items it has refurbished. Your partner should also have access to a global buyer base to generate maximum recovery for your older assets. Assets considered obsolete in your market may be in demand in developing countries.

of buyers want to see the asset’s age included in lot listings

Your partner should have access to a global buyer base to generate maximum recovery for your older assets

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Maximize Recovery for Your Surplus by Building Buyer Trust

Include Original Manufacturer and Seller Name A brand name matters to buyers of surplus. 73% want to know the original manufacturer brand of surplus they’re considering purchasing, and 66% want to know the seller brand. A familiar brand name is a mark of quality that increases buyer confidence and interest. Even if the seller or manufacturer brand isn’t well-known, including it increases buyer trust by showing that the company stands behind the product.

When Considering a Purchase, Surplus Buyers Want to Know:

A provider will – with your permission, of course – communicate your brand and the manufacturers’ brand to potential buyers of surplus. Since buyers associate experiences purchasing your brand’s surplus with your brand, make sure your provider delivers excellent customer service throughout the buying process, from available, helpful staff to proven dispute-resolution processes.

Original Manufacturer Brand

Seller Brand

Make sure your provider delivers excellent customer service throughout the buying process

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Maximize Recovery for Your Surplus by Building Buyer Trust

Display Other Bids and Bidders When browsing lots on online auction sites, buyers are interested in both the number of times an asset has been bid on (61% find this important) and the total number of bidders (58% find this important). This information provides “social proof” of an asset’s value – if many buyers are interested in an asset, this suggests that the asset is a great value. On the other hand, some buyers might be interested in assets with few bids, as this could indicate that it’s a “hidden gem.” Either way, this information helps buyers make decisions.

When Browsing Online Auctions, Buyers are Interested in Both:

Select a surplus asset management partner with a large, diverse, global buyer base. More potential buyers means more bidders and bids, increasing your buyers’ confidence and leading to higher recovery.

The number of items an asset has been bid on

The total number of bidders

A large buyer base means more bidders and bids, leading to higher recovery

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Maximize Recovery for Your Surplus by Building Buyer Trust

Be Open About the Asset’s Original Price Most buyers of surplus (54%) like to see the asset’s original price listed. Comparing the original purchase price with the used price, buyers can feel confident they’re bidding on a quality item, and will be more likely to bid higher. They will also appreciate your transparency in providing this information. There’s another, more subtle way in which displaying the original price can increase recovery. According to the psychological concept of “anchoring,” people tend to evaluate something based on the first piece of information they receive about it. A $100 coat seems expensive if you walk by a rack of $20 shirts first, but not if you pass the $400 suits. Similarly, prominently displaying the asset’s original price in listings can subconsciously prime your buyers to bid more for that asset.

of surplus buyers like to see the asset’s original price listed

Look for a provider that lists your asset’s original price on the lot – with your organization’s permission, of course.

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Maximize Recovery for Your Surplus by Building Buyer Trust

Feature Similar and Related Lots When shopping for surplus online, buyers want to see lots similar to those they’ve searched for and bid on in the past. Buyers of surplus tend to be “treasure hunters” who keep an eye out for the next great deal. This means two things for your organization. First, since surplus buyers usually buy again, it’s important to create customer loyalty. By providing an optimal experience, your organization can turn a first-time buyer into a lifetime customer (see an earlier Liquidity Services white paper, Maximize Value in Your Reverse Supply Chain Through Superior Buyer Experiences, to learn how to do this). Look for a surplus asset management partner that delivers superior buyer experiences by providing complete lot information, fulfillment and warehousing services, and excellent customer service throughout the process. Second, many buyers will search hard for that great deal and refuse to settle. Your organization must distinguish your assets from competitors’ – which you can do by following this white paper’s best practices.

Look for a surplus asset management partner that delivers superior experiences for buyers of your surplus

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Maximize Recovery for Your Surplus by Building Buyer Trust

Conclusion For buyers of your surplus, the secondary market is full of opportunity but also risk and uncertainty. Our extensive research into buyer habits and beliefs has found that your business can build trust with buyers by providing a wide range of accurate, detailed information about surplus assets you’re selling. This information ranges from the obvious (detailed descriptions and compelling photos) to the less intuitive but also important (the asset’s original price and seller). Given the time and resources required to provide this information for all surplus you aim to sell, consider outsourcing this function to a trusted, expert partner. The right provider will maximize recovery for your surplus by delivering the superior, comprehensive merchandising experiences your buyers need. And it will do so while requiring little time and effort from your organization, freeing up resources to focus on your core business.

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 7,000 clients, including Fortune 1000 and Global 500 organizations as well as government agencies. With over $1 billion in annual sales proceeds and nearly 3 million buyers in 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.

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