Guide to Disposing of Excess Inventory

Inventory overload can be a serious financial drag for your business. But what to do with excess items – no matter what they are or where they came from – can be a difficult dilemma. Selling it through normal channels may be out of the question. After all, that’s why you have the surplus.

And – especially if your surplus is new or unexpected – you probably have little patience or time for figuring out what to do with it. But there are several means at your disposal that can either net you a cash return on your items, or a nifty tax write-off for goods donated to a qualified charity. Five directions to go include:

1. Sign up to sell in bulk in a business-to-business (b2b) liquidation marketplace
2. Sell everything at once to an "instant" liquidator
3. Sell small quantities at sites targeting consumer volume sales
4. Hold your own private online liquidation auction for invited guests only
5. Donate qualified items to a charity and earn a tax deduction of up to twice the cost of the goods.

Action Steps
The best contacts and resources to help you get it done

Unload in bulk, b2b

Retailers, wholesalers, manufacturers, distributors and others sell goods via centralized liquidation auctions.

I recommend: Liquidation.com is a b2b bulk marketplace where companies sell all kinds of excess goods. See How to Sell (PDF). Liquidation.com welcomes inventory from small businesses to sell on the auction marketplace, and has a track record of providing returns higher than other liquidation methods. (Nearly a half million small businesses also use Liquidation.com as a source of inventory for resale to consumers.)

Net instant cash on your excess inventory

Avoid the bother of auctions by selling to a surplus inventory liquidator.

I recommend: Instant Liquidators, Merchandise USA and Power Retailing buy a wide range of customer-returned and excess inventory. Excess Technologies is a professional surplus inventory liquidator.

Run your own private online auction

And guess who's going to help you do it – eBay, of course, the online auction king.

I recommend: eBay Private Marketplace is your own private-label, e-commerce site to liquidate excess inventory only to your invited buyers. Your Private Marketplace will have its own Web address and its own look-and-feel, but be hosted and supported by eBay technology. (For businesses with at least $2 million in excess inventory annually.)

Donate your new and qualifying excess goods for a juicy tax deduction

Your corporation can earn an above-cost, federal income tax deduction, clear out warehouse space, avoid liquidation nightmares and help schools and nonprofits.

I recommend: NAEIR, The National Association for the Exchange of Industrial Resources, takes donations of new, overstock or discontinued product and redistributes that product to schools and nonprofit groups nationwide. Donor companies can receive an enhanced income tax deduction of up to twice the cost of the goods, courtesy of Internal Revenue Tax Code Section 170 (e)(3). NAEIR takes donations of general, consumer goods such as school and office supplies, toys, games, building materials, clothing, tools, and much more. NAEIR provides the paperwork to aid in filing taxes. See how it works.

Tips & Tactics
Helpful advice for making the most of this Guide

• Donating merchandise to NAEIR is quick and easy. It's not unusual for donors to have their product on the way to NAEIR a week after initial contact.
• Donors may deduct cost, as carried on their books, plus half the difference between cost (basis) and the fair market value, except that the tax deduction cannot exceed twice the cost. For example, items carried on the books at a cost of $100 that have an established fair market value of $200 may be donated and a deduction of $150 may be taken. If however, those items carried at a $100 cost have an established fair market value of $300, they may be donated and a deduction of $200 may be taken.
• Schools and nonprofit organizations pay a membership fee to participate in NAEIR. Organizations that become NAEIR members must agree to use the merchandise received through NAEIR in accordance with IRC section 170(e)(3), which states that the merchandise must be used for the care of the ill, needy or minors and cannot be bartered, traded or sold.

The official source of Disposing of Excess Inventory is
the Business Liquidation page at Business.com