Liquidation.comB2B Marketing Success Story

Case Study #6Brad GibsonJoe JacksonCINF 4334

Spring 2010Dr. Kim

•Liquidation.com is an online business-to-business (B2B) market creator that specializes in bringing together buyers and sellers of bulk goods.

•Liquidation.com can be thought of as an eBay for bulk goods.

•Liquidation.com operates in the “reverse logistics” market. Instead of helping bring new goods to market from raw materials, they help organizations to clear old, excess and surplus equipment from their stocks.

•Reverse Logistics was estimated to be a $63 billion market in 2008. That’s up from $38 billion in 2004.

•An example would be a local aerospace company that has refreshed their desktop workstations and now has a bulk of outdated equipment filling their warehouse.

• The company can either put the machines in a dumpster, give them to a recycler, donate them or try to recoup some of their initial investment.

• Liquidation.com offers them the marketplace to get something back.

•Liquidation.com’s marketplace allows sellers to unload their goods without having to host their own sales, advertise, open up their facilities to the public or transfer them to an intermediate location.

•Sellers tend to recoup at least twice as much through Liquidation.com as they would the offline world.

• Global reach of the internet.• No longer have to accept highest bid from local buyers.

•The service is used by 675,000 professional buyers in 116 countries to purchase bulk goods.

•Sellers include large manufacturers, distributors and retailers such as Wal-Mart and JCPenny.

• Many of the selling items include return merchandise that cannot be resold in a store.

Federal Government

State and Local Government

Private B2B

European B2B

Dedicated Wholesaler to Retailer

Parent Corporation

•Founded in 1999, Liquidation.com has been profitable since 2002. The company went public in 2006.

•Liquidation.com takes on average a 20% commission from all sales.

•Liquidation.com owes much of its success to its marketing efforts.

• They compared their print ads and websites to those of other online liquidators and strove to make theirs more professional looking.

• They send targeted ads to registrants and previous buyers.

• They purchased hundreds of words on Google and Yahoo that lead seekers directly to Liquidation.com.

• They issue time relevant press releases to print and broadcast outlets.

• After an east coast blizzard, stories ran about retailers unloading their overstock items on Liquidation.com.

•They’ve turned a dank, murky world of warehouses, junkyards and scrap collectors into an easy, efficient way to sell surplus goods.

Question One:Why is Liquidation.com able to compete against eBay?

Answer:Precision online marketing and branding as well as by breaking up large lots into smaller quantities.

Question Two:How did Liquidation.com build trust in its sites and services?

Answer:•Standing behind purchases.•Having “fair” auction policies.•Offering professional looking sites.•Teaming with other trusted brands such as VeriSign, PayPal, Dun & Bradstreet.•Links to positive stories in the press such as those found in the Wall Street Journal.

Question Three:Why would retailers rather have a site dedicated to finding wholesalers rather than use the existing Liquidation.com website?

Answer:To establish long-term and reliable supply chains. Liquidation.com’s items change day-to-day.

Question Four:What are the key elements in Liquidation.com’s core product and how does it create an augmented product?

Answer:Liquidation.com’s core product is the marketplace which allows sellers and buyers to find each other. They’ve augmented their product by branding and offering customer service and protections. They’ve transformed the back alley resale market into a white collar, billions of dollars enterprise.

Question Five:Find a product on the Liquidation.com site that is also for sale on eBay. Compare the prices per unit. What accounts for the price differential?

Answer:Bulk pricing is the reason for the primary reason for price differential between eBay and Liquidation.com. Selling in bulk tends to yield lower prices.