John Davies started Liquidate.it in March 2008, operating on a part-time, evening only, basis, while continuing in his day job. But he went full time last month, thanks to an Invest NI grant from the Propel Programme – a scheme to give the most promising entrepreneurs the opportunity to scale-up their businesses. The grant pays half his previous salary, enabling John to cover his mortgage, feed his family and to operate from prestige premises in Belfast’s Queen’s Island.
Liquidate.it does what it says on the tin – it turns retailers’ and wholesalers’ stock into cash. While the intention was to appeal to insolvency practitioners and sell the assets of businesses that went into administration, the reality – helped by the recession – has been that high street retailers, in particular, have released surplus stock for sale via Liquidate.it.
“The business idea is very simple,” says John. “We liquidate surplus stock, work in progress and customer returns, that is a big one. We do this even for some big companies.”
Traditionally retailers with stock they cannot sell have used intermediaries who pay as little as 10 pence in the pound. Worse still, agents sometimes break contractual undertakings not to sell into the same market – they will normally promise to sell internationally so that the retailer’s own operations are not damaged, yet surplus goods often end up a little way down the high street at bargain prices.
Liquidate.it works differently, operating on behalf of the retailer. It obtains as much as 75% of the recommended retail price, paying the proceeds, less a commission, to the retailer and by selling online is not in competition with the retailer. “The key thing is that we work for the client, not against them,” says John. It is a business model that works well for two large companies in the Republic, but there are no competitors for Liquidate.it in Northern Ireland.
Products are sold through multiple online retail channels, including through eBay, Amazon, shopping comparison sites and Play.com – though the firm is also developing its own website, to be launched in the coming weeks. Using specialist software, Liquidate.it assesses what the optimum market price should be. In some cases products are auctioned, but most are sold at set prices – including on E-Bay, through the ‘buy it now’ function.
One of the great benefits of the Liquidate.it business model is that it does not need working capital. It was started with £150 from John, to pay for the company registration. Since then it has not required any investment. Traders provide their unwanted stock to Liquidate.it, which sells the goods, takes the money and then forwards the majority of the taking onto the client retailer. This process gives Liquidate.it a positive cash flow at all times.
Having established the business, John is keen to take it to the next stage. “I am looking to grow exponentially now,” he says. “Even working part-time I had clients in Northern Ireland, the South and in England. The recession has obviously helped my business because companies are looking to generate revenue or working capital and the only way to do that is selling assets and work in progress. But things will be even better when the recession is over, because people will have more disposable income and my base market is consumer electronics, although we’ve sold everything from bed-sheets to vehicles.
“The scary thing is that if I get in front of the right person on the right day I could go from a turnover of £40,000 in a year up to £1m! Then growth could just go crazy. Realistically, the idea is to continue to grow the business across Ireland and be recognised in the market place.”