Branded Closeout Buyers

Closeout buyers

Buyers of branded closeouts rarely take into account the amount of goods that a branded company produces of an item.
Lets imagine for a moment that XYZ brand is going to produce what they think is a great add on to their line. How many pieces do you really think they are going to produce; 10,000 or 250,000? If your answer is 10,000 you are way off the mark, actually the choices that I gave are both wrong. Here is why; if the population is over 300,000,000 and you are planning on testing a product into the market place you will most likely aim at around 3 - 5% of the population and then based on positive results increase production lines. So to merely test a product you are going to produce a million pieces if you are a main line branded house. If the branded house is going to add a new product into their lines they have to produce for at least 10% of the population or somewhere in the area of a mere 3 million pieces. (This is relevant to the nature of the product; some high end or fashion branded clothing would be an exception to the rule).
For arguments sake if XYZ brand tested a new product into the market place and failed they would have upwards of 500,000 – 750,000 pieces to closeout. However if they added a new product to their lines and failed they could have upwards of 2 million pieces to closeout. On the other hand if XYZ branded company chose to discontinue a product they would in most cases phase it out based on rate of sales but could end up closing out millions of pieces of a product.
Closeout buyers are made to feel like kings
Branded company XYZ knows the value of their name. XYZ brand also know that most closeout buyers want to feel that they are the only ones getting the deal. This is merely because one of the greatest fears of a closeout buyer is that someone else will have the goods cheaper then they do…or that they will have to compete for sales. Being aware of this branded company XYZ plays off of these weaknesses and knowing the value of their brand sales the closeouts in lots charging, for a lack of better words, a premium for the closeouts. Each closeout buyer is made to feel like a real insider. Each is made to feel that they are the only ones with the deal and in some ways they are at first. Branded company XYZ can not afford to release all the goods onto the market place at one time, it is counter productive, forcing the price lower and they would be flooded with returns from their regular accounts.
I chuckle when I hear someone say they have the inside track at XYZ branded company or add that they are the only ones with the deal. I know a half a dozen other companies that have the same inside track with XYZ branded company and they all have the same goods.
One of the oldest salesman’s techniques is to make the buyer feel like “they are the only ones” – building a buyers self importance is a wonderful tool for a salesperson.
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Closeouts