How to sell excess stock without damaging your brand

The fear we hear most from brand owners isn't about price. It's this: "What if my product turns up on eBay for a third of what my retailers charge?" It's a fair worry. Clearance stock that lands in the wrong place can undercut your retail partners, cheapen how customers see your brand and make next season's pricing harder.

The good news is that it's preventable. Here's how to clear excess stock while keeping control of your market position.

Why does clearance stock end up on eBay?

Usually because nobody set conditions, or the stock passed through enough hands that the conditions were lost. A typical path looks like this: stock goes to an auction or a buyer with no restrictions, gets split into smaller lots, and ends up with resellers whose cheapest outlet is an online marketplace.

The first sale is where you have the most control. After that, every extra step makes it harder. That's why the choice of first buyer matters more than any other decision. Our guide to who buys excess stock in Australia compares the brand risk of each option.

What conditions should I set when I sell clearance stock?

Set the conditions that protect what you actually need to protect, and put them in writing. The most common are:

Each condition removes some buyers, so expect it to show in the offer. Our guide to how stock buyers price stock explains why. The trick is to protect the channels that matter and leave the rest open.

Can I set a minimum resale price for my clearance stock?

Be very careful here, and get legal advice. In Australia, resale price maintenance is generally prohibited. The ACCC says plainly that "it's illegal for suppliers to impose minimum prices for the resale of their goods or services". Its examples include setting minimum prices in policies or agreements, and refusing to supply retailers who sell below a minimum price.

The same ACCC page says suppliers can recommend prices, set a maximum retail price, and refuse to supply resellers who sell products as loss leaders. A supplier can also seek an exemption from the ACCC, by authorisation or notification, but must show the conduct is in the public interest.

This is general information, not legal advice. How competition law applies to a clearance deal depends on the facts, the wording of your agreement and the relationship between the parties. Before you put any pricing condition in a contract, talk to a competition lawyer.

What we can say is how we work. Our first guarantee is: "We strictly follow your guidelines in relation to pricing and distribution locations." We're happy to discuss your guidelines and how they'll be documented.

Is exporting excess stock a good way to protect my brand?

Often, yes. Selling stock into a different country keeps it away from your local retailers and customers. It suits products that travel well and don't depend on Australian-only labelling.

We sell to overseas buyers regularly. In one deal we bought 19 containers of washing powder in New Zealand and sold them to Singapore without meeting the buyer or seller. The stock cleared, and it didn't land back in the market it came from.

Two cautions. First, check that export really means export; ask where the stock is going and include it in the contract. Second, think about labelling and compliance in the destination market, because relabelling costs money.

What does debranding or rebranding involve?

Debranding means removing or covering your brand so the product can be sold without your name on it. Rebranding means putting a different label or brand on it. Both protect your brand by taking it out of the clearance sale.

Common methods:

• removing swing tags, labels or sleeves
• over-stickering or over-labelling packaging
• repacking into plain or alternative packaging
• selling components or raw materials instead of finished goods.

Debranding adds handling cost and can affect what a buyer will pay, because a known brand is often what made the stock attractive. It also has to be done properly: the product must still carry whatever labelling the law requires where it's sold. Ask about compliance before you commit to a debranding plan.

Sometimes the answer is to turn stock into something else. We once bought a discontinued line of glass bottles, had them filled with soft drink by a beverage company with spare capacity, and sold the finished product to a discount retailer. The original product never appeared on a clearance shelf.

When does a staged release make sense?

When the parcel is big enough to move the market. Dumping a huge quantity of one product into discount channels at once can depress prices for everyone, including your full-price retailers. Releasing it in batches, across regions or over time, lets the market absorb it quietly.

A staged release needs a buyer with enough outlets to spread the stock around and the patience to do it. It's part of why we sell to a mix of major retailers, discount chains, overseas buyers, charities, wholesalers and distributors. Each has different motivations, and we structure the deal to suit them while keeping your stock away from the channels you want to protect.

What should my clearance contract cover?

Put the deal in writing, and have your lawyer check it. A clear agreement usually covers:

1. The stock: SKUs, quantities, condition and dates, ideally matching your stock list.
2. Price and payment terms: the amount and when it's paid.
3. Collection or delivery: who moves it, when and who pays freight.
4. Channel and region conditions: where it can and can't be sold, and whether those conditions pass to later buyers.
5. Debranding or relabelling requirements, if any, and who does the work.
6. Confidentiality: whether either side can disclose the deal.
7. What happens if conditions are breached.

Any pricing condition needs particular care, for the competition-law reasons above.

What are the warning signs that a clearance could hurt my brand?

Some deals look fine on paper and cause trouble later. Watch for these:

• The buyer won't say where the stock is going. A trustworthy buyer will tell you which kinds of channels and regions they'll use.
• No written conditions. A verbal promise is hard to rely on once stock has changed hands twice.
• A price that seems too good. An unusually high offer for stock with tight conditions can mean the conditions won't be honoured.
• Cherry-picking. A buyer who takes only your best-known lines may be planning to sell them hard, where they're most visible.
• Splitting the parcel across several unknown buyers. The more hands, the less control.
• Auctions of branded consumer goods. You can't choose who bids.

None of these is automatically fatal, but each is worth a question before you sign.

What if my stock has already turned up somewhere it shouldn't?

Find out how it got there before you act. Check your sales records and contracts to work out which parcel it came from and what conditions applied. If a buyer has breached a written agreement, that's a matter for your lawyer.

Then fix the process for next time. Most leaks happen because there were no conditions, or because stock passed through several hands. A single buyer with written conditions and a reputation to protect is the simplest fix.

How do I choose a buyer who will respect my brand?

Look for a buyer whose business depends on being trusted by brand owners. Ask how they'll keep stock out of the channels you name, who they sell to and whether they'll put it in writing. Then ask how long they've been doing it.

We've been buying and selling excess stock for over 30 years. Our fourth guarantee sums up the job: "We speedily and discreetly convert your stock into cash at the highest possible price, without damaging your market position."

Does protecting my brand mean selling slowly?

Not necessarily. Conditions narrow the field of buyers, but a buyer with a wide network can still move stock quickly within them. Our third guarantee is: "We place a priority focus on clearing your stock." Protection and speed can go together when the buyer has enough outlets that don't clash with yours.

What should I send to get started?

Send a stock list spreadsheet (SKU, description, quantity, cost or RRP if you're happy to share, best-before dates), photos and the location, and tell us which channels and regions you need to protect. Use our contact page or read how selling excess stock to us works. If your stock is coming out of an insolvency, see our page for administrators and liquidators.