B2B liquidation terms, explained clearly

Surplus inventory is stock a business holds in excess of what it can sell through normal channels within a reasonable time. It includes overproduction, cancelled orders, discontinued lines, and inventory left over after a season or contract ends.

Overstock is inventory purchased or produced in quantities greater than actual demand. It typically results from forecasting errors, bulk purchase discounts, or a drop in demand after ordering.

Dead stock (also called slow-moving stock) is inventory that has not sold for an extended period and is unlikely to sell through normal retail or distribution channels. It is usually liquidated at a steep discount to recover partial value.

Excess inventory refers to any stock beyond what is needed to meet expected demand over a defined period. It overlaps with overstock but can also include raw materials and components, not just finished goods.

B2B liquidation is the business-to-business sale of surplus, overstock, or excess inventory in bulk, typically at a discount to wholesale price, to other businesses such as distributors, wholesalers, or exporters — rather than to individual consumers.

A B2B liquidation marketplace is an online platform that connects sellers of surplus inventory with verified bulk buyers, replacing traditional liquidation brokers with direct, transparent transactions between businesses. racklots.com is an example built for the Indian market.

Wholesale liquidation is the process of selling large quantities of goods, usually surplus or returned stock, to wholesale buyers at prices well below original retail or distribution value.

KYB (Know Your Business) verification is the process of confirming a company's legal registration, tax status, and ownership before allowing it to transact on a platform. It typically requires GST registration, incorporation documents, and identity proof of the business owner or director.

A GST-compliant invoice is a tax invoice that meets India's Goods and Services Tax requirements, including GSTIN of both parties, HSN code, tax rate, and tax amount, allowing the buyer to claim input tax credit.

Input tax credit is the GST a business pays on purchases that it can deduct from the GST it owes on sales, reducing its net tax liability. A valid GST-compliant invoice is required to claim ITC.

An HSN (Harmonized System of Nomenclature) code is a standardized numeric code used to classify goods for tax purposes under India's GST system. The HSN code determines the applicable GST rate for a product.

An escrow payment is a payment held by a neutral third party until agreed conditions are met, such as delivery confirmation. In B2B liquidation, escrow protects both buyer and seller by releasing funds only after the buyer confirms receipt of goods.

MOQ, or minimum order quantity, is the smallest quantity of a product a seller is willing to sell in a single transaction. Sellers set an MOQ on surplus listings to control how their inventory is split among buyers.

A floor price is the minimum price a seller is willing to accept for a listed lot of inventory. Buyers can offer at or above the floor price; offers below it are typically not accepted.

Recovery rate is the percentage of a product's original cost or retail value that a seller recovers when liquidating surplus inventory. Typical recovery rates for B2B liquidation range from 30% to 60% of landed cost, depending on category and condition.

Deal cycle refers to the time it takes to close a transaction from listing to final payment, including offer negotiation, verification checks, and logistics arrangement. In B2B liquidation, a typical deal cycle ranges from 48 hours to a few business days.

A bulk buyer is a business that purchases large quantities of goods at once, typically at a reduced per-unit price, for resale, export, or internal use. Common bulk buyers include wholesalers, exporters, and regional distributors.

A liquidation broker is a middleman who purchases surplus inventory from a seller at a low price and resells it to buyers at a markup, keeping the difference. Sellers using a broker typically have no visibility into the resale price — unlike a marketplace where buyers bid directly.