No downturn for Liquidation.com: company sees a stellar 2002 - News

Electronic News, Sept 2, 2002 by Rob Spiegel

Not all companies in the electronics industry crashed during the downturn. One business actually watched its annual revenues rise from $16 million in 2001 to a projected $40 million in 2002. The company thrives in the one area of the industry that has experienced a true boom: surplus inventory.

Liquidity Services Inc., based in Washington, D.C., is riding a 150 percent growth bubble via its Web site, Liquidation.com, as it helps companies with oversupply turn unwanted components into a handful of cash--albeit a small handful.

CEO Bill Angrick attributes the company's recent growth spurt to the growing acceptance of Internet auctions for surplus goods. This acceptance has delivered a hefty base of wholesale customers to the site.

"There's an increasing adoption of industrial use of the Internet," said Angrick, noting that his large online customer base has become very attractive to sellers. "We can expose surplus property to 60,000 wholesale buyers in two to four days, which takes the oversupply and turns it into capital," Angrick said.

About 40 percent of the goods sold through Liquidation.com are electronics products. The goods run from industrial hardware and motherboards to CD ROM drives and PCs.

"One key area for us is telecommunications assets, anything related to the office environment--from servers to laptops--and all the electronic components for a corporate enterprise," Angrick said.

One of Liquidation.com's wholesale buyers earns a margin both by selling and buying on the site. "We buy a lot of electronic devices," said Frank Wible, VP of operations for Blackwood, N.J.-based AGS Industries Inc. "If the product doesn't move as well as hoped, we put it back on Liquidation.com. I have not yet done a deal that was not profitable both ways."

Though AGS has not traditionally traded in electronics, the deals that have become available lately have prompted Wible to enter the market.

"Electronics has been something we haven't traditionally focused on, but you look at what's on the site and you say, 'They can't really be selling that item for a dollar.' You know you can buy it and sell it for $40."

The wholesale buyers at Liquidation.com range from sizable traders to cottage enterprises. Brian Walker, owner of TSW Computers in Plano, Texas, buys from the site and sells to individual consumers.

"We basically scour the Internet through liquidation sites and find anything we can make money on," Walker said. "We buy it by the pallet and sell it through our Yahoo! store or through eBay. Ninety-five percent of our customers are end-users."

As a wholesale buyer, Walker has seen the effects of Liquidation.com's recent growth. "There's definitely more people on it, whether it's from word-of-mouth or through advertising," he said. "You can't get prices that are as good as before, but it's still good."

Walker started his small business as a sideline to his day job. "I started with a couple grand and just dabbled in it. When I finished selling the first batch, I started over." A few items here and there add up. "Right now I'm selling between $8,000 and $10,000 per day. I have a full-time job and this is getting too big."