404 Error Drama . . .

Our site is a 100% White hat Marketplace. PPL create products. Products get deleted.

However, I noticed our ranking has dropped on a lot of our #1 Keywords. Nothing crazy but most are now #2. After checking for NegSEO and every other error, I discovered over 12,000 404s through Google Webmaster Tools. We don't have a sitemap at the moment either.

Now in the past (At least on my WP sites) - I would just 301 all deleted pages. No issues whatsoever. Rankings remain tight if not get higher.

I want to implement a site wide 301 and get rid of 404 issues forever - plus re-direct that juice as our products get linked fairly often.

What would you do or recommend?

PS: I feel like doing a 301, getting all that juice and giving Google the Finger - heheh

Soft 404... that says "sorry this product is no longer available... here are some similar products that are available"... dead product pages that performed well are an opportunity for you to revive them later either by bringing the product back or putting something similar or better in its place.