By John-Paul Savant, CEO of Auction Technology Group
With another Black Friday behind us, retailers will no doubt be wondering whether this year’s sales bonanza has been as profitable as years gone by.
As many retailers will know, the post-purchase remorse that kicks in the week following Black Friday is becoming an increasingly costly challenge. Last year, Clear Returns, a retail software solution provider, estimated that as much as 50% of purchases made in the UK during the 24-hour event were returned, costing retail businesses £180m. And with retail returns growing at a rate of 15% year on year, we can only expect that figure to increase this year.
While retailers are preparing to take a hit on Black Friday, as customer returned items make their way back into stock rooms, other savvy players in the retail market will be eyeing up a unique business opportunity. And it’s one which will benefit all parties.
For those who aren’t aware, there is an interesting phenomenon going on behind the scenes in the retail industry. High street retailers struggling to deal with stockpiles of returned goods are turning to trade auction marketplaces to provide a fast disposition route for products that no longer have a place on the shop floor. As well as returned goods, trade auction marketplaces list ex-display, end-of-line and general overstocks, often at a significant discount. This means taking slow-moving inventory off the hands of busy retailers, saving them inconvenient logistical costs and allowing them to make way for new, more profitable lines.
A win-win scenario it seems. But who buys all this good-as-new merchandise once it finds it’s way to the auction websites? Well, that’s where things get really interesting.
Returned, clearance and surplus stock is generally sold at online trade auction, via sites like i-bidder.com, to smaller, independent retailers who snap up these goods at bargains, often 80-90% off the recommended retail price (RRP). These retail entrepreneurs buy in trade quantities, and then re-sell items on for a neat profit, often via e-commerce marketplaces such eBay and Amazon. If you’ve ever wondered why you find better deals on Amazon or eBay than in-store, then look no further than the inner workings of the secondary market.
There is no denying that trade auction marketplaces are playing an increasingly important role in the wider retail market, to the benefit of retailers, resellers and consumers alike. They provide some much needed relief for retailers as they come under mounting pressure from returns and the fast pace of the retail industry. They also offer profitable new business opportunities for eBay and Amazon sellers, enabling them to source product from leading retailers that they otherwise wouldn’t have access to. What’s more, trade auction marketplaces are helping to recycle customer returned and surplus stock back into the market, allowing customers the chance to buy items they might have missed in-store at heavily discounted prices.
Black Friday is inherently designed to encourage impulse buys. It’s therefore inevitable that high street stores will have a lot of excess stock to deal with over the coming weeks as consumers return their regretted purchases. Luckily for retailers, there is help available to ease the logistical nightmare of a retail returns influx. And for online resellers, an even bigger opportunity knocks.
(A Retail Times’ sponsored article)