While the UK has experienced its warmest winter in 70 years, retailers have taken a substantial hit due to lower-than-average sales for seasonal merchandise as well as high return rates for winter wear. As a result, retailers have been left with considerably more excess winter stock than usual; most of which can’t remain or go back on store shelves, says Howard Rosenberg, CEO of B-Stock Solutions
Return stock is an issue for all retailers: 15% of all goods are either returned, or never sold  and retailers and manufacturers ultimately sell more than 95% of this excess inventory on the secondary market, 2] making it extremely important to have an effective plan in place. Traditional methods for dealing with excess merchandise, like selling to a liquidator or negotiating offline with a handful of buyers, aren’t necessarily the best solutions. It’s important to move beyond these inefficient recovery methods, both in the face of current seasonal demands and in response to excess inventory challenges, throughout the year.
An important first step is to implement a solid remarketing plan, with the primary objective of maximising recovery. Most likely, there is already a robust secondary market for your product; in every major city across the UK, and around the globe for that matter, there are businesses that purchase customer returns, excess inventory and discontinued goods for resale.
The best solution then would be to sell directly to a large pool of business buyers. It may seem an impossible task to aggregate thousands of these buyers and sell to all of them, but technology is changing the way companies approach liquidation, allowing them to swap out manual methods with efficient, automated processes.
A web-based solution makes it just as easy to have thousands of buyers compete for the inventory, pushing prices up versus allowing three or four offline buyers to negotiate prices down. Such a solution could involve launching an online auction platform for liquidated stock which can be integrated, customized and scaled based on a retailer’s particular inventory needs, or using an established B2B liquidation marketplace that caters directly to thousands of buyers. When done right this type of solution delivers a faster sales cycle, automates the sales process and generates proprietary market intelligence in the form of real data on secondary market prices. Most importantly this type of solution can improve recovery by 30-80% and sometimes much more.
Take this example: one of the world’s largest home furnishings and décor e-retailers was experiencing higher than normal levels of returns and selling excess inventory to a small group of buyers. As the volume of liquidated stock grew, the need for increased demand become more and more pressing. When the e-retailer launched a branded B2B online liquidation marketplace, they boosted their recovery rates by more than 30% by making their inventory accessible to thousands of new buyers, despite an increase of 138% in inventory volume. The platform also accelerated the cash cycle and reduced operational overheads.
While leveraging a web-based solution will have a positive impact on results, knowing how to best assemble inventory as well as how to target, drive and sustain the right buyers will substantially increase recovery and efficiency. Some tips:
- By segmenting buyers by product category, condition, and lot size you can better match that demand to the inventory supply
- More bidder competition among the right buyers will mean higher prices every time so investing in attracting new buyers is critical
- Repeat buyers can result in a triple digit increase in recovery prices
- How auction lots are assembled is extremely important so consider segmenting by product type or original MSRP per item
Sometimes the best option is to work with a trusted partner whose core business is the provision of remarking solutions for liquidated inventory. It’s critical to adopt a sales platform that is flexible, scalable, transparent and as well designed. A good remarketing partner should have extensive experience in developing auction strategies and managing B2B marketplaces that maximise recovery. Good partners should always have a proven track record in growing buyer bases for products across all categories and conditions; the quality of these buyers matters, not just the quantity. Ultimately, the best partners will have a great client reputation, extensive knowledge of the secondary market, and a data-driven, transparent and analytical approach.
Seeing that high levels of returned and excess stock are characteristic of the current retail climate, it’s critical to understand the true value of this merchandise and implement an effective process to maximise recovery value. Every dollar increase in recovery value equals another dollar of profit.
Howard Rosenberg is CEO of B-Stock Solutions, the largest network of private-label B2B liquidation marketplaces. Hundreds of retailers, including some of the top global retailers, have leveraged B-Stock Solutions’ technology and service offerings to sell billions in consumer returned and excess inventory. For more information please visit http://bstocksolutions.com.
(A Retail Times’ sponsored article)