It’s clear there is a seismic shift happening in retail right now. Once steadfast department stores and high-profile retail chains are announcing massive store closures and bankruptcies, while billions of pounds in sales are moving from in store to online. While this evolving retail climate is creating issues for some, many are successfully shifting their strategy in order to meet the needs of consumers; this includes establishing relaxed return policies to remain competitive and, beyond that, implementing ongoing programmes to effectively deal with those returns.
Relaxed return policies build customer loyalty but, on the flipside, drive a culture of impulse buying: consumers know they can purchase – and bring back – items at will, with no questions asked. In the case of e-commerce returns are even more robust due to the propensity of the buyer to purchase three or four sizes or styles of the same product and send back the ones that don’t work.
This trend, and the growing cost associated with it, is packing a punch with retailers, large and small; this is especially evident when it comes to merchandise that can’t be returned to store or virtual shelves and is slated for liquidation. In the case of smaller, independent retailers with already skinny margins and limited resources, it’s essential for them to understand the true value of the stock and reassess whatever programmes they have in place.
Typical methods like selling the stock to a jobber or negotiating offline with a handful of buyers always leaves money on the table. Liquidators, who know they are not being forced to complete, are really good at negotiating prices down in order to maximise their own profits. What’s more, any time spent negotiating deals for every lot of merchandise takes away from core, strategic business activities.
Turning returned stock into cash
So what makes for a better plan and how can an independent retailer quickly turn its returned and excess stock into the maximum amount of cash?
The most viable solution involves bypassing layers of middlemen and selling directly to a robust base of business buyers who then sell directly to consumers. While returned and excess inventory may have little value to you, the value it holds for secondary market buyers is considerable. Most likely there is already a robust secondary market and buyer base for your product(s); in every major city around the globe there are businesses that purchase excess and returned inventory for resale. The secret to success is the ability to gain access to this buyer base.
Leveraging a business-to-business online auction liquidation marketplace is one way to make this happen. The best marketplaces available come with an established and vetted, base of thousands of active, interested buyers who will compete for your stock via online auctions (this pushes prices up versus a handful of jobbers negotiating them down). When used properly, this type of solution can boost recovery by 30-80 per cent, and sometimes much more. What’s more, it will help deliver a faster sales cycle (to quickly turn your returned and excess inventory into cash), whilst automating the process and generating proprietary market intelligence in the form of real data on market prices.
Take this example: a small, family-owned retailer was looking for an easy-to-use, cost effective solution to help increase recovery on its excess stock. By leveraging a trusted multi-seller B2B online auction liquidation marketplace, the retailer was able to quickly turn its excess stock into cash by having thousands of buyers compete for it. What’s more, the increased exposure and competition allowed for a triple digit increase in recovery (658 per cent) as well as a repeat buyer rate of 74.7 per cent.
While leveraging this type of platform will have a big impact on efficiency, not all B2B liquidation marketplaces are created equal in terms of what you can achieve in recovery. Be sure to look for a marketplace that has:
- Direct access to a global buyer base – thousands of buyers will help drive prices up versus a single buyer negotiating them down
- A great reputation among buyers – repeat buyers mean higher prices for you
- A knowledgeable seller support team – extensive secondary market and online marketplace experience is a key driver of success
- An easy-to-use platform – you should be able to easily post full inventory manifests for buyer review and bidding.
Once you’ve selected a B2B liquidation sales channel, there are a few things you can do to ensure the highest pricing for the stock. For example, how you assemble your inventory and who you market it to can have a huge impact on price. It’s best to segment auction lots by product type, condition code, original MSRP per item, and location. For example, if you are routing returned merchandise from UK buyers to a specific location in the EU, it’s best to market to secondary market buyers in that general geographic location.
Additionally, having a consistent supply of inventory will drive higher prices: consistent auction listings will help you develop loyal followers/buyers, which positively affects recovery. Finally, providing great customer service is key. In an auction environment, the importance of happy, repeat bidders is significant and can boost prices by double digits.
In today’s return-happy landscape, it literally pays to rethink whatever program you have in place for the handling of this stock. In the case of liquidation: every pound increase in recovery value, or reduction in expense, equals another pound of profit for the business.
Ben Whitaker is director of the EMEA region at B-Stock Solutions.
Further reading on retail trends
Nominations are now open for the British Small Business Awards 2017, the leading event celebrating the brightest stars in the SME sector. Click here to enter, and make sure you get involved today using the hashtag #BSBAwards. Good luck!