Shipping and supply chain delays are at the forefront of retailers’ worries this peak season. Companies with holiday goods that arrive after the season or get large amounts of returns have three major options: store them in warehouses until next year, throw them away or sell them on the secondary market.
FreightWaves asked an expert how retailers can sell their seasonal returns, overstock and late inventory.
Howard Rosenberg is the founder and CEO of B-Stock Solutions, which offers retailers a marketplace to liquidate overstock goods at auctions. The auction format often brings retailers 30% more return than traditional liquidation methods, according to B-Stock.
The interview has been edited for clarity and length.
FREIGHTWAVES: Given current supply chain disruptions and delays, how much leftover merchandise do you expect after this holiday season compared to previous years?
ROSENBERG: “With brands having a hard time getting their imports into their channels because they are backed up at ports, on boats or still on foreign docks, they are squeezing more juice out of the products already in the market rather than moving that stuff into secondary channels to make room for the new goods. However, I expect a different dynamic in 2022.
“I think we will see the backlogs clear as product makes its way from the ports. Unfortunately, much of that product will be out of season by the time that happens. Some of it may be packed away for sale next year, but I expect a large influx of overstock making its way to the secondary market.”
FREIGHTWAVES: Are there any seasonal products in particular that you expect to be in short supply?
ROSENBERG: “With any imports attempting to pass through the backlogged U.S. ports being impacted, this includes almost every product you can name. Similarly, U.S.-made goods that require imported parts could be impacted.
“However, given that top holiday categories include toys, consumer electronics, apparel and home and garden goods, consumers will likely see a pinch when it comes to these types of items.”
FREIGHTWAVES: How does B-Stock deal with customer returns and overstock items for major retailers?
ROSENBERG: “B-Stock operates the world’s largest online marketplace for this type of inventory (returns and overstock). Buyers from over 130 countries bid against each other in online auctions for the right to buy the inventory; therefore, our clients’ inventory sells to the buyer willing to pay the most.
“We provide the solution to help retailers maximize the value and velocity of sale on any excess inventory.”
FREIGHTWAVES: What typically happens to late seasonal goods if retailers don’t use a company like B-Stock to sell in the secondary market?
ROSENBERG: “Sometimes goods are considered ‘pack and hold.’ These goods are warehoused and pulled out next year to be sold. Artificial Christmas trees are a good example of this.
“In other cases, companies might consider selling inventory to large off-price retailers. This is a quick and easy way to get rid of inventory but will generate very low recovery rates.
“Using B-Stock to sell into the secondary market is very similar to utilizing the off-price retail channel except instead of negotiating with a single giant retailer with 4,000 stores, you might have 4,000 retailers with one store each bidding against each other and driving the prices higher.”
FREIGHTWAVES: What environmental and economic impacts are associated with customer returns and late seasonal goods?
ROSENBERG: “The worst impacts come from companies sending inventory to landfills or incinerators. There certainly have been stories over the past few years of some pretty high-profile brand names doing this.
“Fortunately, as many companies are implementing sustainability initiatives, they’ve turned to B-Stock for help. By tapping into the secondary market, retailers and brands keep items in use, promoting the circular economy.
“In 2020 alone, B-Stock sold 120 million items across our platform, keeping nearly 400 million pounds of merchandise in use and out of landfills.”
FREIGHTWAVES: How has B-Stock helped mitigate some of the challenges associated with returns and overstock goods?
ROSENBERG: “By making it easy to access the robust, thriving secondary market, we eliminate the need for anything to be thrown away or burned. Many companies just don’t realize that there is a whole economy out there of businesses making money by creating a second life for even apparently defective returns.
“A good example of this is big screen TVs that are broken and considered ‘beyond economic repair.’ We sell millions of dollars worth of these units to businesses that have figured out how to extract value from these broken units.
“In other categories, many times sellers just don’t understand the true value of what they have, so it doesn’t occur to them that selling it is feasible and worth the effort. Even if they did think about it, they have no ability to maximize the price since they can’t easily access a large group of buyers with interest in their particular inventory. This is where we come in.”