Auction option

Last year, it was revealed that returned goods purchased on Black Friday cost UK retailers upwards of £130m, with an additional £50m lost on cleaning and storing stock. And it’s not just around the holidays: throughout the year obsolete and returned inventory costs retailers millions of pounds. 

If you’ve historically sold your inventory to one or two liquidators your recovery value is probably low as the liquidators – who know they are not being forced to compete and are really good at negotiating prices down in order to maximise their own profits. In addition, time spent negotiating deals for every lot of merchandise you have to sell (phone, fax, email), takes you away from core business activities. 

A web-based solution makes it easier to have thousands of buyers compete for your inventory than it is to negotiate prices with three or four buyers, offline. This could entail launching an online auction marketplace platform that can be customised, integrated and scaled based on your inventory needs or leveraging an established business-to-business marketplace that caters directly to thousands of liquidation buyers. Regardless of the platform, an automated, technology-driven sales process delivers a faster sales cycle and generates proprietary market intelligence in the form of real data on market prices.

Take this example: one of the world’s largest home furnishings and décor e-retailers were experiencing higher volumes of customer returns, due to a growth spurt in primary sales. The inventory was being sold to a small group of buyers for a pre-negotiated price, but as the quantity of merchandise grew, so did the need for more buyers. By launching a branded B2B online liquidation marketplace the e-retailer made its inventory accessible to thousands of new business buyers, who could bid directly on merchandise via competitive online auctions; this boosted recovery rates by more than 30% despite a 138% increase in inventory volume. What’s more, this platform allowed the e-retailer to offload most all of the operational work associated with selling the inventory while accelerating the cash cycle.

Keep in mind the technology merely lays the foundation for this type of improvement; understanding how to use it is the key to delivering the best results. When leveraging an online auction platform to sell your returns and excess stock, knowing how to market your inventory as well as how to identify, attract and maintain the right buyers will significantly increase recovery and efficiency. A few tips:

• By segmenting buyers by product category, condition code, and lot size you can better drive demand.

• 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. 

Companies in today’s aggressive business climate can’t afford to use outdated techniques for their returned and obsolete inventory slated for liquidation. With a 30-80% improvement on price to be expected simply by rethinking their programme(s), retailers should see a meaningful impact on operating costs and net margin. Looked at this way, a technology and data-driven approach can create a true competitive advantage.