How Inventory Liquidators Benefit From Strong Holiday Spending

Returns are an inevitable part of holiday shopping, and this year, shoppers are forecasted to bring back a whopping $90 billion to $95 billion worth of goods that were purchased during the holidays. The increase marks a predicted 15 percent to 20 percent rise from last year, with online sales likely to comprise almost half of the volume as inventory liquidators stand to gain from strong holiday spending.

Nearly eight in 10 holiday shoppers prefer to exchange or return merchandise in brick-and-mortar stores. And almost three-quarters of consumers noted that they would likely buy another item while making a return, per a National Retail Federation survey. As companies seek to mitigate the cost of reverse logistics, it is becoming more crucial to meet the needs of these customers, The Wall Street Journal noted.

While some unopened products could make their way back on the shelves of brick-and-mortar stores, many of them are liquidated via online auctions and other secondary channels. B-Stock Solutions is a marketplace that liquidates returned merchandise for retailers such as Amazon, Costco and Target, among others.

Howard Rosenberg, the company’s founder and CEO, told PYMNTS in a previous interview that retailers historically did not often consider liquidation because it was not financially rewarding, recouping about 15 percent on average. As he pointed out, marking down items by 70 percent was still an overall better value, simply because liquidation was so close to giving the product away.

That is no longer the case, however. There are some categories of merchandise where B-Stock will be able to recoup 85 percent of retail. Although that isn’t the norm, Rosenberg said, there is strong competition in some categories, where retailers are almost better off selling to the company by the pallet than taking off 70 percent and aiming to sell inventory to shoppers.

“As a retailer, you would rather have your buyers think 50 percent off is as good as they are going to get, instead of giving them a reason to wait around to try to catch 70 percent off – you don’t want to train them to that. That can’t be the best outcome,” noted Rosenberg.

The online liquidation market promises to grow in the years to come. Returns volume is expected to surpass $1 trillion within the next few years, per an estimate given by Tobin Moore, CEO and co-founder of reverse logistics technology company Optoro, as reported earlier this year.

“Retailers are losing billions and billions of dollars on the way returns are managed,” Moore noted. “A lot of retailers can add 5 percent to their bottom line by better optimizing the management and resale of their returns.”

And, as the holiday shopping season sparks a surge in returns, the online liquidation market may stand to benefit from helping retailers sell merchandise that is no longer wanted by consumers – or merchants.