Dealing with Holiday Returns
The holiday season is right around the corner and will mark a huge boost in revenue for most retailers: holiday sales can account for as much as 30% of total annual revenue. But on the heels of the biggest shopping season of the year, comes a barrage of returned merchandise that will end up significantly cutting into the bottom line without a proper strategy in place. This season in particular will bring higher return rates as more consumers than ever are expected to shop online (e-commerce return rates are almost double that of brick-and-mortar stores). Heightened consumer expectations of relaxed cross channel returned policies along with buyer’s remorse and gift-recipient dislike will also play a role in the reason-for-return.
Whether an ugly sweater, problematic consumer electronic or an ill-fitting pair of shoes, around 10% — or close to $70 billion worth of merchandise — once purchased/gifted/unwrapped, will be heading back to U.S. retailers and manufacturers this holiday season. Though much of it will be in functionally and cosmetically perfect condition, putting it back on store shelves is logistically and financially inefficient; in most cases it’s better to liquidate this inventory and recover as much as you can. Here is where having a proper liquidation solution in place can make a major difference to your bottom line.
If you’ve historically sold distressed inventory to one or two liquidators your recovery for this merchandise is likely low. Liquidators are professional negotiators: They increase their profit by buying at lower prices, not selling at higher prices. What’s more, the time spent negotiating one-off deals for every merchandise lot is inefficient and takes you away from core, strategic business activities.
Rather than treating liquidation as a reactive event, think about approaching it as a long-term strategic asset, in the form of a solution that is automated, sustainable and scalable depending on your liquidation needs. For example, the solution should be able to handle the uptick in returned inventory following the holidays without sacrificing the recovery or velocity with which it is sold.
The most effective solution comes in the form of a Web-based platform. This type of solution allows thousands of buyers to compete for your inventory, pushing prices up (versus a liquidator negotiating them down). 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. A Web-based solution is one way to make this happen. This could entail launching an online auction liquidation marketplace that can be customized, integrated, and marketed based on your unique inventory needs. By automating the process, ensuring a faster sales cycle and proprietary market intelligence in the form of real data on market prices, you can recover substantially more with less work which will positively impact your bottom line.
Many of the world’s largest retailers, including nine of the top 10 U.S. retailers, are using a Web-based, automated auction approach and increasing recovery for their returned and excess merchandise by 30-80%.
What to Look for in an Online Marketplace
When selecting an auction platform or online marketplace provider be sure to do your homework, there are a lot of choices out there and not all are created equal. The best ones will:
• Provide immediate access to a large group of interested, vetted buyers, authorized by you
• Create customized demand generation campaigns for your marketplace and auction lots
• Encourage competition and keep buyers engaged
• Allow you to sell from multiple locations, reducing the need to consolidate inventory and eliminating extra transportation costs
• Collect data on each transaction with analysis on how to improve recovery
Many Happy Returns
In today’s retail landscape returns are inevitable — especially after December 25 when a holiday hangover sets in and people regret their purchases or dislike their gifts. Facing these returns head on with a technology-based program that automates liquidation is imperative and should not be left to old, reactive approaches. What’s more it can mean the difference between winning and losing this holiday season.
Howard Rosenberg is CEO and co-founder of B-Stock Solutions, a technology-enabled service company powering the largest network of private-label B2B liquidation marketplaces. For more information, visit bstock.com.
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