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Seasonal Returns Provide Product-Sourcing Opportunities

Despite a recovering economy, US shoppers still found enough money on their credit and debit cards to drop $601.8 billion in retail spending during the recently completed 2014 holiday shopping season per the National Retail Federation. While we can’t know the depth of thought and consideration that took place with those buying decisions, we do know that plenty of people took the opportunity to return a variety of items.

That returned merchandise presents an opportunity for adept resellers. Firms like B-Stock Solutions and Liquidity Services Inc., which operates Liquidation.com, engage in managing the items that go back to the returns counters of stores like Walmart and Costco.

Such items end up in the online marketplaces managed by these companies on behalf of the big name retailers, selling returned items in bulk auction lots online. Eric Moriarty, VP of sales for B-Stock Solutions, told EcommerceBytes.com his firm sells over 500 bulk lots of merchandise every week across their marketplaces, comprising hundreds of thousands of items.

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“Consumer electronics including TVs and mobile devices are a huge product category for us, followed by apparel and appliances,” he said.

After the holidays, Moriarty said approximately 10 percent of holiday purchases are returned. While he noted their marketplaces in particular see a rise in merchandise mid-January through March, “the time span is due to a few factors including: internal policies set by the retailer on how returns are handled, the retailer’s warehousing and logistics bandwidth, and a delay in returning the item by the consumer.”

Profitability for resellers of returned merchandise will be affected by a number of variables. Moriarty listed ones like the reseller’s channel of eBay, Amazon, or however they opt to make those items available for purchase. Any value the reseller adds, like refurbishing, can have an impact on profit margins, as does overhead and item condition according to Moriarty.

Though the margins will vary, with some sellers seeing triple digits on a per-unit basis while others will see much less, Moriarty’s firm enjoys customer loyalty as he noted they have seen “a high buyer retention rate across all categories, condition codes and sizes.”

Online merchants intrigued by the business possibilities and who want to get involved can register and bid on returned and overstock items from retailer and manufacturer “private-label auction marketplaces.”

“In most cases, we are enabling something that most resellers have never experienced. That is, true direct buying from the largest retailers and brands in the country,” Moriarty said.

 

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David A Utter

David A. Utter is a freelance writer based in Lexington, KY. He has covered technology topics from search to security to online business and has been quoted in places like ZDNet and BusinessWeek. He considers his appearance on NPR’s “All Things Considered” with long-time host Robert Siegel a delightful highlight. You can find him on Twitter @davidautter and on LinkedIn.


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