Even in the height of summer, major retailers still have Christmas in mind. For example, in June Argos released its top toy predictions for Christmas 2017, highlighting the toys and games it believed would be the big winners come December. Considering holiday sales can account for as much as 30% of annual revenue, it’s no wonder retailers begin preparing for Christmas long before the season comes around. However, with ever-changing buyer behaviour, trends toward ecommerce, high return rates (one in three gifts are returned to the retailer) and fluctuating sales over recent years, what was once a sure success of a season is now more and more difficult to predict.
Even for established and successful retailers, Christmas doesn’t always guarantee a win. Online and high-street chain Next saw a drop in full price sales of 3.5% in the weeks leading up to Christmas 2016 – meanwhile M&S had its best Christmas in six years, with like-for-like clothing sales rising 2.3% in the 13 weeks to December 31. This unpredictability puts retailers of all sizes in a difficult position, making it tough to put together a reliable plan for the most important time of the year.
The one constant retailers can depend on is higher-than-average amounts of returns and overstocks. While it’s impossible for retailers to fully prepare for pre-holiday buying behaviour (a top toy prediction is just that), they can be prepared for post-holiday returns and excess inventory. Putting a plan in place for the merchandise that can’t go back to a store or on virtual shelves is crucial and can mean the difference between success and failure over the holidays.
For retailers that have typically sold their liquidation inventory to a couple of brokers, it’s likely recovery value will be low as brokers know exactly how to negotiate prices down in order to maximise their own profits. What’s more, any time that is spent negotiating deals for each and every lot of merchandise takes business managers away from their regular activities and duties.
A more profitable solution is for a retailer to sell its returned and overstock inventory via an online auction B2B liquidation marketplace. This solution allows thousands of buyers to access and compete for the items, helping to push prices up rather than allowing a couple buyers to negotiate them down. Depending on the retailer’s liquidation needs it could leverage a SaaS marketplace solution that can be built, integrated and customized; or an established business-to-business online auction marketplace that brings with it thousands of qualified business buyers interested in stock across all categories and conditions. This type of automated, technology-driven solutions are being used by independent and major retailers and e-tailers across the world in order to increase recovery by 30% and at times much more. Applying technology to the reverse logistics process will also generate a faster sales cycle and proprietary market intelligence in the form of genuine and reliable data on market prices, and
free up time that should be spent on other vital business activities.
Here’s an example of how such a solution works: a small, family-owned electronics wholesaler was looking for an easy-to-use, cost-effective B2B solution to help increase recovery on refurbished electronics. By leveraging a trusted multi-seller B2B online auction liquidation marketplace, the business was able to quickly turn its this stock into cash by having thousands of buyers compete for it. What’s more, the increased exposure and competition allowed for a triple-digit increase in recovery (658%) as well as a repeat buyer rate of 74.7% – a massive success for the business.
Consumer behaviour is continuing to alter and shift and as such retailers must plan accordingly for increased returns and excess inventory woes. For retailers that have come to rely heavily on positive sales during the holidays, it’s essential that a suitable plan is in place for returned and overstock merchandise; such a plan can help reduce losses to a large degree. Whether the business is a small independent retailer or a multinational corporation, an efficient, cost-effective, recovery-generating liquidation process is vital in such a competitive modern retail landscape.
Ben Whitaker is director of EMEA at B-Stock Solutions