Why Your Business Needs to Develop a Diversified Liquidation Strategy
Large discount stores like TJX, Big Lots, Ross, and others have been around for some time now. They’ve become institutions for price conscious consumers. And to their credit, there are valid reasons why retailers and manufacturers partner with these off-price stores to move out unsold goods. Their business model, however, is far from perfect.
The Narrow Appeal
Admittedly, discount stores do offer a few important benefits:
- They offer retailers and manufacturers consistent, predictable recovery with pre-negotiated prices and annual or multi-year contracts
- They can easily manage high volumes of inventory without the need for palletization, which helps to clear warehouse space quickly when necessary
- They enjoy strong brand recognition in the eyes of consumers
Unfortunately, this is where the benefits come to an end. Top consumer brands are learning that discounters are far from a comprehensive solution to liquidate excess inventory.
Where Large Discounters Fall Short for Your Liquidation Strategy
Their Fixed Prices Leave Sellers Boxed In
Large discounters’ biggest advantage—fixed, pre-negotiated pricing—is also their biggest shortcoming. While guaranteed prices are known quantities, they ultimately cap recovery on high-demand items. For higher value unsold items, auctions are a superior option, as they generate competition and fetch the best price the open market will supply.
They’re Too Specialized
Familiar off-price stores like Marshalls and Burlington are well known for their apparel and homewares—but that’s about it. While they can be part of
your approach, they may not be a realistic option for liquidating everything your retail business has to offer.
For example, if you’re hoping to move out heavy, space-intensive wares like scratch-and-dent or salvage appliances, or open-box electronics, these operations simply won’t be useful to you. And these aren’t the only kinds of inventory large discounters will turn away: consider, too, the looming returns problem.
Returns Are Off the Table
Customer returns can pile up quickly, especially in the apparel business. But if you’re at all familiar with major discounters, you likely already know
that returns are a “no-go.” Discounters typically only deal in new unsold merchandise. It’s an unfortunate catch, given that customers make returns for
many reasons including poor fit, undesired color, late arrival, a mistaken order, and so on—reasons that don’t indicate any flaw with the item itself. And if you deal at all with returns, you already know how expensive they can be for retailers to process and remarket.
Still, perhaps against discounters’ expectations, these returned goods are in high demand. This leads to the final disadvantage of taking on these large
operations as liquidation partners.
They Don’t Tap Into a Surging Secondary Market
Consumers are now more accepting than ever of used and second-hand goods. You’ll need a method to recover as much value as possible from your most desirable returned items. In fact, some of the best recovery rates will come from entrepreneurs running stylish stores on recommerce sites like Poshmark and thredUp. If you want to access this market, outlet stores or traditional liquidators simply won’t cut it.
And if brand and channel control is a concern, you don’t need to swear off of these recommerce sites altogether and settle for discounters—you simply need a solution that can deliver invitation-only bidding to help you vet and hand-select only the most trusted buyers.
The Future For Discounters Is Uncertain
If you’re still not convinced, consider this final point: recent data suggest a grim future for off-price stores given production slowdowns, supply chain
backups and the recent surge in popularity of online shopping.
Discounters have been unable to get their hands on the same amount and quality of inventory as before and it’s beginning to show. TJ Maxx is reporting a 22% loss in 2022. Even before these issues arose, popular luxury and up-market brands began trying to distance themselves from discount stores due to the low recovery rates they’ve experienced.
Finally, with some discounters’ recent struggles filling headlines, it can be hard to trust that your goods won’t become tied-up in a high profile controversy, such as being sold alongside unauthorized or even recalled goods.
Building a Diversified Liquidation Strategy
For all these reasons, you may want to reconsider your liquidation strategy if you’ve long relied on large discounters to liquidate. Although there are important benefits to working with discounters, including handling large volumes of apparel and home goods at guaranteed prices, this approach alone is limiting to your business.
A great next step is to seek out a partner to help manage the struggles of your modern retail business. Such a partner should be an online, service-based solution that provides access to a large and diverse buyer pool. Additionally, it must offer guidance from dedicated experts, auction automation features, and granular record keeping for compliance and analytics. These features give what large discounters can’t—a virtually never-ending stream of competing buyers for goods of any category, condition or quantity, as well as the network-wide insights needed
to make data-backed selling decisions.
That said, it’s a smart business move to hedge your bets. Keep multiple liquidation channels in place, ensuring you always have a way to move whatever inventory you may have. This flexibility will reduce cycle times and, thus, holding costs.
B-Stock Is the Partner You’ve Been Waiting For
B-Stock is the world’s largest B2B online marketplace for excess and returned merchandise. Top retailers and manufacturers from around the
globe count on our platform to liquidate surplus, returned, salvage, and otherwise unsold inventory.
With auctions designed to fetch the highest possible market prices and a network of 500,000+ buyers, B-Stock will help liquidate any inventory of any category, condition, or location. And by outsourcing inventory reduction needs to us, partners gain access to our logistics partners, platform-wide data insights, and expert account managers.
Whether your business aims to save cash, conserve time, clear valuable warehouse space, improve operational velocity, or scale up operations, contact B-Stock today to begin tackling your toughest inventory challenges and earning back your valuable time to focus on your organization’s core competency.
