As COVID-19 continues to escalate and impact businesses around the world, we wanted to share the latest trends B-Stock is seeing in the reverse logistics space and in the secondary market specifically. Our visibility into the largest retailers and manufacturers in the U.S., Canada, and Europe is providing unique insights into how supply chains are managing through this rapidly evolving landscape. We are monitoring the situation closely, and will continue to share observations and insights with our partners on a regular basis.

Emergent Reverse Logistics Trends

Retail and Warehouse Operations

We have seen a rise in reverse facility closures in some supply chains. Across retail, there have been temporary, chain-wide suspensions and facility closures. Some locations have been impacted due to various states and municipalities ordering businesses and buildings to be closed (or temporary closures due to a positive case for an employee). This is resulting in reverse inventory being held inside and outside of facilities and not being processed.

Labor

Labor constraints are putting a strain on reverse operations as well. Labor shortages due to child-care needs or illness are impacting some facility performance, and additionally, some retailers are shifting reverse logistics personnel to accommodate heavily-burdened forward operations.

Facility closures and labor shortages stress the other nodes of retailer reverse networks, creating sporadic spikes in secondary market supply in various regions. We are expecting this trend to increase and arrive in waves, with facilities coming off and online as different geographic areas run through the progression of the virus.

Emergent Secondary Market Trends

The secondary market is responding in real time to the changing landscape. Supply is being impacted by disruptions to inventory processing, while demand is evolving due to a combination of surging interest in some categories and other factors. Having a broadly distributed buyer base is proving to be advantageous. Overall, there is still plenty of demand in the secondary market, with some shifting of that demand among categories—some of which are proving to be more resilient than others. The following are our insights, broken down by supply and demand:

Supply: Inventory Processing Disruptions

  • Some retailers relying on direct contracts with a handful of local buyers are experiencing delays and storage issues, as some buyers are not able to pick up inventory and resell quickly enough at scale (especially for local buyers operating discount retail outlets).
  • Transportation demand is tightening and is focused on the forward chain, resulting in slower liquidation inventory pickup and increased prices. According to DAT (https://www.dat.com/) the load-to-truck ratio has increased from 1.87 for week ending February 23rd to 3.15 for the week ending March 20; a 168% increase.
  • Some retailers are introducing new sorts to the sorting process, allowing certain classes of items to be resold through traditional retail channels. These include items such as cleaning supplies and non-perishable grocery items.
  • As some retailers rapidly change their retail product mix, inventory that would normally be in the retail flow is being moved to liquidation. As such, there will likely be a higher supply of non-core overstock products introduced into the secondary market.

Demand: Liquidity Strains

  • We are seeing overall secondary market liquidity being impacted by the same transportation and labor challenges affecting supply. Some liquidation buyers that primarily resell goods using regional brick and mortar stores are unable to accept new incoming inventory.

B-Stock Network Demand

  • Overall, B-Stock’s demand continues to be strong and relatively unchanged from previous weeks. We are not seeing dramatic swings in pricing yet, but some categories are starting to be impacted. Categories showing strongly increased demand include household goods, groceries, toys and hardware.
  • Some of the metrics we closely follow include the number of bids and bidders competing for inventory. Participation among bidders continues to be strong across different geographies and buyer types, again with some minor shifts between categories.

How B-Stock is Helping

B-Stock can help by providing:

  • Consistent liquidity with access to a large and distributed buyer base. As the market continues to shift, we are seeing significant benefits from having a large and dispersed buyer base, as this significantly reduces the risk of disruption to your liquidation business. The diverse pool of buyers is acting as a shock absorber in the current environment, where any single buyer can be shut down in an instant. It is best to reduce reliance on a small number of buyers.
  • Marketplace model results in true market value of inventory. It is hard to predict where your product will be valued most highly in the current environment, but a dynamically priced, geographically dispersed marketplace can ensure the proper distribution of those goods.
  • Data/Insights to Recovery & Category Trends. We are monitoring the market closely to spot category trends and will communicate with you regularly if we believe any special action is warranted.
  • Flexible secondary market logistics solutions that:
    • Guarantee velocity
    • Reduce the burden on facilities
    • Re-position inventory where needed
    • Provide value-added sorting or manifesting
    • Arrange overflow/ surge transportation & warehouse capacity

Available Solutions for Additional Velocity and Liquidity:

  • Drop Trailers – Additional drop trailers can be delivered to facilities to be loaded and stored on the yard as they go through the auction cycle to ensure liquidity
  • Cross-Dock Facilities – Short-term, flexible locations near sellers to further process/sort inventory into most desirable lots
  • Forward Transfer & Storage – Removal of inventory immediately from potentially affected warehouses to be liquidated at your request.
  • B-Stock Supply for Non-Traditional Inventory – Leverage the strong demand in our multi-seller marketplace to quickly move non-core inventory.

We hope you found this update helpful during these changing times. B-Stock will continue to update our partners weekly with the latest information we have regarding the impact of Covid-19 on secondary markets.