How top retailers are reducing the cost impact of returned and overstock items

Around $400 billion in merchandise was returned in 2017, up 70% from two years ago. When you consider returned merchandise costs retailers 20 to 65% of the cost of goods sold, it’s clear retailers are in serious need of new avenues to recover the cost impact of returns.

A popular approach is to include a Returns Recovery aspect to your current omnichannel strategy, which most likely includes processes on how to accept returns from customers. Successful retailers also include processes on how to recover losses from those returns (the cost impact of processing returns is high due to: shipping, storing, processing and determining final destination—refurbish, repackage, recycle, liquidate, etc.).

Ideally, retailers strive to keep the reverse flow of inventory moving in an effort to prevent overstock or returned items from taking up valuable and expensive warehouse space. While keeping inventory flowing in and out of the warehouse remains a primary goal, the reality is, increased return rates are having a significant impact on retailers. As a result, new returns ideologies are taking shape within the industry, with the idea of liquidation as a viable solution becoming less taboo. For example, nine of the top 10 U.S. retailers are currently using a modern liquidation process to recover a significant amount of the cost associated with returns. This includes leveraging B2B liquidation marketplaces to reach a larger base of secondary market buyers, thus generating higher recovery than they would get with a traditional, local liquidator.

Take for example appliance manufacturers and retailers; there is an enormous buyer base for Scratch & Dent washers, dryers, refrigerators, and other household appliances. Resellers, such as small to medium sized family shops, make a lucrative business out of selling such items purchased from an online liquidation marketplace platform like B-Stock’s. Says Jeff Miars of Camden Appliances: “B-Stock has become our main channel for buying product.” You can read more about Jeff’s story here.

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