When one of our apparel retail clients first partnered with us, they leaned towards setting the starting price close to what they wanted to sell the lot for—around 20 to 30% of MSRP. These high starting bids can build resentment from buyers who want to feel they are getting the best possible price. To offset this, savvy retailers are implementing B-Stock’s Low Start Price Action Strategy where they start with a price that’s not related to the value or expected sale of the merchandise. This strategy attracts additional bidders at the auction start time, which leads to more competition (note: many retailers experience 3x higher recovery as competition grows from under five bidders to over 15). As a result, the retailer is able to extract the highest willingness to pay. We’ve also seen that when a buyer wins an auction that started at a low price, that buyer will come back and bid more the next time.
Here’s some of the psychology behind the strategy:
Many of our retail clients are putting this strategy to work, including a large department store retailer that recently experienced increased bidding and higher recovery by starting all auctions on its B2B liquidation marketplace at $100.
If you’re a retailer and would like to start selling overstock and returned items on the secondary market, please get in touch with us.