Excess stock, returned inventory and outdated products have long been problematic for retailers, wholesalers and manufacturers, according to clearance company, Going. They take up valuable warehouse or shelf space that could be better used to stockpile current inventory and perhaps more importantly, they represent lost revenue.
In South Africa, retailers have traditionally called local traders or auctioneers to dispose of excess, returned and out-of-date products, but now that is changing with more warehousing operations going online. According to clearance market place Going.co.za, these traditional means of disposing of such stock is a highly fragmented method. The company says this increase in excess stock can, in part, be attributed to the increasingly liberal return policies of retailers, together with the Consumer Protection Act that allows consumers to return goods to suppliers for various reasons. As a result, the company is seeing more and more online liquidators emerging as the demand for inventory liquidation services increases. Going estimates the return-merchandise business in South Africa alone totals approximately R13 billion. Most local customers are following international trends and have been trained to expect a no-questions-asked return policy, according to the company and that has allowed all the big box players to build market share, but one of the costs of that strategy is that they have to handle the returned merchandise.
Web-based liquidation services such as Going.co.za offer a nationwide pool of potential buyers, opening new markets for retailers’ and manufacturers’ excess inventory. With thousands of small businesses and traders, a market is being built for virtually any quantity or condition of returned merchandise, according to Going, who states its buyer base is growing rapidly since it was launched together with black empowerment group Amabubesi in 2013. The web-based liquidation site also gives manufacturers new outlets for their surplus goods, as the company has the ability to reach millions of small retailers, sparshops and traders. Internet salvagers touch a huge audience as anybody can shop online.
Online liquidation platforms also benefits buyers, particularly small, independent retailers, by giving them access to a wider variety of products at lower prices. Instead of traveling to trade shows or auctioneers warehouses in search of inventory, these retailers simply go online. In today’s fast-paced and highly competitive market, retailers need to be able to unload excess or out-of-date inventory quickly and efficiently, says Going.
Obsolete products
Of particular importance are areas such as consumer electronics, where a product can become obsolete shortly after landing on the retailer’s shelf. Many products have a three- to six-month cycle now and it is crucial that the retailer has a strategy for what to do once the item is less than current technology, says the clearance company. For online retailers return rates can be as high as 25 percent because customers cannot try on apparel or examine merchandise before making a purchase and with more and more of the retail trade realizing the various benefits and return on investment from online liquidator channels, Going expects more such platforms to emerge over coming months.