Archive for the ‘Liquidation’ Category
B-Stock launches new liquidation site for major department store
December 6, 2009 11:02 am | by Howard Rosenberg
Visit www.bstockauction.com now and apply to buy liquidation inventory directly from a major department store chain. There are no middlemen…you buy directly from the source.
Monthly auctions, hundreds of listings, great deals! Overstock, shelf pulls, customer returns, store stock all available. Inventory includes:
- High end, designer handbags
- Fine jewelry and gold
- Women’s coats
- Bed & bath
- Men’s & women’s clothing
- Fragrances
- and more!
Excess Inventory Liquidation’s Bad Rap
October 23, 2009 10:55 am | by Howard Rosenberg
The Dirty Little Secret that Isn’t a Secret
The term “liquidation” has developed a very negative connotation in business. It is instantly associated with failure. It may have resulted from a product being introduced with a design flaw or technical issue that results in high return rates. Perhaps a merchant or planner failed to accurately project the level of demand for a new product and overbought creating excess inventory and overstocks. Alternatively, a company that runs out of cash might be forced into an asset liquidation. While there are many reasons for engaging in different types of liquidation, none of them are viewed positively.
It is really hard to think of a positive use of the term in business, and as a result, many large retailers and manufacturers don’t want to admit they have a problem that requires use of liquidation services. With a reluctance to even acknowledge the problem, it is no surprise that these companies are not thinking about investing in this area to bring similar efficiency to it that they demand in other areas of their supply chain.
The real “secret” is that this is no secret. Everybody knows! Have you shopped on Amazon or eBay lately? Why do you think those new-in-the-box Nikes from last season are 70% off?
Outsourcing Can Bring Efficiency With Minimal Investment
The traditional approach to liquidation is to sell to 2 or 3 big liquidators. You send them a list, they send you back an offer and then you start negotiating down from your asking price. Alternatively, some companies care so little about liquidation that they don’t even bother negotiating. Rather, they establish a contract that says Mr. Liquidator will take everything at ‘x’ cents on the dollar. In exchange for a grotesquely low price, the liquidator agrees to take huge quantities of everything the seller wants to move…any time, no questions asked. It is a nice symbiotic relationship that, in the absence of any better option, works pretty well for both parties. It also precludes the thousands of smaller liquidators and brokers who would like to buy this merchandise from participating.
Whoever has been “stuck” with managing the liquidation function at the retailer likes knowing he/she has a reliable outlet to keep the shelves clear and, more often then not, believes they need these 2-3 liquidators more than the liquidators need them. This is where the biggest misconception occurs and causes even the most innovative companies in the world to manage this function the same way it was managed 50 years ago. The truth is, there are tens-of-thousands of buyers who would love to buy almost any company’s excess inventory. What has been lacking are the tools to manage a very large buyer base interested in unique lot configurations of various products of uncertain value without dedicating lots of resources to the effort.
B-Stock Provides the Tools and Services
What B-Stock Solutions does is provide the necessary tools and services to allow companies to do this. By creating an ability to sell to a more fragmented buyer market, we reduce the power of the big liquidator in the company/big liquidator relationship. Once we have built up the buyer base to critical mass for a client, every bit of inventory sold is certain to go to the buyer with the highest willingness to pay at any particular point in time. Our clients typically enjoy 20-40% higher recovery rates by virtue of this broader customer base and the auction mechanism we employ.
More importantly, the marketplace can absorb all of the company’s excess inventory because there is so much buying power (or absorption capacity) among the larger number of buyers. No longer must a company worry about their ability to move excess inventory on demand. They find they can sell anything they want in 3-5 days and realize great prices by letting buyers bid prices up, rather than negotiate them down. So the company gets to enjoy improved velocity AND recovery rates simultaneously.
Liquidation as a Strategic Asset
Having established the capability to move ample volume at adequate velocity and improved recovery rates, company’s can then factor these improvements into their planning. Since liquidation is typically a money-losing endeavor, if these losses can be substantially reduced the merchant can have more degrees of freedom in their buying to ensure they maximize sales at full retail. Similarly, with returns often making up a large portion of what gets liquidated, a company can offer a more liberal return policy when it knows its recovery value on what comes back is substantially higher.
On the other hand, some companies may have no interest in investing these additional dollars into improving their business service to customers. That’s fine…they can just enjoy the additional dollars dropping straight to the bottom line. They can really add up.
Report: 10,000 retail stores could close by year-end
August 27, 2009 1:23 am | by Howard Rosenberg
Interesting take on the state of the retail industry by Grant Thornton CARS national managing principal Marti Kopacz. Marti makes a great point that I could not agree with more strongly:
“Although there’s high risk in the retail industry, now is the time for companies to fine-tune their business and take advantage of new opportunities,” he said. “The winners will be the disciplined companies investing the time, effort and resources to reexamine their strategies and position themselves for growth.”
Inventory is the enemy of the retailer. Successful merchants in these tough times will be forward-thinking and creative in there use of new and innovative solutions, like B-Stock Solutions’ services, for managing their inventory levels and liquidation recovery rates.
B-Stock Solutions to Launch BStockDVDs.com on August 27
August 21, 2009 9:34 am | by Howard Rosenberg
We are very excited about the impending launch of a new marketplace. BStockDVDs will be auctioning off liquidation lots of DVDs for a major DVD rental company. Purchases in the marketplace will be directly from this company (whose name we can’t mention).
Bidding will start as low as 5 cents per disk with no reserves.
This will be an amazing opportunity for smaller resellers to acquire inventory directly from a major, reputable source without any middlemen, brokers or liquidators pushing up the price.
Register now at BStockDVDs and enjoy the great deals.
Future of Excess Inventory Liquidation and Reverse Logistics Industry
July 17, 2009 9:23 am | by Adam D'Augelli
Adrian Gonzales over at Logistics Viewpoint just posted the mid-year update to his 2009 Logistics Predictions this week. His predictions have so far been on the mark and we still agree with them now, just like we did back when he made the predictions back in December 2008.
Still the most interesting trend to us is:
3. More logistics software companies will venture into managed services.
This trend is one of the founding principles of the B-Stock Solutions model. At eBay, our model was primarily on the software side, providing the custom auction platform for our customers as well as driving additional buyers from the eBay marketplace.
However, while at eBay, we discovered that many of the companies we called on:
1) Did not want to invest in a money losing operation like liquidation
2) Had little or no experience or knowledge in liquidation beyond “what has always been done”
With that knowledge, when we left to start B-Stock Solutions, we knew that many of our customers needed and wanted extra help developing their liquidation strategies. This realization led us to offer our turn-key solution which enables our customers to outsource their liquidation process to us – allowing them to concentrate solely on their core business.
With our senior team’s 20+ years of auction-marketplace management experience and knowledge of the liquidation business, we are able to bring efficiency to this inefficient process and thereby drive increased recovery rates on excess inventory. This includes pricing optimization via auction strategy and marketplace management and the testing, measuring and iteration that goes along with it. In addition, increasing the number of buyers for your product while protecting your channel partners, and handling all of the administration work associated with your liquidation transactions are all parts of this outsourced service that most companies will never invest in directly.
A managed service liquidation solution is the future of the industry. Can you afford to still be in the past?
Sam’s Club Auctions on CNN’s Clark Howard
July 7, 2009 2:20 am | by Howard Rosenberg
We are proud to once again be supporting Sam’s Club on this initiative. We have people who were part of the launch at FairMarket in 2001, then we helped them grow while we were at eBay through 2008, and now we look forward to taking it to an even higher level as B-Stock Solutions. They are truly great partners whose long-term view of business is inspiring.
In this video, Clark Howard talks about Sam’s Club’s B2C liquidation marketplace. This has proven to be the single most effective liquidation mechanism I have seen for brand new excess inventory. It is effective in many diverse ways that cut across departments in an organization. The overall value to an online retailer is truly incredible. This type of B2C solution creates:
(1) Huge increases in recovery rates over traditional liquidation (finance and merchandising love it as it improves the P&L),
(2) Ability to achieve both recovery improvement and velocity (operations teams love it since it keeps inventory flowing),
(3) Deep customer engagement and loyalty (e-commerce teams appreciate the impact on the buyer experience, time on the site, repeat visits, etc.), and
(4) Extremely efficient, targeted marketing opportunities. (marketing loves the opportunity auctions provide to send huge volumes of targeted email (you’re winning, your’re losing, you won, you lost, etc.))
Every one of the top 100 online retailers should (and ultimately will!) have a solution like this on their website. Call us and we’ll make it happen!
Everything as a Service
June 28, 2009 1:30 am | by Adam D'Augelli
Yesterday, I attended GigaOM’s Structure ‘09 conference where HP’s CTO of Cloud Services Strategy, Russ Daniels, made a bold prediction.
“Everything as a Service.”
To clarify, Daniels’ believes that the current trends in technology will lead to a world where “information, opportunities and experiences — from computing power to business processes to personal interactions” will be “delivered wherever, however and whenever you need it.”
In practical terms? New cloud technology will revolutionize how businesses operate and interact with each other. Because of how new technology is designed, the cost savings associated with scale will allow more businesses to save money by outsourcing their non-core tasks. Not only will this increase revenue, but it will also allow businesses more time to focus on their core business.
This technology’s impact on the supply chain industry has already started. Many companies today – Oracle, Invensys, SAP – already offer supply chain services. This model is viable because it helps small businesses take advantage of the economies of scale associated with supply chain systems. If your business isn’t large enough to scale, it is ususally more cost effective for you to pay someone who has scale to run your that aspect of your business.
The same trend is already starting to happen in the reverse logistics business. Many companies are beginning to outsource the management of inventory liquidation into the secondary market to companies like B-Stock Solutions because they realize the cost savings associated with our solution can be substantial.
The old protocol of liquidation, where one or two liquidators get everything from a retailer or manufacturer under a fixed price contract, is dying. Technology-enabled services like B-Stock’s are revolutionizing how businesses operate and the reverse supply-chain is no exception.
Dealing with Forecast Inaccuracies
June 20, 2009 10:52 am | by Adam D'Augelli
In my inbox this morning, I found a press release announcing a massive one-day $5 million inventory reduction auction by boating company North Point Water Sports. Events such as this are not uncommon in the manufacturing industry as excess inventory is a major problem for many companies operating in a make-to-stock environment.
Unfortunately, a fundamental fact about auctions is that if you overwhelm limited demand with too much supply over too short a period you depress pricing. When a seller needs to liquidate a very large volume of product all at once, they are doomed to suboptimal recoveries as they are forced to trade recovery for velocity of sale.
This weeks Industry Week’s Manufacturing Business Challenge tackled a similar problem. The case entitled “Unreliable sales projections ripple through company”, deals with a hypothetical ceramics manufacturing company whose incorrect inventory supply forecasts had led to massive excess inventory in most quarters.
The solution for problems such as the ones faced by North Point Water Sports and the hypothetical ceramics company in the Industry Week case is not to just improve forecast accuracy, but to more importantly, to build a business process that minimizes the financial impact of imperfections in the forecast. This can be accomplished by improving demand management and putting tools in place now to deal with potential future problems.
In the cases above, B-Stock Solutions’ services are one such tool that would have helped avoid the current “worst case” scenario they are facing by creating a process to manage the ongoing liquidation of smaller quantities on a regular basis throughout the quarter or year. By continuing to liquidate throughout the year, businesses can avoid the inventory buildups that otherwise occur and drive desperation selling resulting in low recovery rates. By throttling the availability of their excess inventory over a longer period of time, businesses can realize greater recovery on excess inventory and drive operational efficiencies in their business at the same time.
Forecast accuracy is truly one of the great challenges companies in volatile, dynamic industries face. No matter how much you invest in forecasting, a forecast is based on historical data or imprecise estimates. Especially in times of economic uncertainty, the past is not always an accurate indicator of the present or future. However, by investing in tools today to deal with excess inventory problems down the road, your business will see increased efficiencies and increased returns in the future.
Preparing for Disruptive Events
June 11, 2009 11:02 pm | by Adam D'Augelli
Great article by Steve Banker over at Logistics Viewpoint titled Integrating Strategic and Supply Chain Planning at Emerson. In the article, Steve gives a case study of Emerson Process Management, a company that has prepared itself for turbulent times by implementing a robust strategic management planning process.
A major part of Emerson’s risk analysis accounts for disruptive events. These “What if” scenarios ensure that the company is well positioned in case of high impact events such as the recent outbreak of swine flu or the political turmoil in Thailand.
However, it seems that many retail businesses have not prepared for such disruptions to the supply chain, nor the sudden change in consumer spending. According to the Wall Street Journal, even today, months after the initial slowdown in consumer spending, the inventory-to-sales ratio, a measure of the number of months it would take businesses to deplete their current inventory, still flies high at 1.31 much higher than a year earlier, when the ratio was 1.12. Given the uncertainty around the economic outlook and the effect of additional job losses on consumer spending – there are still significant excess inventories that will need to be worked off.
With more scrutiny from stakeholders pressuring companies to perform at higher levels of efficiency through the downturn, businesses will have to work harder in all aspects of their business to increase returns and lower costs. Companies will need to put more inventory controls in place, creating efficiencies through reverse logistics – turning the excess inventory into cash and maximizing those recovery rates. Moving forward, however, with so much excess inventory on the market, businesses are going to have to look for new and creative to offload inventory – as well as develop contingency plans for disruptive events.
How did we get here?
June 2, 2009 10:42 pm | by Howard Rosenberg
When I launched the eBay Private Marketplace business in 2004, I spent most of my time that first year talking to retailers and manufacturers learning how they manage bulk liquidation (ie. truckloads and pallets) of excess inventory. After the first 20-30 of these conversations, I was amazed by the consistency of what I learned.
The key learnings, at a high level were that most companies:
- Don’t want to invest in a money losing operation like liquidation
- Don’t like to even admit they have a liquidation problem, let alone invest in it
- Believe they are more dependent on their liquidator than the liquidator is on them
- Manage liquidation the way they do because that is how it has always been done at the company
- Don’t realize the true value of their excess is far higher than they have become accustomed to receiving.
Calling these companies as eBay, we had little trouble getting just about any Fortune 2000 company to pick up the phone over the years (of course we would then have to spend 20 minutes explaining that we were not calling to convince them to sell to consumers via eBay.com, but that’s another story). What was really amazing was that big companies who had invested a tremendous amount of money, time and energy in bringing efficiency and automation to their supply chain operations had not evolved their approach to liquidation beyond the same process they had used for decades.
The answer to the question: “How do you handle liquidation?” was almost always: “Well, we have 2 or 3 guys we call when we have a need to liquidate anything.” In some cases it got as advanced as, “We send out an email to our 4 or 5 buyers and ask them to get us back an offer by Friday.” As you would expect, the use of such a manual process necessitated limiting the buyer base to whom the inventory was shopped. After all, how could you manage this sort of process with 50 buyers, 100 buyers, 1,000 buyers? In no case was there any meaningful negotiation process or other discovery of the buyers’ true maximum willingness to pay.
As we built out the business, added customers and increased our annual “GMV” (gross merchandise volume, or the dollar value of everything our customers transacted on our platform), it became crystal clear that what we were doing was extremely powerful and could really impact a company’s bottom line. Generally speaking, we found that we increased recovery rates for our customers by anywhere from 20% to 100%, depending on the type of inventory. Take a look at what this means…if a company has $1 billion of revenue and generates 2% of revenue from liquidation, and we improved the recovery rate by 30%, we’d drop nearly $6 million straight to pre-tax profit. If that company operated at an 8% operating margin, we just boosted operating earnings by 7.5%. Not bad when you consider how easily accessible these dollars are.
So we continued to grow the business at eBay with great success. We never had a quarter with less than 50% year/year growth in the last 10 quarters I was there. Unfortunately, eBay’s core business started to really suffer and “all blood was being drawn back to the heart”. That is to say, there were no resources available to fund interesting, but small, businesses like ours. Finally, in late 2008, I decided that I had to leave and gather the resources needed to build this business as an independent entity.
So in January, my co-founder and I launched B-Stock Solutions. We closed our Series A financing in February and shifted into high gear. We built our platform in about 3 months and just recently signed a deal with eBay to take over the management of our old business from them. With that agreement and the associated customers moving over to B-Stock, we have again become the leaders in this market.
It is funny how things happen.
