Today in the retail industry there is growing emphasis on reverse logistics, particularly on efficient returns management – of which a key part is dispositioning strategy. Your dispositioning strategy plays a pivotal role in determining how you manage, process, and recover value from returned items.

All too often, however, in the real world we see out-of-date dispositioning processes that were developed years ago and may no longer make sense. In this blog post, we will explore the importance of having a good dispositioning strategy, why regular reviews are key, basic building blocks, and the benefits for retailers.

Understanding Dispositioning Strategy

Dispositioning refers to the systematic approach that retailers use to handle customer returns, including making decisions about what to do with them. Should you restock, refurbish, recycle, liquidate, or dispose? How far upstream should the process begin? Developing a disposition strategy involves strategic decision-making that is essential to optimize resources, minimize losses, and maximize recovery value.

Final Takeaways

Embracing an effective dispositioning strategy is key to maximizing returns and maintaining a competitive edge in the retail industry. By strategically managing returned products, retailers can minimize losses, keep customers happier, employ sustainable practices, and maximize recovery value.

Need a hand developing your disposition strategy? Interested in outsourcing part or all your reverse logistics operation? Contact us at 800.310.4604 ext. 5500 or email businessdevelopment@liquidityservices.com.

In the ever-evolving world of supply chain management, the buzz around sustainability has grown into a critical factor for business success. One area gaining significant attention is sustainable reverse logistics – the secret sauce for companies looking to make their supply chains more environmentally friendly.

In this blog, we’ll dive into the growing importance of sustainable reverse logistics and provide practical strategies for professionals to adopt.

Unlocking Success with Sustainable Reverse Logistics

As global concerns for the environment continue to rise, businesses are reimagining their supply chain practices. Enter sustainable reverse logistics, a game-changer in the quest for eco-friendly operations. This circular approach focuses on product reuse, refurbishment, and recycling, aligning seamlessly with the global push for sustainability and corporate social responsibility.

1. Design for a greener tomorrow

A fundamental step in building a sustainable reverse logistics system is to design products with reusability in mind. This involves selecting materials that are easily recyclable and designing products that can be disassembled and reassembled efficiently. By doing so, businesses reduce the environmental impact of their products and facilitate the reverse logistics process.

2. Implement customer take-back programs

Take-back programs involve the return of used products by customers to the manufacturer for proper disposal or recycling. These initiatives not only demonstrate a commitment to environmental stewardship, but also allow companies to recover valuable materials from end-of-life products, reducing the demand for added resources.

3. Remanufacturing and refurbishment centers

Establishing remanufacturing and refurbishment centers is a strategic move for companies looking to extend the lifespan of their products. These centers can efficiently repair and upgrade returned items, giving them a second life in the market. This approach not only reduces waste but also presents an opportunity for businesses to generate additional revenue through the resale of refurbished products.

4. Collaborate with reverse logistics partners

Effective sustainability initiatives in reverse logistics often require collaboration with third-party logistics providers and other stakeholders. By forming partnerships with organizations that specialize in reverse logistics, businesses can tap into expertise and resources to optimize processes, minimize waste, and maximize the recovery of materials.

5. Use data analytics for optimization

Harnessing the power of data analytics is crucial for optimizing reverse logistics processes. By analyzing data related to returns, recycling, and refurbishment, businesses can identify patterns, streamline operations, and make informed decisions to minimize environmental impact.

Final Takeaways

As sustainability takes center stage globally, savvy professionals in logistics and supply chain management recognize the pivotal role of sustainable reverse logistics. By integrating initiatives like designing for a greener tomorrow, implementing customer-centric take-back programs, embracing remanufacturing, forming collaborative partnerships, and optimizing processes with data-driven insights, businesses can not only reduce their environmental impact but also build a resilient, responsible, and successful supply chain for the future. In a world where sustainability influences consumer choices and regulatory requirements, investing in sustainable reverse logistics isn’t just responsible – it’s a strategic imperative for long-term success.

If you would like to explore other strategies to improve your total recovery, let’s talk. We can design a flexible solution that’s the right fit for your business.

Reverse logistics, particularly a retailer’s strategy for handling customer returns, represents a significant revenue opportunity that continues to garner increased attention as cash-strapped retailers jockey to improve razor-thin margins. Generating the highest recovery is key to success.

Frequently, however, when retailers try to assess their recovery rates, they focus primarily on topline revenue from resale rates garnered through liquidation, including auction returns and/or direct sales to a small slate of existing buyers.

That is a good place to start, but by itself, this strategy overlooks several key areas: handling costs, transportation costs and storage costs.

To accurately assess recovery rates, retailers are better served by examining Total Recovery Value: the total of your resale price PLUS savings on handling, transportation, and storage.

If a product is received, triaged, and sorted optimally, refurbished, then sold through the right channels, you will get maximum recovery. Let us take a look at the following graphic.

1. Highest Resale Price

Frequently, we see retailers relying solely on a pre-existing internal slate of B2B buyers to liquidate overstock and returns. That may not be the best strategy to maximize recovery and velocity, for a few reasons. One, it limits the pool of potential buyers. Two, it limits the retailer’s ability to determine optimal recovery via price discovery initiatives. And three, it increases the likelihood of supply chain disruptions.

To help increase recovery, retailers may want to consider adopting the following liquidation strategies instead:

• Leverage partners who can give you access to greater numbers of B2B buyers. A good liquidation partner will offer you several liquidation channels, including online auctions and direct sales to a larger slate of established buyers.
• Consider incorporating D2C (direct to consumer) sales for high-ticket or bulky, heavy items that are difficult to transport. There are millions more consumers than B2B buyers, and they frequently are willing to bid higher for the same items.
• Ensure that your partners and your reverse supply chain have the necessary flexibility to pivot your liquidation strategies in response to changing marketplace conditions.

3. Transportation Costs Savings

With rising costs of transportation today, this is a key area to consider. The number of transportation legs has a significant impact on your Total Recovery Value. Transportation legs is defined as the number of times a returned product is transported until it reaches its final disposition and the total mileage. Cut the number of legs and your recovery rate will improve.

You may want to consider these strategies for lowering your transportation costs:

• Perform dispositioning further upstream via store apps or DC sorts
• Lease or build additional DCs or RCs closer to your stores
• Outsource the logistics of managing returns to external vendors

A real-world example: A large wholesale retailer with 400+ US locations was encountering interruptions and failures in its reverse supply chain. Contributing factors included sporadic pick-up of goods, unpredictable freight costs, and diminishing recovery. Additionally, their inefficient solution weighed on the retail and operational teams, creating stress from their store operations, and disrupting their core business efforts.

By customizing a solution that allowed for parcel/LTL shipments to occur on an as-needed basis, we reduced their freight costs by more than $200,000 annually while eliminating legacy shipping issues, which removed the stress from their store operations and allowed them to handle spikes in inventory flow during peak season without disruption.

4. Storage Costs Savings

If you have overstock and returns occupying valuable floor space better suited to forward sales, you will need a short-term storage solution. How and where you store your product has a significant impact on total recovery. A flexible storage solution is mandatory, or product usually sits too long in the DC.

To help cut storage costs, your reverse logistics operation should include strategically located warehouses to reduce freight and cut cross-country travel. Consider also selling direct from your warehouse.

Sometimes, a third-party integrated storage solution makes the most sense.

For example: Liquidity Services slashed storage and transportation costs for one leading international home decorating retailer by leasing a dedicated building for them located near their DC. Then, we provided a pool of trailers to hold their excess inventory. The retailer loads the trailers and furnishes a manifest. We manage all labor and resources and provide drivers and transportation for eight round trips a day, including shuttle service to and from the dock to the building.

 

This strategy saves them space, labor, time, and hassle. Not only does it eliminate the need for a third-party carrier to schedule pickups, but it also eliminates most overtime labor while freeing up space in their DC for more valuable merchandise. It is an ideal approach for high-volume facilities requiring operational efficiency.

For another retailer, we implemented our award-winning Automated Sell in Place Solution, which allows the retailer to build virtual pallets or multi-pallet auctions and send them to Liquidation.com, our B2B auction marketplace. The actual picking and fulfillment occur at the retailer’s warehouse after the auction closes. All products remain in the rack position until they are dispositioned, which saves warehouse floor space and eliminates unnecessary touches between seller and buyer. In a year, on average, this solution has produced an impressive 20% increase in recovery.

Putting it all together: Total Recovery Value

To get the best value for your returns, we recommend that you start by identifying the critical processes that can affect the entire life cycle of the return. If, for example, a retailer looks only at how many cents on the dollar that their auctions yield, they are likely overlooking other real costs – and corollary savings – that a more holistic view would provide.

If you’re wondering how your colleagues are capturing total recovery value, improving the efficiency of their reverse logistics operation, and solving their reverse logistics challenges, you’ll get answers to these questions and more when you download our benchmarking research survey, Recovery & Efficiency: Are Retailers Positioned for Reverse Logistics Success? 

Getting optimal recovery means looking at the full spectrum of reverse logistics — the four Rs: Retrieve, Receive, Repair, and Resell. Limit yourself to incomplete metrics, and you risk overlooking tangible savings. Whether your goal is to improve recovery, maximize velocity, lower return processing costs, or reduce waste and carbon emissions (or all of these), you will improve your overall efficiency and recover many more dollars if you take Total Recovery Value into account. And your COO will thank you.

If you would like to explore other strategies to improve your total recovery, let’s talk. We can design a flexible solution that’s the right fit for your business.

Let’s talk about seasonal fluctuations in the volume of returns and excess inventory. What do you do about all that merchandise after the holiday season is over? 

For most retailers, the volume of returns will be the highest after the holidays.  The secret to dealing with it successfully is to plan before it happens.   

1. Review Past Performance

The first step is to review past performance and history to learn whether you performed according to your expectations. What was the impact of seasonality in prior years? Did recovery drop? Were your DCs overflowing with product?  

Ask yourself, “Am I still getting maximum recovery? Or am I starting to see fluctuations?” If your recovery is decreasing dramatically during seasonal highs and lows, it’s a good time to think about a liquidation strategy that minimizes the impact of seasonal overstocks and customer returns. Here are a few tips to help you come out on top when dealing with seasonality. 

In Part I, we discussed the pros and cons of auctions. In Part II, we demonstrated how to boost recovery and move larger, ongoing volume flows more profitably. In Part III, we show you how to cut shipping costs.

With rising fuel costs and shipping delays throughout the supply chain, cutting freight expenses is top of mind for most retailers.

Historically, retailers and manufacturers have operated centralized returns networks or relied upon models that required multiple legs of freight. This strategy worked well when freight costs were lower. But today, many are finding that they need to re-evaluate their returns strategy to optimize freight costs and reduce the risk of freight disruptions.

Retailers and manufacturers usually tend to look at freight costs from the viewpoint of forward logistics. However, freight costs are a significant issue for reverse logistics operations as well. Ignoring them can come at your peril.

Why is this? Because more legs of freight equals higher operational costs and more damage to product, which ultimately results in lower total recovery value. The farther upstream in the supply chain that you can segregate items for final disposition, the more you save — by reducing both freight legs and total freight costs.

Thus, you should always work toward a goal of dispositioning product as far upstream as possible. That includes merchandise from stores, distribution centers, third-party storage , along with overseas factories and port facilities.

We recommend three strategies to maximize freight savings:

1. Sell on Location

If a product arrives late or is not needed in the store or fulfillment center, try to dispose of it before you incur transportation costs. Liquidity Services can sell directly from the dock or wherever your products are located — even if you don’t know what is in the container.

This is an especially good strategy for low-value items such as Christmas merchandise or seasonal apparel.

3. Target Different Buyers

The more buyers you reach, the faster your excess inventory will sell, which will lower your overall costs. Slow velocity leads to disruptions in the supply chain and more touches. Finding multiple channels to sell your product will create a leaner, more flexible supply chain.

Liquidity Services offers multiple channels to reach a variety of buyers (almost 5 million) in different marketplaces. If you’re disposing of a significant amount of excess, you’ll want to consider channels that reach consumers who can purchase your products directly. This strategy is particularly effective for high-value items like toys and electronics. Consumers will pay more and there are more of them.

For lower-value items, sold by the pallet or truckload, you’ll want to consider business-to-business (B2B) buying channels, such as auction marketplaces or direct negotiated sales to small regional businesses.

Keep in mind B2B truckload buyers comprise a relatively small percentage of the overall total of secondary buyers. If your supply chain is leveraged primarily to B2B truckload buyers, you are at risk for slower velocity and lower total recovery. Ideally, you would want your strategy to include a mix of both consumer and B2B buyers. The devil is in the details.

Freight costs are often a significant part of reverse logistics, but they are not the whole story. To accurately compare and evaluate your real recovery, it is key to look at Total Recovery Value – the sum of your resale price, plus handling costs savings realized through reduced touches, plus savings on transportation/freight. Taken individually, none of these metrics will yield an accurate recovery rate. Taken together, however, they provide a much more powerful and accurate picture of how well a recovery program is performing.

Retailers need more creative ideas to improve the efficiency of reverse logistics operations, and many also want to better understand how their colleagues are handling their reverse logistics challenges. If this sounds like you, download our benchmarking research survey, Recovery & Efficiency: Are Retailers Positioned for Reverse Logistics Success? today. 

If you would like to explore other strategies to cut freight costs, streamline your reverse logistics, and improve total recovery, let’s talk. We can design a flexible solution that’s the right fit for your business.

In Part 1, we discussed the pros and cons of auctions. We also established that selling all your liquidation product via auctions is not always the best strategy, especially for retailers and manufacturers with high liquidation volumes and seasonal variance in volume.

So, what’s the answer?

1. For reliable, ongoing sales liquidation, you need to establish a network of small and large professional buyers
2. You need to continue developing new buyers for your product

If you sell multiple truckloads a week, here’s a two-step multichannel approach that Liquidity Services takes to improve recovery rates for your product.

Step 1: Begin with liquidation.com

The first step is to begin with our B2B auction marketplace, liquidation.com, to establish your baseline recovery rate.

Liquidation.com is the industry’s largest B2B auction marketplace, delivering 4+ million business buyers. Our marketplace consultants will review your product type, conditions, volume, and create a customized asset sale plan that will appeal to the right buyers.

We typically begin your program with smaller lot sizes of a few pallets per auction. This strategy allows buyers to test the program without making a major financial commitment. By having buyers compete for your product, you can quickly determine its market value. Our marketplace consultants fine-tune the asset sale plan based on data and buyer feedback from previous closed auctions.

Step 2: Direct negotiated sales

With a solid asset sale plan and established pricing in place for your program, step two is to begin selling your product via our direct negotiated sales channel. This strategy targets larger buyers , including regional and national discount stores, outlets,  chains – companies who can purchase in large volumes and who typically don’t use the auction marketplace. These buyers purchase in truckload quantities and are willing to make long-term purchase commitments, which creates a reliable and predictable sales pipeline for your liquidations.

We then continue to sell your products using these two channels and focus on adding new buyers, which leads to higher recovery and more control during high-volume seasons.

Why this multichannel strategy works

By using a multichannel approach, you gain access to small and large buyers, both of whom are important for your recovery goals. Using a combination of auction and negotiated sales gives you more control over your pricing.

The secret is to match your supply with the right buyers and the right channel for the best price. A multichannel strategy delivers on both fronts. Diversifying your audiences and your strategies, plus learning how your colleagues are handling their reverse logistics challenges, can significantly improve efficiency and recovery. Download our benchmarking research survey, Recovery & Efficiency: Are Retailers Positioned for Reverse Logistics Success? to see for yourself.

To improve your recovery rates and total recovery value, contact us today.

In a new video, CNBC takes you on an exclusive tour inside a Liquidity Services returns warehouse outside Dallas, Texas, where unwanted goods from Amazon and Target are stacked to the ceiling before being resold on Liquidation.com or a variety of other marketplaces.

Liquidity Services is the nation’s only major public liquidator.

In this new video, you’ll learn how we handle warehousing, auctions, refurbishment, and how we support your sustainability initiatives.

History of Liquidity Services

How we started, where we’re going, and why we’re the nation’s #1 resource for liquidating overstock and customer returns.

Warehouses: Where Your Overstock and Customer Returns End Up

Inside our 130,000-square-foot warehouse in Garland, Texas, the aisles aren’t lined with typical merchandise. Instead, they’re stacked with returns from Amazon, Target, Sony, Home Depot, Wayfair and more, all in the process of being liquidated.

Watch the video for an exclusive tour inside one of our warehouses, and explore the booming business of processing and reselling excess and unwanted goods on the secondary market.

Auctions: Your Starting Point for Maximum Recovery

Our B2B and D2C auction marketplaces deliver more than 4.7 million loyal buyers every day to help you achieve peak recovery. Dispose of unwanted goods profitably here, or use auction pricing to establish a baseline for negotiated direct sales.

B2B Auctions

Direct-to-Consumer

Refurbishment

See how we refurbish and restore open-box and damaged goods to factory original condition.

Refurbishment Process

Watch Hewlett-Packard discover a profitable new marketplace for their refurbished electronics.

Retailers and manufacturers who have a high volume of returns and excess inventory often resort to using bulk liquidations – selling pallets or truckloads of inventory to liquidators and wholesale buyers. However, in recent years, using online auction marketplaces to sell bulk liquidations has become especially popular.

An auction marketplace can be an excellent way to boost recovery – but it’s not always the best option for every retailer. In this blog, we’ll discuss the pros and cons of auctions: When they’re most effective, which retailers they’re right for and when it makes sense to explore alternative recovery options.

Where Do Auction Marketplaces Shine?

1. Efficiency

Auctions are efficient, particularly when contrasted with private sales. Consider the retailer who negotiates a private sale with multiple prospective buyers. The retailer must share product information with buyers, compare the various offers received from each buyer, then negotiate individually on price and other terms of sale.

Instead, that retailer could list the product on an auction marketplace and get buyers to bid against each other. The online bidding process replaces individual negotiation and saves the retailer time and effort.

How to Profit Off Excess Retail Inventory! Here’s Where to Start.

Do you ever find yourself wondering how (and what is the best way) to maximize return value on excess inventory? Well, you’ve come to the right place. 

Handling returns can be costly and often stressful. Now more than ever, managing excess inventory in a post-pandemic world where supply and demand are an on-going challenge for businesses can be even more difficult for retailers. 

But don’t worry! There are many options when it comes to selling your inventory – let’s get into them.

3 Solutions to Reduce Excess Retail Inventory

If you’re ready to sell your excess inventory, your options aren’t limited! Choose what’s best for your business with these options for selling overstock items.

1. Sell on Online Marketplaces

With today’s advancement of e-commerce and the ubiquity of the internet, most buyers are purchasing their items online. Liquidity Services has options for selling excess inventory on our Secondipity Marketplace and popular e-commerce sites.

Seller Self-Serve

For small and medium-sized retailers and consumer brands, Liquidity Services has a Seller Self-Serve option, allowing you to quickly manage, sell, and profit from your inventory. 

 

Scan.N.$ell 

Another smart and easy way to leverage the world’s largest e-commerce marketplaces is through our Scan.N.$ell Mobile App, which allows you to list and sell items in just a few clicks. 

We know you have options, but why not choose the best? When it comes to retail liquidation, we come out on top by providing companies with maximum recovery, robust selling options, flexible service models, account management strategies, and more!

1. Multiple Selling Channels

Competitor B only offers B2B Auctions which limits your potential to rack up more with your recovery. The following selling channels are offered with Liquidity Services:

• B2C Sales 

This method is ideal for those looking to sell new, like new, and refurbished assets with high potential recovery. We even have our own B2C marketplace. 

• B2B Auctions

Not interested in selling to consumers? No problem. You can opt to sell via our B2B auctions which is helpful for those looking to move larger quantities of various products.

• B2B Negotiated Sales

Finally, this method is ideal for those with truckloads of products that can be sold in high volume. Our liquidation experts can help get you in front of the right buyers to strike a deal.

2. No Hidden Fees

Unlike other liquidators, we don’t nickel and dime you or surprise you with hidden fees. There is no initial setup cost, monthly requirements, or seller penalties, unlike Competitor B. Yield higher recovery by not losing out on pesky fees.

3. Three Distinct Asset Management Strategies

We know one size does not fit all so neither should your asset management strategy. At Liquidity Services we offer three ways to manage your assets:

• List ‘n’ Sell

Competitor B only offers companies to sell overstock on location. That can work for some companies that don’t have a lot of items or prefer to control the listing.

• Load ‘n’ Sell

Our competitors don’t offer these services but partner with us and you can sell truckloads from a nearby managed location. This method helps with fast asset removal and reduced transportation. 

• Warehouse ‘n’ Sell

Our final strategy for asset management allows you to send your assets to our managed warehouses to sell. Ideally, this is best for fast asset removal, high recovery, and high touch.

4. We’re a Trusted Partner

Our customers consider us industry experts with over 20+ years of experience. Additionally, we are a publicly listed company which gives our customers the confidence knowing we will be here for years to come.

5. Sell Your Items Fast

We know that selling your items fast is a priority which is why we can get your seller account setup in one day. While Competitor B will take 30-60 days to get your account activated. Who has that kind of time to wait around?

Not only can we get your account up and running but we have 3.8 million buyers in our network so the odds of finding a match for your surplus just got a whole lot higher.

There are many more reasons to partner with Liquidity Services for your retail liquidation needs. See how we stack up against Competitor B