The hidden costs of remarketing. How to recover excess inventory revenues while protecting the brand.

Posted by Cameron Swan as published by Retail World April issue 2017 Corporate Trade
25 4 2017

In today’s fast moving marketplace consumers are more demanding, product life cycles are shortening, globalisation is increasing, and retailers are forced to realise revenue growth through solid remarketing strategies.

2016 studies indicate that more than 15 percent of all FMCG products * bought by consumers online are either returned or never sold from the shelves to begin with, leaving retailers and manufacturers with little choice than to sell excess inventory on the secondary market. Consequently, it’s not hard to understand why a poor approach to disposing of returned, excess and obsolete inventory can significantly decrease revenue recovery for retailers and affect their bottom line.

It’s essential for retailers to understand the real value of their merchandise and rethink the strategies they have in place for inventory resale. For example, the obvious and most common solution is to ‘mark down’ the inventory in store to eliminate excess. Despite ensuring quick liquidation, this strategy is not only costly but can impact ongoing margins on similar categories.

Another solution by default is to sell excess inventory in the strong secondary market. Every major city around the globe boasts businesses that purchase customer returns, excess inventory and discontinued goods for resale. Yet, selling onto a liquidator can mean a lack of control over what environment and price these goods could appear.

Instead, innovative retailers are having success leveraging excess inventory through ‘corporate trade’ methods that push the boundaries of traditional resale. The model is simple and effective. Inventory is purchased with cash or a trade credit and in return, the retailer commits to allocating a portion of their media spend or other expenditures through the corporate trade company, using the trade credit as partial payment.

Market player Active International offers businesses around Australia and New Zealand the opportunity to recover, in many cases, the full wholesale value of their excess stock while partly fund their media advertising spend.

The remarketing platform offered within corporate trade provides manufacturers and retailers with control, extended distributions, access to new buyers all while recovering more value from the sale. Active International have 16 global remarketing sites offering inventory and product distribution throughout all major markets around the globe. It scale, like this from Active, that offers clients with geographic, market or channel options otherwise unexplored.

“Active International’s ability to absorb excess inventory losses is a trend quickly taking over the retail market. Already Australia's top advertisers and those new to spending on above the line advertising are supplementing their media costs through excess stock trade” explains Cameron Swan, Managing Director, Active International Australia.

Active International’s Australian clients can be found in every main industry vertical including manufacturing, retail, electronics, airlines, hotels, automotive, FMCG, finance and more.

No stranger to the risks of engaging a middleman for inventory resale, Cameron assures, [We] recognise that how and where your product is remarketed will have an impact on your brand and on the remainder of your inventory, so we give you full control of the remarketing process. We want to find a suitable home for your product.

You can choose to sell the stock yourself or Active can handle the sale based on your remarketing restrictions”. Swan explains, “[We] did not want to impact on the client’s wholesale or retail business by establishing a clearance channel for second’s products that cannibalise existing commercial channels.

With a global footprint, Active International have a strong history in trading with overseas buyers, giving us an extensive knowledge of the secondary market, data driven and transparent approach to remarketing that won’t jeopardise the B2C functions of the retailer”.

The lessons for retailers are obvious: Make sure your remarketing partner has extensive experience in managing marketplaces to maximize your results while growing your business. Investing resources to better understand your remarketing channel will have a direct and meaningful impact on the bottom line.

 

* Source: KPMG Omnichannel Retail Survey 2016. https://assets.kpmg.com/content/dam/kpmg/pdf/2016/02/omnichanel-retail-survey-2016.pdf

 

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