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Who’s got the margin? Liquidators may be getting it at eBay
Traditional liquidators may buy surplus from retailers for as little as cents on the dollar, but turning to eBay can boost their return on resale.
It’s not only retailers and manufacturers who are now turning to eBay to move surplus inventory. Traditional liquidators–-the jobbers to whom stores and manufacturers have historically sold surplus for as little as cents on the dollar for resale elsewhere–-are looking to the wider eBay marketplace to boost their own margins.
“It’s a fragmented industry and hard to target, but we’ve seen a lot more liquidators get attracted to eBay and start to sell that way than we did a couple of years ago,” says Paul Lundy, chief marketing officer of online auction software provider Auctionworks. “They are pretty opportunistic, they may have special relationships with different retailers, and they are starting to look at how to sell this inventory online to increase margins relative to traditional channels they were selling it in.” Traditional channels for liquidators reselling merchandise include a range of outlets ranging from dollar stores to small retailers to bulk truckloads or pallet loads destined for outside the U.S.
Liquidator MJR Sales launched its first storefront on eBay using Auctionworks last summer, and last February added a second eBay storefront. The company, which got its start more than 10 years ago by buying manufacturers’ and retailers’ surplus to resell to deep-discount stores such as T.J. Maxx, also operates two stores itself and runs periodic event sales out of temporary quarters it rents in an eight-city market area.
In August, MJR Sales began handpicking some of the best items from its inventory and offering them in its apparel storefront on eBay. Starting with about 100 items per day, it’s since grown its volume to about 1,000 posted items per day and added a second eBay storefront featuring home goods such as bedding.
Its eBay sales are all in the auction format, and director of operations Mark Mendelson says the auction dynamic works to bid up prices, and therefore, MJR’s return on its cost of goods beyond what they’ll fetch in either its stores or at an event sale. A particular swimsuit from a leading cataloger, for example, retails in the catalog for $128 but consistently brings as much as $80 or $90 on eBay. “At an event sale, if it’s on the swimsuit rack it’ll bring $10 or $15, because all the suits at the sale are priced in that range, while at one of our stores it will bring about $30,” he says. “The stores tend to do a lower volume, and the event sales are labor-intensive to run. Over time, we’re looking for ways to increase our sales on eBay, ways to post more items more quickly, and branch out into other categories.”