Narrowing in on which returned goods sell best at auction
Reverse logistics services providers Genco Distribution System says a year after adding online auctions as part of its end-to-end returns handling offering, it’s seen retail and manufacturer clients who use the auctions average a 78% return on their cost of goods. Returned or surplus merchandise that goes to salvage liquidators as part of a “blended” truckload or pallet–-containers that hold a mix of broken, repairable and like-new items-–by contrast generally brings back only about 35% to 40% on the dollar, says Tim Konrad, Genco vice president of research.
Genco has accelerated its online auction activity through a partnership with auction software provider Slingshot Solutions since last year, seeing the number of its retail and manufacturer clients that use online auctions for surplus and returns increase about fourfold, Konrad says. Part of the success of its online auction business results from its decision to stick to only four categories that its experience has shown sell particularly well at auction, he adds: consumer electronics, sporting goods, power tools and small household electrical appliances.
“We’ve also set a threshold on doing auctions only for items that cost the retailer a minimum of $70," he says. “If you sell an item that costs less than that it`s not that great of a bargain for the consumer by the time you add shipping, handling and auction fees for the item.”
Online auctions still constitute only a small percentage of the returned and surplus goods market, as Genco, one of the world’s largest returns processors, uses other liquidation means for the rest. “One of our returns clients, for example, handles a million units a month, and what goes to online auctions is only 2,00 to 4,000 items a month,” Konrad says. However, the company is exploring ways of increasing the amount of goods it can sell at online auctions by evaluating other tactics such as bundling less expensive items to meet the minimum cost threshold.
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