Sears nets greater return by moving surplus inventory to online auctions
With revenues of more than $40 billion per year, retail giant Sears, Roebuck & Co. moves a lot of inventory – including returned and surplus goods. To maximize its recovery on that merchandise and save costs on reverse logistics, Sears is moving a portion of its liquidation sales to online auctions. Since last November, Sears has sold hundreds of selected items at auction on eBay under the Slingshotman brand icon and recovered an average two to three times more on its original cost of goods than it would by using other liquidation channels, according to Clay Valstad, director of central return center operations at Sears. Sears is able to recoup more of its original cost by going directly to the consumer online and eliminating the multiple turnovers of traditional liquidation.
Slingshot Solutions developed the technology supporting its Slingshotman brand auctions, and it partners with Genco Distribution Systems on logistics. Genco collects the merchandise to be auctioned from Sears, inspects it, and, following criteria set by Sears, informs Slingshot of the items that are to be listed as “masked,” that is, not identified with the Sears brand name. Slingshot uses its proprietary software to determine optimal promotional timing, placements and dynamic pricing for each product and launches the auctions accordingly. Genco steps in again post-sale to complete packing and shipping to the consumer.
Though Sears keeps more on the dollar by selling directly to consumers, Valstad does note that auction-associated costs such as product inspection, auction management and shipping fees take a bite out of Sears’ percentage. Even so, “When that is netted out, our recovery is still higher than with our other liquidation options,” he says.
Sears recently expanded into the online sale of distressed inventory through masked auctions conducted under Slingshot’s newest auction brand, Delivery Dog, which focuses on squeezing out higher returns on damaged or distressed goods. Genco estimates that moving distressed goods at auction online could net retailers three times as much as selling the merchandise by truckload for salvage.
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