Challenge

Our client is one of the world’s leading consumer electronics brands. Like every retailer and consumer brand, this company faces the challenge of returned goods. Nearly $650 billion worth of goods is returned each year globally (source: IRL), creating the need for streamlined returns management to turn this burden into a revenue source.

The client had a returns management and refurbishment process in place before partnering with Liquidity Services. Wanting to focus on core business, however, the client sought a partner to optimize its program while reducing its infrastructure and its associated costs. It achieved this by outsourcing returns management, refurbishment, and secondary market resale activity to Liquidity Services, generating maximum net revenue and dramatically increasing yields on resold product.

Solution

The client turned to Liquidity Services to efficiently manage its returns management program. In addition to receiving, reconciling, refurbishing, and selling the client’s regular flow of returned goods from retailers, we also provide the client with revenue for surplus inventory resulting from warehouse closures, aged inventory clean-ups, and overstock liquidations. We handle a fluctuating product mix that entails all conditions, SKU breadth in the thousands, and a wide range of categories including headphones, TVs, smartphones, cameras, Blu-ray players, and personal audio devices.

Our managed network receives returned goods directly from customers, retailers, and dealers, which we then reconcile and record in a system shared with the client. This system provides the client with a real-time, transparent view of returned inventory so it can quickly credit customers and retailers for returns and remove them from its financial books. The client also shares its updated product catalogs through this system, helping us receive the product quickly, expediting both reconciliation with the client and channel allocation for sale.

We refurbish these returned items as determined by analytics, then sell them on the secondary marketplace that will achieve the highest net recovery. This can include our Liquidation.com online auction marketplace, Liquidation.com Direct direct sales multi-pallet and truckload channel, and individual-unit-sale B2C channels such as our Secondipity online marketplace and other online marketplaces including Amazon and eBay.

We carefully select the optimal sales channel(s) for each item based on product type, condition, and buyer demographic. For instance, high-value items with low individual shipping costs such as smartphones are often sold B2C because the client can earn higher revenues selling these directly to consumers, while lower-value items, which may have been previously disposed of, are often sold by the truck- or pallet-load to maximize recovery and
optimize velocity.

The client balances recovery and risk by partnering with us on different pricing models depending on the product category and source of inventory. Certain one-off categories and product flows are sold through a traditional purchase model in which the client receives money upfront. Consistent categories are sold via a revenue-share model that lets our client share in the recovery we achieve while also receiving guaranteed payment upfront.

We protect our client’s brand in the secondary market by providing excellent customer experiences to buyers of its goods. Through informative product listings, high-quality packaging, and responsive customer support by phone, email, and web chat, we ensure buyer satisfaction. We also create positive brand experiences by testing all returned items before selling them on B2C channels, ensuring no defective items are sold under the client’s name. By relaying recurring product issues back to the client’s engineering team, we help the client address underlying problems at the manufacturing site.

The client receives detailed monthly and quarterly performance reports, providing full visibility into everything from the conditions of its returned goods to recovery achieved. These reports help the client better understand its returned goods and continually measure the success of our program.

Results

By efficiently managing our client’s returns process, from receiving through fulfillment and payment processing, Liquidity Services transforms the burden of returns into a streamlined profit center while reducing the dedicated resources and infrastructure the client needs for reverse supply chain activities. In nearly two years of client partnership, we’ve sold more than 400,000 returned units totaling over $60 million in original MSRP value.

Our partnership benefits the client in four key areas:

  • Recovery – Our flexible, multichannel marketing approach matches goods with the right channel and buyers, optimizing recovery. Refurbishing select products increases their recovery. In December 2011, just in time for the holiday rush, Liquidity Services managed the execution and fulfillment of a 10,500 unit promotion within the short span of 62 minutes.
  • Efficiency – By receiving goods directly from customers and managing the entire returns process, we reduce the client’s transportation and processing costs and time while expediently returning value.
  • Integration – Our integrated IT systems enable real-time information sharing that helps the client more efficiently process and make intelligent decisions about its returned goods.
  • Brand Protection – Superior customer experiences and extensive product testing and refurbishment ensure the client’s brand makes the best possible impression on secondary market buyers. 

By efficiently managing our client’s returns process, we transform returns into a streamlined profit center while reducing resources needed for reverse supply chain activities.