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February 2016

More inventory returns coming as retail sales continue to shift online

According to the US Commerce Department, online retail sales grew to $341.7 billion in 2015. This was 14.6% growth over the prior year. What is particularly interesting is that total retail sales grew only 1.4% over that same period (excluding food sales).

So once again, ecommerce has gained share of total retail sales. In 2015 it represented 7.3% vs. 6.4% the prior year.

If you exclude automobiles and fuel sales, the implication is that e-commerce generated ALL retail sales growth in the year. Pretty shocking implications for brick and mortar retail.

Of course, for the liquidation industry, this is great news. As you probably know, e-commerce sales typically experience higher return rates than brick and mortar sales, in some cases double or more. This means increasing amounts of product available to the secondary market.

Other good news for secondary market buyers is that e-commerce returns are typically considered higher quality than store returns. Perhaps this is because e-commerce returns are often sent back immediately (before using the product) when the buyer realizes they made a buying mistake. These products are also handled less than returns in stores that then have to be centralized back at the returns distribution center.

All-in-all, this is great news for secondary market liquidation buyers of returns and excess inventory. The only bad news here is for anyone who operates a vast network of retail stores. Figuring out how to keep shoppers coming in to see you is becoming more and more important.