Bethesda, Maryland-based Liquidity Services has been helping retail, industrial and government clients capitalize on returned merchandise, overstocked goods and excess inventory for more than 20 years. And it will be a big part of repurposing gift returns again this post-holiday season.
Liquidity Services, whose online auction sites include GovDeals.com, SurplusBid.com, Bid4Assets.com and Liquidation.com, is big and growing. The company, with more than 650 employees including about 100 locally, logged more than $244 million in gross merchandise volume in fiscal year 2021, a measure of how much product it moved, up 24% from the previous fiscal year. Its near-term objective is $1.5 billion in annual gross merchandise volume.
That requires a lot of storage space between buying and selling, and Liquidity Services currently has more tan 1 million square feet of total warehouse space.
In November, Liquidity Services opened a 100,000-square-foot warehouse in Pittston, Pennsylvania just to keep up with its retail merchandise segment growth. Retail now makes up 25% of the company’s gross merchandise volume.
As the holidays have come to an end, gift returns will be highly impacted by the pandemic-era swell in online purchases.
“Last year about 10% of all in-store purchases were returned, so that’s a pretty significant volume. What is interesting is that as e-commerce grows, e-commerce returns are even a greater share. E-commerce returns are at a rate of 15% of 20% or more,” according to Jeff Rechtzigel, vice president and general manager of Liquidity Services’ retail division.
And for retailers, resellers like Liquidity Services are usually the best option for returned merchandise.
“More often than not, it doesn’t go back on the shelf,” Rechtzigel said. “Usually the box has been opened. The packaging has been damaged in some way. And it’s not perfect.”
Returned merchandise is most often repurchased by discounters, online resellers and even Mom and Pop stores.
An estimated $114 billion in holiday merchandise sales will be returned this season, and companies like Liquidity Services and others in what is known as reverse logistics also keep some of that from being simply discarded.
Returned and excess merchandise create about 5 billion pounds of landfill waste annually, according to D.C.-based reverse logistics company Optoro.
Liquidity Services has also recently branched out into direct-to-consumer surplus sales, AllSurplus Deals, sort of cuts out the middleman’s middleman, selling returned and overstocked items at deep discounts directly to consumers.
Those sales are through an online bidding auction format, though the merchandise itself is only available for pickup at the company’s newly-opened 85,000-square-foot warehouse in Phoenix, but expanding to other markets is the plan.
“Most of those items start at $5 and then competitive bidding results in a sale,” Rechtzigel said. “Consumers then pick up their purchases, often getting deals at 80% or 90% off the retail value.”
Even with its fast-growing retail segment, the majority of Liquidity Services business is outside of that segment, and it moves an eclectic mix of items.
“We have an industrial vertical that sells biopharma equipment, or energy equipment or farming machinery,” Rechtzigel said. “We also have a government services business that has some interesting stock. So we’ll sell planes, helicopters, restored automobiles. We recently sold an island.”