By  on June 15, 2005

Sears Holdings has gone online to make a bid for new inventory liquidation practices.

With its three Internet storefronts on eBay, Sears Holdings has found that online auctions yield a better financial return than some of the conventional liquidation practices that it now uses to dispose of excess inventory.

"It's creating another channel within multichannel," said David Southworth, divisional merchandise manager for hardlines at Sears Holdings. He outlined the strategy for each of the three Sears-branded eBay sites at a new industry conference called Internet Retailer in Chicago last week.

Southworth said the initiative was helping Sears increase its margins on excess inventory and acquire new customers for its overstock, particularly among the 147 million value-oriented consumers who are already registered users of eBay. (Sears also operates brick-and-mortar outlet stores.) In addition, he said, the program encourages shoppers who have not ventured into online auctions to explore the process through a brand they know.

Sears' three eBay stores are called Sears, Sears Appliance Outlets and Sears Liquidation Center. Each store, running on marketplace management software from ChannelAdvisor of Research Triangle Park, N.C., features product at different stages in the twilight of its life cycle.

"Retailers are very adept at selling in-season merchandise, but where we find a huge opportunity to innovate is at the back end on product that isn't so desirable, because it deals with messy things like returns, damaged and defective products," Southworth said.

In a test, Sears compared the financial return of selling merchandise via eBay against the return expected through conventional liquidation channels. Southworth declined to reveal the results, but said, "There were a lot of skeptics, internally, that we were able to win over" as a result of the test findings.

One of the Sears eBay sites focuses on hardlines overstock, such as tools and consumer electronics that are still in their original, unopened boxes. "It's picked, packed and shipped out of our distribution center in Manteno, Ill.," said Southworth.

The Sears Appliance Outlets site is different. Large items, such as ovens, treadmills and TVs with surface damage or marked for clearance are featured on this site, he explained. "You can buy a refrigerator for 40 percent off. It might have a scratch, and we'll tell you where the scratch is," he said.

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