RETAILEXCHANGE’S EXCESS SUCCESS

Byline: Peter Braunstein

NEW YORK — “If excess inventory is wrong, I don’t wanna be right.” That could well be the slogan of RetailExchange.com, which since February 2000 has served as an online marketplace for the buying and selling of excess merchandise. In the last six months, however, the utility of this B2B hub has been reinforced by a phenomenon that has otherwise bedeviled apparel retailers: the imminent-rumored-near-recession that has already taken a bite out of profit margins.
With more retailers and manufacturers policing the bottom line, RetailExchange.com has seen notable growth. Since November, the online marketplace has signed on 2,000 new members, bringing the present total to 7,500; presented 4,211 new product listings; and listed $237 million in new, excess merchandise. Apparel is still the leading category, constituting roughly 45 percent of RetailExchange.com’s offerings, followed by home goods and electronics.
“We’ve seen a gradual increase in listings from retailers and manufacturers all along, but things have really taken off in the first three months of this year — we’ve been receiving about $50 million a month in listed merchandise, a majority related to the holiday season,” said Jason Kissell, director of marketing for RetailExchange.com. While the disposal of excess inventory becomes all the more pressing during economic downturns, Kissell also explained the pseudo-recession is stimulating excess inventory purchasing. “At times like these, retailers will be very cautious in their spending, and their biggest concern is inventory. If planned spending decreases even 10 percent in favor of opportunistic spending, that’s where RetailExchange comes into the picture.” To stimulate such “opportunistic purchasing,” RetailExchange has made it a point to list seasonal items and not just winter apparel that didn’t sell. “Our most recent e-mail of listings had in-season items like swimsuits,” said Kissell.
Financial belt-tightening has also helped RetailExchange.com in its mission to destigmatize excess inventory as the “dirty secret” of the apparel, and other, industries. Remembering a time when manufacturers would only admit to having excess goods after that third martini at a trade show, RetailExchange has gone so far as to formulate guilt-alleviating, Blue’s Clues-like editorial pieces that make unsold inventory seem like a normal state of affairs. “The notion of excess goods can be somewhat of an enigma. The word excess tends to conjure up negative thoughts, when in actuality it can be a very positive situation, as virtually all retailers and manufacturers have excess at some point,” argued one RetailExchange editorial item. “Many retailers experience margin pressure but are unaware of what channels to use to off-load their excess goods and alleviate some of that pressure.”
So far, the 14-month-old RetailExchange.com has not yet reached profitability, but the growing B2B has studiously avoided throwing bubble-era dot-com yacht parties where guests have Beluga caviar food fights just for kicks. “We learned all the lessons we needed from the B2C companies,” said Kissell. “We’re spending very little on marketing and are generally frugal.”

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