Hidden Cost of Remarketing

Posted by
18 5 2017

Hidden costs of remarketing

How to recover excess inventory revenues while protecting the brand

This article originally featured in Australian magazine Retail World

 

In today’s fast-moving marketplace, consumers are more demanding, product lifecycles are shortening, globalisation is increasing, and retailers are forced to realise revenue growth through solid remarketing strategies.

The KPMG Omnichannel Retail Survey 2016 showed that more than 15 per cent of all FMCG products bought by consumers online are either returned or never sold from the shelves to begin with, leaving retailers and manufacturers with little choice than to sell excess inventory on the secondary market. Consequently, it’s not hard to understand why a poor approach to disposing of returned, excess and obsolete inventory can significantly decrease revenue recovery for retailers, and affect their bottom line.

Retailers have to understand the real value of their merchandise and rethink their strategies for resale. For example, the obvious and most common solution is to ‘mark down’ (ie, put on sale) the inventory in-store. Despite ensuring quick liquidation, this strategy is not only costly but can also affect ongoing margins on similar categories.

Another default solution is to sell excess inventory in the strong secondary market. Every major city around the globe has businesses that buy customer returns, excess inventory and discontinued goods for resale. Yet selling onto a liquidator can mean a lack of control over what kind of retail environment these goods appear in, and for how much.

Instead, innovative retailers are successfully leveraging excess inventory through ‘corporate-trade’ methods that push the boundaries of traditional resale. The model is simple and effective. Inventory is bought with cash or a trade credit and, in return, the retailer commits to allocating a portion of their media spend or other expenditures through the corporate trade company, using the trade credit as partial payment.

Market player Active International offers businesses in Australia and New Zealand the opportunity to recover, in many cases, the full wholesale value of their excess stock, while partly funding their media- advertising spend.

The remarketing platform offered through corporate trade gives manufacturers and retailers control, extended distributions, access to new buyers – all while recovering more value from the sale. Active International has 16 global remarketing sites offering inventory and product distribution throughout major markets all around the world. Scale like this offers clients geographic, market and channel options otherwise unexplored.

Active International’s ability to absorb excess inventory losses is a trend quickly taking over the retail market. Already, Australia’s top advertisers and those new to spending on above-the-line advertising are supplementing their media costs through excess stock trade.

Active International’s Australian clients can be found in every main industry vertical, including manufacturing, retail, electronics, airlines, hotels, automotive, FMCG, finance and more.

 

You stay in control

No stranger to the risks of engaging a middleman for inventory resale, we at Active International recognise that how and where your product is remarketed will have an impact on your brand and on the remainder of your inventory. That’s why we give you full control of the remarketing process. We want to find a suitable home for your product.

You can choose to sell the stock yourself, or we can handle the sale based on your remarketing restrictions. It was never our ambition to affect the client’s wholesale or retail business by establishing a clearance channel for seconds products that cannibalise existing commercial channels.

With a global footprint, Active International has a strong history in trading with overseas buyers, giving us an extensive knowledge of the secondary market, and a data- driven and transparent approach to remarketing that won’t jeopardise the B2C functions of the retailer.

The lessons for retailers are obvious: make sure your remarketing partner has extensive experience in managing marketplaces to maximise your results while growing your business. Investing resources better to understand your remarketing channel will have a direct and meaningful impact on the bottom line.

Contact us

If you'd like to work with us or find out more information about Active, get in touch with us by email or phone

020 7520 6666