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Stores Turn to Secondary Market to Manage Returns

Convenience is often cited as the top reason why shoppers head online rather than in store. But for retailers, this shift results in a few inconvenient truths.

First, the shift has resulted in plummeting same-store sales in brick-and-mortar locations.

Second, these online transactions all too often become a two-way street. The National Retail Federation says the amount of merchandise returned increased by 52 percent from $171 billion in 2007 to $260 million in 2015.

With so many items flooding back into stores, retailers are looking for new ways to handle this rejected merchandise. The Boston Globe takes a look at online auctioneers that sell off lots of returns to the highest bidder.

“Think about people ordering six pairs of shoes, keeping one, and returning the rest,” Howard Rosenberg, founder of B-Stock Solutions, told the paper. Companies “are leaving huge amounts of money on the table by dealing with those returns the way retailers did 50 years ago. There are new, more-efficient ways.”

The resale of goods is strictly controlled, with the retailer stipulating to whom and where the items may be sold. That way, the stores can unload goods without cannibalizing full-price sales.