Large discount stores like TJX, Big Lots, Ross, and others have been around for some time, and to the price-conscious consumer, each is nothing short of an institution. But it’s not just consumers that have come to depend on them—businesses also view these stores as an avenue for liquidating unsold inventory. To their credit, there are a few valid reasons why these stores are solid options for brands and retailers looking to move out their surplus goods. Overall, however, the business model that they rely on is far from perfect.

The Narrow Appeal

Admittedly, discount stores do offer a few important benefits:

• They offer retailers and manufacturers consistent, predictable recovery with pre-negotiated prices and annual or multi-year contracts
• They can easily manage high volumes of inventory without the need for palletization, which helps to clear warehouse space quickly when necessary
• They enjoy strong brand recognition in the eyes of consumers

Unfortunately, this is where the benefits come to an end. Top consumer brands are learning that discounters are far from a comprehensive solution for moving out excess inventory.

Where Large Discounters Fall Short

Returns Are Off the Table

Anyone who has worked in apparel understands the significant challenge that customer returns can pose. Given the marketwide expectation of easy and cheap (if not totally free) returns, consumers are very much in the habit of casually purchasing and sending back items of clothing—and these returns and exchanges can pile up quickly.

If you’re at all familiar with major discounters, you likely already know that, unfortunately, returns are a “no-go” for these businesses, with discounters typically only dealing in new and never-sold merchandise. While this does ensure a certain level of inventory consistency for the stores themselves, it’s a tough break for brands and retailers given that these items are almost always perfectly functional. Consumers tend to return items—especially online purchases—for many different reasons including poor fit, undesired color, late arrival, a mistaken order, and so on. While once-bought merchandise can carry a stigma, the most common reasons for returns don’t actually indicate any flaw with the item itself.

And perhaps against discounters’ expectations, these returned goods are in higher demand than you might assume. This leads to the final disadvantage of taking on these large operations as liquidation partners.

The Fixed Price Model Can Leave Sellers Boxed In

Large discounters’ biggest advantage—fixed, pre-negotiated pricing—is also their biggest shortcoming. While guaranteed prices are known quantities, they can ultimately cap recovery on high-demand items.

For higher-value unsold items, an auction-based format tends to be a superior option, as it can generate competition and fetch the best price the open market will supply. Still, business leaders should leverage a wide variety of resale models for various scenarios—ideally, through just a small handful of highly flexible partners.

They’re Too Specialized

Familiar off-price stores like Marshalls and Burlington are well known for their apparel and homewares—but that’s about it. While they can be part of your organization's approach to recommerce, they may not be a realistic option for selling every type of slow-moving inventory that your business may have to offer.

For example, if you’re hoping to move out heavy, space-intensive wares like scratch-and-dent or salvage appliances, or open-box electronics, these operations simply won’t be useful to you. And these aren’t the only kinds of inventory large discounters will be unable to help you with.

They Don’t Tap Into a Surging Secondary Market

Consumers are now more accepting than ever of used and second-hand goods. You’ll need a method to recover as much value as possible from your most desirable returned items, often in flawless condition. In fact, some of the best recovery rates will come from entrepreneurs running stylish stores on recommerce sites like Poshmark and ThredUp—if you want to access this market, outlet stores or traditional liquidators simply won’t cut it.

If the workload is a concern, you don’t need to swear off of these recommerce sites altogether and settle for discounters—you simply need a solution with tools designed to streamline the recommerce process and a team that can take on some of the many steps involved in reselling effectively.

The Future For Discounters Is Uncertain

If you’re still not convinced, consider this final point: recent data suggests that business might be getting tough for these off-price stores given continuing supply chain instability, the rising wage expectations, and the recent surge in popularity of online shopping.

TJ Maxx, for example, has struggled to meet its projections in late 2023. Burlington Stores are feeling the squeeze too as lower-income shoppers— traditionally their most reliable customers–have been hit especially hard by aggressive increases in the cost of living in a post-pandemic world.

Building a Diversified Recommerce Strategy

For all these reasons, you may want to reconsider your current recommerce strategy if you’ve long relied on large discounters to move out excess inventory. Although there are important benefits to working with discounters, including handling large volumes of apparel and home goods at guaranteed prices, this approach alone is limiting to your business.

A great next step is to seek out a fully managed platform that provides access to a large, diverse buyer base, guidance from industry experts, automation features, and granular recordkeeping that enables both compliance and analytics.

Together all these aspects give your business what large discounters can’t:

• A virtually never-ending stream of buyers for goods of any category, condition, or quantity
• Competitive prices at high velocities
• Deep market insights to power data-backed reselling decisions

Further, any solution that truly has a single-minded focus on delivering sellers the best possible reselling experience, will have multiple flexible resale models to choose from, never locking their clients in to one method of reselling.

The Power of Resale Model Flexibility

One key characteristic of a great recommerce partner is that they offer you as much flexibility as possible as you move out your unsold merchandise. Here are a few different approaches to reselling you’ll want to have at your disposal:

The Auction Format

When recovery rate is your top priority, having the option of a list-and-bid auction format is an absolute must. Assuming a recommerce partner has taken the time and effort to build a broad, varied buyer base, the competition generated by an auction can be your sacred weapon in securing the highest possible willingness to pay.

Why is this? First off, there's no faster way for a buyer to learn the fair market value of a listing than submitting a bid and watching in real time as others one-up them—lowballing a seller is simply not an option when demand for the lot is there for all to see. Further, there’s a psychological aspect to it. By virtue of that first bid, a buyer has already committed their money—in their mind, at least—to acquiring your lot, so once they’re over this mental hurdle, it’s simply a matter of how much. After another bid or two, they’ve spent their valuable time and attention on your listing and are hooked. Having been sucked in, buyers often spend more than they might have offered in closed negotiations.

The Contract Format

While brands and retailers certainly prefer to maximize recovery when possible, they often need to prioritize high throughput and predictability when it comes to managing their excess inventory—especially when operating at scale. This is why a great recommerce partner should also be able to offer contract-based resale options.

Under this model, relevant buyers are invited to bid on not a single lot, but rather the right to purchase streams of inventory in the future. The main benefit here is that pricing and cadence are fixed by a legally binding agreement. Sellers can rest assured their goods are spoken for months ahead of time, which both reduces stress and boosts accuracy of financial projections. Similarly, buyers appreciate the guarantee of quality inventory.

Fast Direct Sales

Finally there are scenarios in which a business will need to prioritize velocity above all else. For instance, perhaps your organization is downsizing and has truckloads of office furniture to dispose of. Or maybe a market anomaly or purchasing error has left you with a mountain of goods that you don’t regularly offer. These things happen and it’s important to have a solution at the ready.

That’s where a direct sales option is critical. In addition to the resale models mentioned previously, an ideal recommerce partner should be able to set up exclusive, one-time-only auctions for a few buyers from outside your typical categories. Or identify and approach a suitable buyer directly to ensure a quick, quiet sale. No matter the circumstances around your challenging lots, a partner should be working to get these goods out of your warehouse and off of your mind as soon as possible.

Diversify for Now, but Keep Your Eyes on the Horizon

For the time being, it may be a smart business move to hedge your bets and keep multiple resale channels in place. But with top recommerce platforms now providing increasingly comprehensive offerings for cycling out your returned and slow-moving goods, leaders should keep their eyes on the horizon.

Simply put, the customizability and flexibility that these managed solutions deliver to your program will greatly reduce workloads and cycle times, and thus, operational and holding costs—all with very little downside.

B-Stock Is the Returns Partner You’ve Been Waiting For

B-Stock is the world’s largest B2B recommerce marketplace for returned and excess merchandise. Many a world-class consumer goods business counts on a blend of our highly competitive auctions, carefully devised resale contracts, and direct brokered sales to maximize the value they recover from their returns and surplus.

But it's not just our modular suite of sales models that sets us apart from unsophisticated liquidators or inflexible off-price discounter chains. When you pair this benefit with a global 500K-member buyer base, automated features, expert reselling staff, and advanced predictive analytics, and you’ve got a winning combination of demand, efficiency, and insight in your corner.

So whether your goal is to recover cash value, conserve time, clear warehouse space, scale up operations, or a little of everything, B-Stock fits the bill.

To learn more about how we can help your business handle mounting returns and excess, visit us today at bstock.com/sellers

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B-Stock Editorial Staff
'B-Stock is the world’s largest B2B recommerce marketplace. Billions in returned and overstock inventory are resold through B-Stock each year as a result of unparalleled buyer demand, streamlined operational processes, and extensive expertise and insights. Industry leading brands and retailers trust B-Stock with their recommerce operations because we deliver superior financial results and significant improvements in velocity and efficiency, all while furthering global sustainability efforts.'