An estimated 18% of holiday gifts from this past season will be returned to retailers. Most won’t end up back on the retailers’ shelves, but those returns aren’t a total loss.
Bethesda-based Liquidity Services is among companies helping retailers salvage value from returned merchandise that is in its original condition.
It is big business — not just during the holidays, but all year round.
Liquidity Services also runs auction sites selling excess inventory and overstock items for governments and other industries through several action sites, including GovDeals.com, SurplusBid.com, Bid4Assets.com and Liquidation.com. It had $1 billion in gross merchandise volume last year.
About 25% of the company’s resales are now retail merchandise.
“Typically, the retailer will first screen the merchandise and in the rare occasion when it is in perfect shape, they will return it to their inventory,” said Jeff Rechtzigel, the vice president and general manager of Liquidity Services’ retail business. “More commonly, the box has been opened or maybe the packaging is disturbed, and then the retailer will send it back through a returns process, and that’s where companies like Liquidity Services come in.”
Liquidity Services now has about 725 employees orchestrating the logistics of moving the products it is tasked with reselling. All of that merchandise needs a place to be stored. The company now has about 1.6 million square feet of warehouse space across the country.
On the retail side, there is appetite for buyers looking for such merchandise.
“Local resale shops. Local electronics stores. People who resell on marketplaces like E-Bay, so thousands of small businesses who, in a lot of cases, are people who’ve created their own businesses,” Rechtzigel said.
In 2023, retail merchandise returns totaled $743 billion, according to the National Retail Federation.
Companies like Liquidity Services operate in what is known as reverse logistics, and it also has an environmental impact, keeping some returns from being discarded. Returned and excess merchandise create about 5 billion pounds of landfill waste annually.
“We really handle any product that is sold at retail. Today we may open the doors on a truck and it’s full of kayaks, and tomorrow that same truck may be full of televisions,” Rechtzigel said.
Liquidity Services’ retail resale business also operates a direct-to-consumer model, selling merchandise through an online bidding auction format at AllSurplus Deals, though currently it does not ship merchandise to consumers who buy through the site. Winning bidders pick up their merchandise at one of its five warehouse locations in Cincinnati, Dallas, Indianapolis, Phoenix and Pittston, Pennsylvania.
The majority of Liquidity Services’ business is still outside of retail, moving everything from biopharma equipment to farm machinery, and eclectic items ranging from pinball machines to restored classic cars.
The company, founded more than 20 years ago, has completed over $10 billion in total transactions to five million buyers and 15,000 corporate and government sellers worldwide.
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