If you’ve ever seen Project Runway, you know the old adage about fashion and style: “One day you’re in, and the next; you’re out.”
However, what the hosts do not cover on the popular reality series is the grimmest reality of all. Fickle seasonal styling can produce a large amount of waste. Fast fashion retailers, which mass-produce trendy clothing at a low price point, produce waste that accounts for 10 percent of global carbon emissions. And if customers aren’t throwing their low quality fast fashion pieces out, they are often returning them. Furthermore, because fast fashion retailers can produce so much more at a lower cost, they often over-produce items. That results in overstock and clothing waste.
This is where the secondary retail market comes in. Secondary retailers or liquidators sell quantities of customer-returned products or overstock to other retailers or businesses. Those businesses can then sell those products to their customers. This is part of what is often referred to as the circular economy. It can include online or in person auctions of individual items or pallets of overstock or returns, and includes items from many brands.
Pallet auctions of unused, returned, or over-produced goods provide other retailers with a way to purchase inventory without succumbing to high costs. And, for the retailers selling the products, they can effectively and greenly get rid of stock that they would not be able to use or sell otherwise.
For instance, a retailer that sells women’s petite clothing can sell that inventory to another retailer that potentially specializes in selling to petite women. This can not only alleviate two retailer headaches at once, but it also reduces the amount of waste that those textiles could produce otherwise. B2B liquidation can connect two businesses that can be mutually beneficial to each other by selling or purchasing inventory.
More and more, shoppers are turning online to make clothing purchases. 27 percent of apparel purchases are made online, but then the Project Runway trend mentality takes effect, and shoppers ship back their items. With fast fashion taking over the online apparel marketplace, those hungry for style know they have other options if they are not at first satisfied with their buys.
Big fast fashion retailers will take a financial hit in returns when those shoppers find that what they ordered does not fit or does not meet their wardrobe expectations. It is estimated that return deliveries from purchases made online will reach $550 billion in costs to retailers by 2020.
Big businesses can benefit from utilizing liquidation sales. Businesses can mitigate those return costs by selling the returns to direct liquidators or other secondary retailers.
Additionally, fast fashion retailers can keep up their status as “fast” fashion retailers if they keep their inventory moving off the shelves so they can replace it with newer styles. This makes the retailer more money in the long run. It can also strengthen their business when compared to other retailers because they will be able to stock more innovative and trendy pieces sooner than their competitors who do not utilize liquidators will be able to.
Liquidation auctions and liquidators who are part of the secondary retail market can help big businesses thrive by reducing the cost of returns, helping to free up space to refresh inventory, and connecting them to other businesses that can benefit from their unused product. Fast fashion over-produces a lot of apparel and also sees many online and in-person returns as fashion moves at such a quick pace. Big fast fashion businesses are directly benefited and can sell unused or returned clothing to these liquidators.