Latest / Speaking of Supply Chain / Conquering Excess Inventory: Small Retailers Thrive with Inventory Solutions

Transcript

Conquering Excess Inventory: Small Retailers Thrive with Inventory Solutions · Speaking of Supply Chain

0:06
Speaker 1: You're listening to Speaking of Supply Chain, a meeboch podcast.
0:10
Speaker 1: This is a show for logistics professionals looking to learn
0:13
Speaker 1: more about the latest innovations in supply chain. Each episode
0:16
Speaker 1: will feature a conversation on topics such as mitigating supply
0:19
Speaker 1: chain disruption and reducing risk, current automation trends, sustainability initiatives,
0:25
Speaker 1: and more. Let's dive right in.
0:32
Speaker 2: Hello, and welcome to Speaking of Supply Chain, where we
0:35
Speaker 2: explore trends, current events, and innovations impacting the logistics and
0:38
Speaker 2: supply chain industries. I'm your host, Alan Wood. Last year,
0:42
Speaker 2: over stocks were estimated to have cost retailers over five
0:45
Speaker 2: hundred and sixty billion dollars in losses. In addition to
0:49
Speaker 2: the lost volume from wasted stock, the excess carrying costs
0:52
Speaker 2: account for nearly a third of that number. You may
0:56
Speaker 2: recall that in twenty seventeen, one popular fashion brand faced
0:59
Speaker 2: signal magnificant public outrage over their decision to destroy thirty
1:03
Speaker 2: seven million dollars worth of excess finished product that hadn't sold. Today,
1:08
Speaker 2: we're going to learn more about the financial and environmental
1:11
Speaker 2: impacts resulting from this difficult to predict industry. I'm joined
1:15
Speaker 2: today by Melody Vanderband, co founder and CEO of Max Retail,
1:19
Speaker 2: to share her insights on how companies can mitigate excess inventory.
1:24
Speaker 2: Welcome Melody, Hello, and thank you for having me Ellen.
1:28
Speaker 2: Of course, So this is such a great topic, which
1:32
Speaker 2: is inventory, overstock and what to do with it. So
1:36
Speaker 2: how has the integration of digital technology and data analytics
1:42
Speaker 2: transformed some of those inventory management practices, because I know
1:46
Speaker 2: that's one of the cornerstones of Max Retail.
1:49
Speaker 3: Well, you know, it's been a long journey to getting
1:51
Speaker 3: here today. Fashion has been very slow to adopt technology.
1:57
Speaker 3: I was at a trade show last week where I
1:59
Speaker 3: would say to twenty percent of brands were still taking
2:02
Speaker 3: orders live in copy paper. So we haven't quite arrived
2:07
Speaker 3: just yet. Okay ten years ago, yes, as of ten
2:11
Speaker 3: years ago, point of sales were server based, not cloud based,
2:17
Speaker 3: and so that was a huge shift. I would say
2:20
Speaker 3: the biggest driver of our industry coming online is that
2:24
Speaker 3: consumers are there. And so if you think about even
2:27
Speaker 3: ten years ago, people were not shopping on Amazon as
2:30
Speaker 3: they were before. They were not shopping online in general, right,
2:36
Speaker 3: and that has really been the biggest push of brands
2:41
Speaker 3: and retailers to come online is because they're realizing that's
2:44
Speaker 3: where customers are and with that you have to evolve
2:48
Speaker 3: your systems. So I would say retailers tend to be
2:52
Speaker 3: notoriously reactive, not proactive. As you know, in technology, there
2:57
Speaker 3: are early adopters, there are followers, and there are skeptics.
3:01
Speaker 3: In retail especially, it takes a lot to get something
3:05
Speaker 3: over the line. There have been a couple inventory management
3:09
Speaker 3: systems for brands that really I believe that they paved
3:13
Speaker 3: the way for other technologies, and I would consider these
3:16
Speaker 3: to be Jure, New Order, Shopify, and fair. I would
3:21
Speaker 3: say these are the four most successful companies to get
3:25
Speaker 3: their retail industry to move forward when it comes to
3:28
Speaker 3: inventory management. However, we have not made enough progress. So
3:35
Speaker 3: I see plenty of retailers jumping on to different technologies
3:39
Speaker 3: that will help them sell products, Max Retail being one
3:42
Speaker 3: of them, but very few going out to seek ways
3:46
Speaker 3: to better manage and plan and allocate for their inventory.
3:51
Speaker 2: Right because Max Retail is solving a problem in the
3:55
Speaker 2: industry of unsold inventory. But if we could solve that
3:59
Speaker 2: problem sooner than there would be unfortunately less for you
4:03
Speaker 2: to do, but another problem for you to go fix.
4:05
Speaker 4: Maybe let's look at it that.
4:06
Speaker 3: Way, and that's one hundred percent how we look at it, Yes, Ellen,
4:11
Speaker 3: And here's the irony. If retailers and brands were to
4:15
Speaker 3: be more proactive about their inventory and how they plan
4:19
Speaker 3: for it and how they replenish with shorter cycles, right,
4:24
Speaker 3: we don't run out of a job to do. There
4:26
Speaker 3: is still going to be inventory that doesn't perform always. However,
4:31
Speaker 3: the retailers and brands would get more turns and so
4:35
Speaker 3: they would actually use us more frequently. What we have
4:38
Speaker 3: seen of retailers that leverage max Retail for their past
4:41
Speaker 3: season inventory is eventually they get such a handle on
4:44
Speaker 3: the past season inventory, they become more aware of where
4:47
Speaker 3: they're over indexed in season, and they utilize our platform
4:51
Speaker 3: sooner to get their cash out and bring in their
4:53
Speaker 3: next shipment. And so we believe exactly what you said
4:57
Speaker 3: to be true. We must solve problems upstream, and that's
5:01
Speaker 3: why a big part of our roadmap at max Retail
5:04
Speaker 3: is helping brands and retailers receive recommendations of where they're
5:08
Speaker 3: over indexed so they can be more mindful. We're not
5:11
Speaker 3: getting into planning, we're not getting into allocating, but we
5:14
Speaker 3: absolutely can help them with a better job of understanding
5:18
Speaker 3: their cell through and they're at risk inventory before it
5:22
Speaker 3: becomes really a dead weight.
5:24
Speaker 4: Oh absolutely.
5:25
Speaker 2: What sort of factors are causing that lack of agility
5:30
Speaker 2: in their inventory and their accuracy of forecasting for the
5:35
Speaker 2: need and for the demand.
5:36
Speaker 3: So I think a big part of the problem is
5:39
Speaker 3: how far out all of this planning takes place. When
5:42
Speaker 3: I was in New York last week, the brands were
5:45
Speaker 3: showing next spring. So here we are in the end
5:51
Speaker 3: of Q three and we're showing Q one Q two goods,
5:56
Speaker 3: and these retailers are placing orders for merchandise that they
6:01
Speaker 3: will not receive for five to eight months out. What
6:06
Speaker 3: happens next is the brand is going to batch all
6:08
Speaker 3: of those orders together and then they're going to place
6:12
Speaker 3: their orders with their suppliers of the materials. Those materials
6:17
Speaker 3: have to be made. A lot of times they're not
6:20
Speaker 3: just in stockholas. They have to be made for the purpose.
6:24
Speaker 3: Then those materials have to get to the manufacturers to
6:28
Speaker 3: be produced, and there's a timeline with all of this.
6:32
Speaker 3: From there, it has to ship and clear and arrive
6:36
Speaker 3: here safely to the United States. If it's not already
6:38
Speaker 3: made here, and if you look at the port problem
6:40
Speaker 3: that we're experiencing in this last week, you can see
6:44
Speaker 3: how that's causing a supply chain issue. But these things
6:48
Speaker 3: happen in sequences. Now, what happens when it hits the port, Well,
6:53
Speaker 3: every order that is placed has a start date and
6:56
Speaker 3: a cancel date, that is when a retailer is willing
7:00
Speaker 3: to receive the shipment. And so let's say there's goods
7:03
Speaker 3: that are sitting outside of the port right now, but
7:05
Speaker 3: the cancel date for the order is October fifteenth. If
7:08
Speaker 3: that merchandise doesn't get to Macy's Nordstrum Sacks wherever by
7:15
Speaker 3: the fifteenth, that retailer can cancel the order and refuse
7:19
Speaker 3: the goods. And now those goods are going back to
7:22
Speaker 3: the warehouse and they have instantly become at risk inventory.
7:26
Speaker 3: So you can see how the timeline for everything to
7:30
Speaker 3: happen can leave a lot of room for problems along
7:34
Speaker 3: the way.
7:35
Speaker 2: Absolutely, So we were just talking about some of those
7:38
Speaker 2: situations where this inventory is at risk. So what are
7:41
Speaker 2: some of the financial and operational risks associated with holding
7:46
Speaker 2: that excess inventory? Because it's not just that now you
7:49
Speaker 2: have the excess inventory, and you've got to figure out
7:51
Speaker 2: what to do with it. This is going to cause
7:53
Speaker 2: you problems.
7:54
Speaker 3: Yes, absolutely, it causes major financial problems. Most of the time.
7:58
Speaker 3: These brands are produced on net terms with their manufacturers,
8:03
Speaker 3: and so the immediate risk posed for a brand, for instance,
8:07
Speaker 3: is that they have to pay that manufacturer, and if
8:10
Speaker 3: those goods weren't received, then they don't have the money
8:14
Speaker 3: to pay the manufacturer. And by the way, most brands
8:18
Speaker 3: are not cutting to order. Cutting to order means you
8:21
Speaker 3: only produce what was purchased. Most brands cut in surplus
8:25
Speaker 3: because then the manufacturers give them a better price. So
8:29
Speaker 3: now you've already overcut. You overcut, you got more than
8:33
Speaker 3: you needed when it arrived, and now you have even
8:35
Speaker 3: more because your retailer, for whatever reason, didn't receive it.
8:39
Speaker 3: And the financial pain is not just hey, I need
8:44
Speaker 3: the money to pay my manufacturer, but it's also you're
8:47
Speaker 3: paying to store it now, so that merchandise is costing
8:50
Speaker 3: you overhead, and a very expensive overhead. Three pls will
8:54
Speaker 3: tell you our job is not to be a storage.
8:57
Speaker 3: We're very expensive storage. Actually, get a lot of three
9:01
Speaker 3: pls that reach out to me, and the three pls
9:04
Speaker 3: say can you please help my customers because I only
9:07
Speaker 3: make money when I pick and pack outside of being
9:10
Speaker 3: an expensive storage unit. But this is not serving me.
9:12
Speaker 3: I need you to sell their inventory. Yeah, so it
9:16
Speaker 3: is a burden on the brand. It is a burden
9:19
Speaker 3: on their threepl and you can imagine that manufacturer is like,
9:22
Speaker 3: where's my money?
9:25
Speaker 2: Of course, I mean everyone needs to get paid. So
9:28
Speaker 2: how do retailers balance that risk of the obsolescence of
9:32
Speaker 2: their inventory things just sitting around and waiting, and the
9:36
Speaker 2: balance of needing to meet the demand that they truly
9:39
Speaker 2: do expect.
9:41
Speaker 3: Absolutely, So the problems that we've discussed thus far have
9:44
Speaker 3: really been more of the brand's problems. So yes, let's
9:48
Speaker 3: talk about that merchandise that successfully shipped to the retailer
9:52
Speaker 3: that they received. There's a couple of ways that this
9:55
Speaker 3: is solved. For if you have a big, notorious name
9:58
Speaker 3: in retail and have gross margin guarantees, and what that
10:03
Speaker 3: means is if your product doesn't sell on the floor
10:07
Speaker 3: and you have to do a markdown, that you're going
10:10
Speaker 3: to pay the brand less. Okay, that is one way,
10:14
Speaker 3: and it's really if you think about it's like probably
10:16
Speaker 3: the best solution because hey, let's mark it down and
10:18
Speaker 3: see if we can get it sold. Even if we
10:20
Speaker 3: make less money. Hey man, at least the brand isn't
10:22
Speaker 3: stuck hold in the bag exactly. And if it can
10:25
Speaker 3: get sold with the markdown, okay, let's think that's best
10:28
Speaker 3: case scenario. The next scenario is when that big name
10:32
Speaker 3: retailer says, I'm sending you back anything that doesn't have
10:35
Speaker 3: a sixty percent sell through.
10:37
Speaker 4: Okay, and that's.
10:38
Speaker 3: Very convenient for the retailer, but once again inconvenient for
10:42
Speaker 3: the brand. Now, what I see most frequently with my
10:46
Speaker 3: core customer base, which is independent retailers. We're talking your
10:50
Speaker 3: favorite store down every main street in America. We work
10:53
Speaker 3: with over two thousand of these today with Max retail.
10:56
Speaker 3: These are the ones who don't have a markdown allowance.
11:00
Speaker 3: They cannot send goods back to their brand. And would
11:03
Speaker 3: you believe it that for every small store you see,
11:05
Speaker 3: they are sitting on an average of one hundred thousand
11:08
Speaker 3: dollars of wholesale financial losses each year due to unsold inventory.
11:14
Speaker 3: So you only have to walk a block and you
11:16
Speaker 3: pass a million dollar problem of unsold inventory.
11:20
Speaker 4: That's got to be killing small and medium businesses.
11:22
Speaker 3: It's totally killing it. If you think about these small businesses,
11:25
Speaker 3: if they could have that extra hundred thousand dollars in
11:27
Speaker 3: their bank account, what could they do? Absolutely, they would
11:31
Speaker 3: run a completely different operation. They could hire more people
11:33
Speaker 3: in the community, they could write themselves a bigger check,
11:36
Speaker 3: they could bring an inventory faster, which would produce more
11:39
Speaker 3: gross margin for them, and so there's tremendous opportunity ironically
11:44
Speaker 3: that is sitting on this sale rack unsolved for today.
11:48
Speaker 3: And so what we see is today these independent retailers
11:54
Speaker 3: their only solution is a marked down in store, and
11:57
Speaker 3: that's on them, right. The brands aren't giving them an
12:00
Speaker 3: a kickback for that. And why the markdowns don't work
12:03
Speaker 3: is because there's only so many people who will walk
12:06
Speaker 3: through that door every day. And that's why they use
12:10
Speaker 3: max retail, because hey, if you're only going to have
12:12
Speaker 3: x amount of feet walking in, you want those feet
12:15
Speaker 3: buying full price, right, And yet you know you have
12:18
Speaker 3: dollars sitting on that unsold inventory.
12:22
Speaker 2: Okay, So how does the process work to help these
12:25
Speaker 2: companies offload their excess inventory more efficiently? Do you have
12:29
Speaker 2: a success story you can share?
12:31
Speaker 3: Oh my gosh, I have my favorite success story so
12:34
Speaker 3: we've been at this for a couple of years. And
12:36
Speaker 3: fun fact, my background is as an independent retailer, Okay,
12:40
Speaker 3: So I had a store for nine years in South Florida.
12:43
Speaker 3: Before that, I was a distributor, so I sold to
12:45
Speaker 3: over five hundred retailers around the United States. So I've
12:49
Speaker 3: been seeing this problem in my life since around two
12:51
Speaker 3: thousand and nine, and so it's a big part of
12:54
Speaker 3: my course. So when we launched max Retail, I remember
12:57
Speaker 3: it was about a year ago. There was one particular
12:59
Speaker 3: custom and she was just getting so many sales on
13:03
Speaker 3: Max Retail, like it was crazy, Like she was this
13:06
Speaker 3: is like when we were still like a little baby company,
13:08
Speaker 3: and she was getting like five to ten sales a day.
13:10
Speaker 3: So I said, I just need to talk to this person.
13:12
Speaker 3: So I called her up and I was like, Hi,
13:14
Speaker 3: I'm Melody, I'm CEO of the company that you're using.
13:17
Speaker 4: What are you doing?
13:20
Speaker 3: And she said, well, I have a small store in
13:24
Speaker 3: Wisconsin in a resort town and I didn't have a
13:29
Speaker 3: solution for a couple of years. So I would just
13:31
Speaker 3: take the past season inventory, put it in our basement
13:34
Speaker 3: and bring it out every summer for the sidewalk sale.
13:37
Speaker 3: And so when she started using max Retail, what she
13:40
Speaker 3: said is I made it a habit every single day
13:44
Speaker 3: to pull one item out of the basement and list
13:47
Speaker 3: it on max retail. Okay, And she was just consistent
13:51
Speaker 3: about it, ellen every single day. And then she would
13:55
Speaker 3: wake up and she'd have another sale from Max Retail,
13:58
Speaker 3: so she'd approve a sale and list another item, and
14:00
Speaker 3: she just kept doing this and today she's made over
14:03
Speaker 3: three hundred thousand dollars on our platform, and that, to
14:06
Speaker 3: me is just so fulfilling. And we have plenty more
14:10
Speaker 3: stories just like hers. And they're not even big retailers.
14:14
Speaker 3: They're small retailers with massive problems of access, inventory and
14:20
Speaker 3: no solution, but they are the core pillars of their community.
14:23
Speaker 2: Yeah, they don't have the negotiating power that Walmart does
14:27
Speaker 2: or a Nordstrom. So these are fantastic solutions for these
14:31
Speaker 2: smaller businesses that just want to get rid of their
14:34
Speaker 2: inventory to be successful in their business, but they want
14:38
Speaker 2: to offer the products that people want to buy. So
14:42
Speaker 2: what are some of the key benefits that you're able
14:45
Speaker 2: to deliver to your clients compared to those traditional tactics
14:48
Speaker 2: like those clearance sales. I mean, Obviously, selling all the
14:51
Speaker 2: stuff in your basement is hugely helpful for that small,
14:56
Speaker 2: niche retail store. But you and I were talking earlier
15:01
Speaker 2: about just some benefits of them learning how to plan
15:06
Speaker 2: better for their next sales cycle.
15:09
Speaker 3: Absolutely, and there's a lot of amazing companies out there
15:13
Speaker 3: that help independent retailers specifically do their planning. Of course,
15:16
Speaker 3: the large big box retailers have entire divisions for planning. Absolutely,
15:21
Speaker 3: so I would say the number one reason why independent
15:23
Speaker 3: retailers today are so reactive about their inventory is because
15:28
Speaker 3: they do lack that planning. And so I would suggest
15:30
Speaker 3: a couple companies that are good for it. There's Management One,
15:33
Speaker 3: There's Blax Retail. These are really strong companies for helping
15:38
Speaker 3: independent retailers specifically learn how to use their data from
15:42
Speaker 3: their point of sale and really plan better. And believe me,
15:46
Speaker 3: I will once again, I will never be out of
15:48
Speaker 3: a job for people doing a better job planning. And
15:50
Speaker 3: we work very closely with these planners and allocators at
15:53
Speaker 3: Max Retail. But what I would say the benefits of
15:56
Speaker 3: Max Retail is when you mark down your inventory in store,
16:02
Speaker 3: you're waiting, You're waiting for someone to walk in and
16:06
Speaker 3: buy it, so you're losing what I call your opportunity cost.
16:11
Speaker 3: So what I love to do this example. So let's
16:13
Speaker 3: say I have this bag right here, better late than ugly.
16:15
Speaker 3: It says, if I'm a brand, I'm going to make
16:20
Speaker 3: this for probably two dollars. I'm going to sell it
16:23
Speaker 3: to an independent retailer for ten dollars and they're going
16:27
Speaker 3: to sell it in store for twenty. So let's say
16:30
Speaker 3: I buy it today and everyone it's a big hit, right,
16:34
Speaker 3: so it gets purchased immediately. Okay, I made ten dollars profit,
16:37
Speaker 3: and what am I going to do? I'm going to
16:39
Speaker 3: take my other ten and reinvest it. That is my turn.
16:42
Speaker 3: So now I buy another bag and I sell that.
16:46
Speaker 3: I do the same thing again, and I do this
16:49
Speaker 3: for ten days from my ten dollar investment, I have
16:53
Speaker 3: made one hundred dollars of profit. However, if I buy
16:58
Speaker 3: this today and it doesn't sell tomorrow or the next
17:02
Speaker 3: day or the next day, and ten days later I
17:06
Speaker 3: sell it for twenty did I really win? I made
17:09
Speaker 3: ten dollars, but I lost time. And that is why
17:14
Speaker 3: max retail is a more powerful tool, because in a
17:16
Speaker 3: few quick clicks, these retailers are able to in their
17:20
Speaker 3: point of sale tag the items that aren't performing well.
17:23
Speaker 3: That sends a product feed to max Retail and we
17:26
Speaker 3: go ahead and find the images right the descriptions and
17:29
Speaker 3: expose this inventory to over four hundred million end consumers.
17:32
Speaker 3: Why so that we can get them paid the highest
17:35
Speaker 3: price for that unit. Because if I don't get them
17:39
Speaker 3: back as close to ten dollars as I can, it's
17:42
Speaker 3: not enough meaningful money to place their next bet. And
17:45
Speaker 3: time is of the essence mark down. It might take
17:48
Speaker 3: six months to sell. If Max Retail can sell it
17:50
Speaker 3: for you in ten twenty days, you get to place
17:53
Speaker 3: your next bet. And that's why I love what we
17:56
Speaker 3: do because it's about turn and in retail, turn is everything.
18:02
Speaker 3: It's not about your margin that you got. You might
18:05
Speaker 3: have one hundred percent sell through, but it took you
18:08
Speaker 3: a year to do it. You might have sold it
18:10
Speaker 3: at full price, but it took you a year to
18:11
Speaker 3: do it. It's a false sense of accomplishment. And that's
18:15
Speaker 3: why when we talk about how to manage inventory, ellen,
18:18
Speaker 3: the most meaningful thing you can do is know when
18:21
Speaker 3: you're losing your opportunity cost on an item and you
18:25
Speaker 3: need to get your money out of it. So you
18:27
Speaker 3: can bring in something else. And that is where supply
18:30
Speaker 3: chain really hits home for this massive segment. There's two
18:34
Speaker 3: million independent retailers between North America and Europe alone, and
18:39
Speaker 3: if all of them paid attention to their turn, they
18:42
Speaker 3: would run far more profitable businesses and have less inventory
18:47
Speaker 3: on hand.
18:49
Speaker 4: That's amazing.
18:50
Speaker 2: So what are some practical tips that you would give
18:54
Speaker 2: to a company a retailer looking to manage or reduce
18:58
Speaker 2: their excess invent Obviously the tip of trying one at
19:02
Speaker 2: a time and do it daily and make a daily
19:05
Speaker 2: practice of the effort rather than letting time slip by
19:09
Speaker 2: and hoping. I mean, obviously it's about getting up and
19:13
Speaker 2: trying something. Even if it fails, try something. But what
19:17
Speaker 2: else can they do to manage that inventory? Does it
19:20
Speaker 2: come down to trying to negotiate better deals with the suppliers?
19:25
Speaker 2: Does it come down to trying to have their own
19:28
Speaker 2: online presence for their sales channels? Because I know a
19:32
Speaker 2: lot of these smaller independent retailers don't necessarily have the budget,
19:36
Speaker 2: or the staff or the capability to run their own
19:39
Speaker 2: e commerce site.
19:41
Speaker 3: I agree with you, selling online is very tough. I
19:44
Speaker 3: can attest as an independent retailer. I had, of course
19:48
Speaker 3: a Shopify store right and what my customers would do
19:53
Speaker 3: is go on my site just to see what I
19:56
Speaker 3: had in and then they would come into my store
19:57
Speaker 3: and buy from me because I had such a loyal
20:00
Speaker 3: customer base. So what I would say, more important than
20:03
Speaker 3: trying to grow your online presence is to grow your
20:06
Speaker 3: social media presence. And so when merchandise comes in the store,
20:11
Speaker 3: you have to be proactive about all of it. You
20:14
Speaker 3: have to make sure you photograph it, yes, put it
20:17
Speaker 3: on your site. Even if you're not planning on becoming
20:20
Speaker 3: Thenextrevolve dot com, you can still get it exposed so
20:24
Speaker 3: that you can promote it on TikTok, on Facebook, on Instagram.
20:29
Speaker 3: These are where audiences are. And do you know YouTube
20:33
Speaker 3: is still ten times as big as TikTok. Do not
20:37
Speaker 3: underestimate YouTube. It is amazing. So I would say making
20:42
Speaker 3: sure your merchandise is shot and being promoted, making sure
20:45
Speaker 3: you understand what different social media your customers are on,
20:50
Speaker 3: and also client telling. There's a client telling app called
20:53
Speaker 3: one Shop, and it's super amazing for independent retail where
20:57
Speaker 3: when merchandise comes in you can see exactly who's in
21:00
Speaker 3: the past and clientele. So, Ellen, Yes, a big part
21:03
Speaker 3: of making sure you don't have excess inventory is properly
21:06
Speaker 3: promoting the items you have.
21:08
Speaker 4: Know who your.
21:08
Speaker 3: Customers are, have a fantastic CRM or a good point
21:12
Speaker 3: of sale, right, You've got to know the power law
21:15
Speaker 3: where eighty percent of your sales are coming from twenty
21:18
Speaker 3: percent of your customers, right, Just really having a handle
21:22
Speaker 3: on your new shipments to properly promote them so that
21:25
Speaker 3: you can determine what's a dog. That's what we call it, Ellen,
21:29
Speaker 3: We call it a dog something that's not going to sell.
21:32
Speaker 3: If you've properly promoted it and it's not selling, then
21:36
Speaker 3: you know it's going to be at risk as excess inventory.
21:39
Speaker 3: If you can't sell it in the first thirty days,
21:42
Speaker 3: you're not likely going to sell it in the next
21:44
Speaker 3: three to six months.
21:45
Speaker 4: That's true.
21:46
Speaker 2: Yeah, So we've talked about a lot of clothing and
21:50
Speaker 2: apparel and home goods types of things. What types of
21:54
Speaker 2: products does max Retail really excel at pushing through this
21:59
Speaker 2: cycle and getting sold because retail encompasses so many things.
22:04
Speaker 2: And I know you said you don't do grocery and
22:06
Speaker 2: that's a huge sector, but home goods pets.
22:10
Speaker 4: Oh my gosh.
22:11
Speaker 2: Pet supplies have just exploded in the past few years.
22:15
Speaker 4: Absolutely.
22:16
Speaker 2: As you said, clothes weren't purchased online ten years ago
22:20
Speaker 2: to the degree that they are now. I feel like
22:23
Speaker 2: I do half of my kids' school shopping online, and
22:27
Speaker 2: Christmas shopping has already done. The Amazon wish list is created,
22:30
Speaker 2: so those types of things. We're doing all of this
22:33
Speaker 2: online shopping. But what types of goods really perform best
22:38
Speaker 2: for your retailers.
22:40
Speaker 3: I would say, if you've heard of it, it sells
22:42
Speaker 3: on max retail, if you've heard of it, right, And
22:45
Speaker 3: what do I mean by that? I would say that
22:48
Speaker 3: ninety percent of our customers today, the independent retailers that
22:52
Speaker 3: we serve, they are the big thing in their small town. Okay,
22:56
Speaker 3: there is no department store near them, and so they
22:59
Speaker 3: are the source for buying those fantastic brands, whether it
23:03
Speaker 3: be apparel, whether it be footwear, whether it be accessories.
23:08
Speaker 3: And that's where there's this limiting belief that independent retail
23:11
Speaker 3: is dead.
23:12
Speaker 4: But it is alive and well.
23:14
Speaker 3: And you know this if you just get in your
23:16
Speaker 3: car and you don't take the highway, but take like
23:20
Speaker 3: the main road and just drive north for the next
23:25
Speaker 3: eight hours.
23:26
Speaker 4: Oh gosh, it.
23:27
Speaker 3: Will blow your mind how many businesses there are and
23:31
Speaker 3: they're doing fantastic.
23:33
Speaker 2: That's amazing. So what about used items? I know that
23:38
Speaker 2: that's a whole channel on Amazon is purchasing refurbished, factory
23:43
Speaker 2: approved refurbished items. Is that something that is it also
23:47
Speaker 2: available through max retail or is it only new condition
23:50
Speaker 2: items that are just overstock.
23:53
Speaker 3: I would say in our core categories, which are contemporary apparel,
23:58
Speaker 3: designer apparel, we dabble in luxury. We do have a
24:02
Speaker 3: couple luxury where we see the most luxury is actually
24:06
Speaker 3: pre owned, So we have what's been interesting is this
24:09
Speaker 3: segment of independent retailers who buy contemporary apparel, but they
24:13
Speaker 3: also sell luxury handbags in store and sometimes those are
24:16
Speaker 3: not turning. So we'll see some luxury watches and those
24:20
Speaker 3: can be pre owned as long as they have authentication,
24:23
Speaker 3: that's fine. And then also we'll do some contemporary pre owned,
24:26
Speaker 3: but it has to be excellent condition or it can
24:29
Speaker 3: be returned, but it has to be with tags, right.
24:33
Speaker 3: So we do have a couple sellers on our platform
24:35
Speaker 3: that maybe they'll buy a palette of returned goods from
24:38
Speaker 3: like a department store, and as long as they're in
24:41
Speaker 3: excellent condition, they're able to list them on Max retail.
24:44
Speaker 3: I would say ninety percent of our assortment is unsold
24:47
Speaker 3: inventory that is past season, that is in a physical
24:52
Speaker 3: retailer who carries anywhere between forty to sixty different brands
24:55
Speaker 3: in store. I would say another five percent of our sellers,
24:59
Speaker 3: or what I call the hacker retailers. And this blows
25:02
Speaker 3: my mind. I found out about these same way. I
25:04
Speaker 3: was like, who is that customer? I need to talk
25:06
Speaker 3: to them. And the hacker retailer is fascinating. They actually
25:11
Speaker 3: buy liquidation from brands and from retailers going out of business,
25:16
Speaker 3: and in the past they were selling it on poshmark
25:19
Speaker 3: or on eBay right, and then they found out about
25:21
Speaker 3: Max retail, and they ask themselves, well, why am I
25:25
Speaker 3: listing this stuff myself on these sites?
25:28
Speaker 4: Why am I doing all the work?
25:29
Speaker 3: Why am I doing all the work? Why am I
25:31
Speaker 3: dealing with customer inquiries and return request Because on Max Retail,
25:34
Speaker 3: sales are final. Once it's out of your store with
25:37
Speaker 3: the prepaid label we give you, it's never coming back.
25:40
Speaker 3: And so the hacker retailers love Max retail because now
25:43
Speaker 3: they don't have to do anything. They just buy the
25:46
Speaker 3: inventory and they stock it themselves and they use us
25:50
Speaker 3: to sell it, so that that's pretty amazing. And the
25:52
Speaker 3: last five percent of our sellers are brands. We do
25:56
Speaker 3: have brands that work with us directly, and so they're
25:59
Speaker 3: just short at right. Maybe they only have ten people
26:02
Speaker 3: on their staff and they don't have someone to go
26:06
Speaker 3: and do a past season liquidation strategy. Maybe the pricing
26:09
Speaker 3: doesn't work for them and they need the money, they
26:11
Speaker 3: can't give it away for pennies on the dollar. They'll
26:14
Speaker 3: work with us as well, So we do a lot
26:16
Speaker 3: of business with independence Hacker retailers and brands.
26:21
Speaker 2: So what do you feel or maybe you know what
26:24
Speaker 2: the impact the environmental impact is of getting this inventory
26:29
Speaker 2: out of these basements, out of these warehouses and to
26:33
Speaker 2: the end consumer who wanted the item in the first place.
26:37
Speaker 2: This is keeping a lot of material out of our landfills.
26:42
Speaker 2: It's making sure that the economy is still chugging along,
26:45
Speaker 2: which I know for a lot of people, especially during
26:49
Speaker 2: the American election season, that's a huge topic. But environmentally
26:54
Speaker 2: that's significant. What you're doing for the companies, for the
26:58
Speaker 2: three pls, for these independent retailers to manage to keep
27:03
Speaker 2: all of this inventory moving.
27:06
Speaker 4: Absolutely.
27:07
Speaker 3: I think one of the memories that stands out in
27:09
Speaker 3: my mind the most is a brand that had inventory
27:14
Speaker 3: sitting in their warehouse for three years and it was
27:18
Speaker 3: over three hundred thousand pairs of shoes.
27:21
Speaker 4: Oh that's a lot of shoes.
27:23
Speaker 2: I mean, one would think that that's just going to
27:25
Speaker 2: go to a landfill or it's going to be, you know,
27:28
Speaker 2: a donation to some organization.
27:31
Speaker 4: But they were able to sell it.
27:32
Speaker 3: Yeah, we're able to help them sell it. And by
27:34
Speaker 3: the way, on that note, I do want to give
27:36
Speaker 3: a shout out to Souls for Souls. It's so l
27:40
Speaker 3: Ees the number four and then Souls which is the
27:44
Speaker 3: most amazing nationwide organization to donate access inventory too. So
27:50
Speaker 3: when it is end of life from a brand before
27:53
Speaker 3: they think of a landfill, call Soles for Souls. They
27:55
Speaker 3: work with nonprofits across the country in poverty stricken communities,
28:01
Speaker 3: in at risk families, homelessness. They are doing such incredible work.
28:06
Speaker 3: So anytime we can refer someone to Souls for Souls
28:09
Speaker 3: if they don't need the money, if they're considering a landfill,
28:12
Speaker 3: if they don't want to leverage max retail to get
28:15
Speaker 3: money back. We really love what they do over there,
28:18
Speaker 3: so I just want to give them a little love here.
28:21
Speaker 2: I just have to say I love your attitude towards
28:24
Speaker 2: just raising up the entire community. You know that your
28:28
Speaker 2: company is solving a problem for a retailer or for
28:31
Speaker 2: a brand, and that it could potentially put your company
28:35
Speaker 2: out of business, but that doesn't matter because that'll open
28:37
Speaker 2: another opportunity.
28:38
Speaker 4: And you're giving all of these.
28:40
Speaker 2: Kudos to these other platforms that are going to help
28:43
Speaker 2: these retailers do a great and fantastic job at their business.
28:47
Speaker 2: And you're promoting this charity that's going to take access
28:52
Speaker 2: inventory and make sure it gets utilized by someone who
28:55
Speaker 2: truly has a need for it. And that's just an
28:58
Speaker 2: amazing thing for a business person these days, because a
29:01
Speaker 2: lot of times it feels very selfish. If nothing else,
29:05
Speaker 2: you know that it's all about building your own brand
29:08
Speaker 2: up and amassing as much capital as you can, and
29:12
Speaker 2: it's just very refreshing to hear all of the ways
29:16
Speaker 2: that you are trying to build business for everyone.
29:19
Speaker 3: Thank you, Ellen, And you said it when we started
29:22
Speaker 3: this podcast. Today there's over five hundred billion dollars of
29:29
Speaker 3: unsold inventory annually. If I can chip away at this problem,
29:34
Speaker 3: it'll be fantastic, but it's going to take a lot
29:37
Speaker 3: of us to solve it.
29:38
Speaker 2: It is a five hundred billion dollar problem, a five
29:41
Speaker 2: hundred dollars billion boon for the economies, whether in the
29:46
Speaker 2: US or that's only I believe a US fact, and
29:52
Speaker 2: I don't know that that's an international number.
29:54
Speaker 4: That's US dollars.
29:55
Speaker 2: So five hundred billion dollars back into the US economy
29:58
Speaker 2: would be amazing, and that would be a benefit to everyone.
30:03
Speaker 2: So I do understand your reasoning for wanting to raise
30:05
Speaker 2: everyone up, but it's still an unusual thing. So I
30:10
Speaker 2: am extremely pleased to have the opportunity to talk to
30:14
Speaker 2: you today. What else do our listeners need to know
30:18
Speaker 2: about Max Retail?
30:20
Speaker 3: So this we found out very early on in our journey,
30:23
Speaker 3: is that no one wants anyone to know about their
30:26
Speaker 3: dirty laundry. No one wants anyone to know how much
30:30
Speaker 3: access inventory they have on hand. It's embarrassing, it's something
30:34
Speaker 3: that we prefer not to think about, and yet it
30:37
Speaker 3: is a massive opportunity for revenue.
30:40
Speaker 4: And so one of the.
30:41
Speaker 3: Core pillars of max Retail is that it's all anonymous ellen.
30:45
Speaker 3: So when a retailer or brand is leveraging Max Retail
30:49
Speaker 3: to sell their past season aged inventory, there is no
30:54
Speaker 3: tie back to them. That inventory just becomes an item
30:57
Speaker 3: that needs to be sold. And what's most power full
31:00
Speaker 3: about it is a lot of times we see the
31:02
Speaker 3: same item listed across multiple sellers, right, and what we
31:07
Speaker 3: do in that case is we actually we group it
31:09
Speaker 3: back together. It's still sitting in their stores, but on
31:12
Speaker 3: max Retail, we now know that there's one hundred units
31:15
Speaker 3: of these genes and that becomes a powerful assortment when
31:20
Speaker 3: we're selling it online. There are a lot of our
31:22
Speaker 3: e commerce partners, they require breadth and depth of products.
31:26
Speaker 3: You can only qualify to sell on their site if
31:28
Speaker 3: you have a certain volume. And when we work together
31:31
Speaker 3: as a community, it unlocks these opportunities for.
31:34
Speaker 4: All of us.
31:35
Speaker 2: Yeah, you can pool those resources.
31:37
Speaker 3: Yes, that's what we do. We pool the retailer resources.
31:40
Speaker 3: I always tell our community we are stronger together than alone.
31:43
Speaker 3: The last unit on your sale rack isn't much, but
31:47
Speaker 3: when it's all listed on max Retail, it's powerful and
31:51
Speaker 3: we can all command a higher price for it, get
31:53
Speaker 3: it sold. And I just love that. So you know,
31:55
Speaker 3: when we talk about how are we solving for this problem,
31:58
Speaker 3: it's challenging and we have to be creative, but I
32:01
Speaker 3: really love it. But anonymity, teamwork, you know, working as
32:05
Speaker 3: a community. These are really core things at MAX Retail
32:08
Speaker 3: and sharing knowledge, which is why, as you and I
32:10
Speaker 3: are talking today, Ellen, our biggest company value is share knowledge.
32:15
Speaker 3: And if I can share it with retailers, with brands,
32:17
Speaker 3: with you, with investors who are interested in the excess
32:21
Speaker 3: inventory space and want to know more. By sharing knowledge,
32:25
Speaker 3: we're all going to be able to make more of
32:26
Speaker 3: an impact together.
32:27
Speaker 4: That's fantastic.
32:29
Speaker 2: I mentioned at the beginning when that one particular fashion
32:32
Speaker 2: brand decided to destroy their inventory, their excess inventory, it
32:37
Speaker 2: caused major public outrage. But I know when it comes
32:40
Speaker 2: to some of those large brands, the luxury brands especially,
32:44
Speaker 2: they can't allow for their product to devalue. And this
32:50
Speaker 2: gives them the opportunity, especially with that anonymity, to continue
32:55
Speaker 2: to have their product available to the marketplace and let
33:00
Speaker 2: it devalue and not put it in a landfill and
33:03
Speaker 2: cause major public outcry.
33:05
Speaker 3: Yeah, that is a major reason why brands work with
33:07
Speaker 3: us directly. Is the anonymity. And I think the other
33:10
Speaker 3: really important thing to know is when you're looking at
33:12
Speaker 3: past season inventory. And what I love about your podcast
33:16
Speaker 3: is we're talking about supply chain, and we're talking about
33:18
Speaker 3: like the end of the line of the supply chain
33:20
Speaker 3: here right. And what I've found to be so true
33:24
Speaker 3: and amazing is that when there is unsold inventory of
33:28
Speaker 3: a brand or of an independent retailer, that same exact
33:32
Speaker 3: item was purchased in another location in season, it was
33:37
Speaker 3: worn and enjoyed by someone, and that person might be
33:41
Speaker 3: done with it and reselling it on Poshmark tomorrow as
33:44
Speaker 3: pre owned. Meanwhile, you have the exact same item still
33:49
Speaker 3: sitting in a warehouse or sitting in an independent retailer
33:51
Speaker 3: that's never had the opportunity to be worn. And so
33:55
Speaker 3: in these cases is when we will mark an item
33:59
Speaker 3: of certain brands that are really notorious as pre owned
34:03
Speaker 3: because it is past season and it has been worn
34:06
Speaker 3: by other people, and when we market as pre owned,
34:10
Speaker 3: nobody gets mad. End consumers don't get mad when they
34:13
Speaker 3: get an item that they bought and it's got the
34:15
Speaker 3: tag on it. You're not going to piss anyone off.
34:17
Speaker 3: So we have found sometimes even just how you present
34:21
Speaker 3: that item as pre owned can make a big difference
34:24
Speaker 3: when it's past season, that it's not a brand new
34:27
Speaker 3: item being sold by the brand at a discount and
34:29
Speaker 3: just being anonymously sold as if it has been worn
34:32
Speaker 3: and you just surprise, You just surprise the end consumer
34:35
Speaker 3: with a little of protect the brand integrity in the process.
34:39
Speaker 2: Absolutely well, I think that brings us to the end
34:43
Speaker 2: of this episode. Thank you so much for sharing your
34:46
Speaker 2: insights and your knowledge with us today. I've learned so
34:50
Speaker 2: much about the end of the supply chain and what
34:53
Speaker 2: can be done to make sure that that leftover inventory
34:57
Speaker 2: after a sales cycle is not just left to the dumpster.
35:01
Speaker 4: Absolutely to our listeners.
35:03
Speaker 2: If you have a suggestion for a topic or would
35:05
Speaker 2: like to be a guest on the show, like Melody,
35:08
Speaker 2: we'd love to hear from you. You can contact us
35:10
Speaker 2: at podcast at meboch anytime. As always, thank you for
35:14
Speaker 2: listening to Speaking of Supply Chain. If you enjoyed our show,
35:17
Speaker 2: please rate and review us on whatever podcast platform you prefer.
35:21
Speaker 2: We are available on Apple Podcasts, Amazon Music, and Spotify,
35:24
Speaker 2: and be sure to tune in next time.
35:31
Speaker 1: Meeboch Consulting is one of the largest and most globally
35:34
Speaker 1: recognized supply chain consulting, engineering, and advisory firms. For nearly
35:39
Speaker 1: fifty years, we've helped clients achieve supply chain excellence and
35:42
Speaker 1: sustainable competitive advantage across the entire spectrum of the supply
35:46
Speaker 1: chain by delivering improvements and innovation strategically, tactically, and digitally.
35:52
Speaker 1: To learn more, visit meeboch dot com. You've been listening
35:56
Speaker 1: to Speaking of Supply Chain, a meboch podcast conected with
36:00
Speaker 1: us by subscribing to the show in your favorite podcast player.
36:03
Speaker 1: If you like what you've heard, please rate the show
36:06
Speaker 1: that helps us to keep delivering the latest in supply
36:08
Speaker 1: chain information. Thanks for listening. Until next time,