From vacuums to air fryers, auction houses are cashing in on online shopping returns
CBC
On a bright but chilly Saturday, the parking lot at Ollive's Auction in Calgary is bustling with a steady stream of customers arriving to pick up the treasures they'd won the week before.
Among them: a $7 vacuum cleaner, an $11 hair dryer brush and two tricycles for $13, sold at a steep discount.
"I don't want to advertise this place because it's a gem," said shopper Pat Knecht, who picked up the vacuum cleaner along with a lamp, some storage bins and a dozen picture frames. "You can get some really good deals."
Items at Ollive's Auction can be found at a steep discount because they've likely been purchased and returned once already. The business is among a growing number of auction houses whose bread and butter has become selling off returned and excess merchandise.
That line of business has grown as online shopping, and online returning, have become ever more popular — with some research suggesting 30 per cent of what's bought online ends up being sent back. For retailers, the price of shipping, processing and restocking returns can be steep, and liquidation is one way to deal with it.
As Black Friday kicks off the official start to the holiday shopping season, these auction houses offer a glimpse of where some of those returns wind up.
Inside the nondescript brick exterior of Ollive's Auction is a roughly 5,000-square-foot warehouse, packed floor to ceiling with everything from diapers to paddleboards to electric vehicle chargers.
The business gets a truckload every other week with about 24 skids' worth of product: a mix of online returns and unsold-but-outdated merchandise that's being cleared out to make way for what's new.
Owner Wayne Ollive works with a national liquidation company that sources the returns directly from retailers. He chooses how many truckloads to order, but the rest of the process is a roll of the dice, he said.
"We never know what's coming in," said Ollive. "It's kind of like Christmas for the staff when we're opening up the skids because we don't know what to expect."
While it's hard to pin down exactly what share of returned and excess merchandise ends up at auction, or in liquidation more broadly, retail consultant Sonia Lapinsky said it may be happening more often as retailers deal with a "glut" of inventory from previous supply chain disruptions, and from the growing trend of customers buying excess merchandise and then sending it back.
"I would say over the last few months, there would be a significant percentage, much more than usual, that's off to the liquidators," said Lapinsky, managing director in the retail practice of the global consulting firm AlixPartners. She's based in the U.S. but said similar trends are at play in Canada.
And while liquidation has become a common option for retailers grappling with online returns, Lapinsky said it isn't necessarily the most profitable.
"The liquidation route is going to be lower level margin, just above actually destroying the merchandise itself."
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