The benefits of the secondary market

In June, the French prime minister announced a new law that looks to ban the destruction of unsold products. The legislation, which directly tackles the €650m (£576m) worth of new consumer products that are binned or destroyed every year in France, will go into effect within the next four years. This new French legislation is a ‘world-first’, but experts predict that the crackdown will soon extend to other countries across the globe.

For example, the German government is also taking steps towards a legal framework which would bring an end to the destruction of unsold and returned products. This comes after research from the University of Bamberg showed that six percent of returned online orders end up being thrown away.

Additionally, further regulations such as the UK 1p clothing tax speak to evolving attitudes that are happening in industries wider than just retail, suggesting that a green and clean future is achievable.

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Much of this is being driven by recent shocking revelations from large corporations that reveal the extent of corporate waste and damage to the environment. Some examples:

  • It was revealed last year that Burberry had been burning £28.6m of unsold apparel annually to prevent its items being sold off cheaply
  • Two 2019 investigations showed that Amazon destroys or bins millions of unsold products every year
  • The recent £1 bikini scandal

Fast fashion encourages a throwaway fashion culture: British shoppers bin one million tonnes of clothing every year.

That said, experts have predicted in order to effect real change, a European or even global approach is necessary. Without this, companies will be able to simply transport products to other countries and destroy them there.

As legislation continues to be implemented with the environment and circular economy in mind, retailers will need to utilise tools and services that can enable them to offload unused and unwanted stock in an environmentally conscious way.

One option is leveraging a B2B marketplace platform to sell returns and other overstock into the secondary market. Rather than sending items to landfill or leaving them to sit in a warehouse taking up space, retailers have the option to sell goods to a large network of small business buyers who will recycle, repurpose, or resell them.

Many of today’s largest retailers and brands are using an online marketplace solution to offset more loss than traditional methods, while still protecting their brands.

Here’s how and why it works:

Higher Pricing: By setting up an online auction dynamic where specifically targeted buyers compete to buy your merchandise, pricing goes up.

Better Control: Exposure to the right buyers ensures there is no confusion between primary (a-stock) or secondary (b-stock) channels and that your brand remains secure. By marketing to a database of targeted, vetted secondary market buyers you can control who sees your merchandise and who is allowed to buy it.

Velocity: With a larger buyer base, made up of the right buyers, you can move inventory as needed – regardless of volume, time of year, or product category.

Automation/Efficiency: By automating your liquidation process you’ll improve the operational efficiency of your liquidation program. No more spreadsheets. No more faxing. No more negotiating over the phone.

Online Auction Dynamic: Increased competition through auctions means higher pricing; it also drives velocity, creates a sense of urgency and excitement. Auctions also mean no offline negotiating: you’ll be able to extract buyers’ highest willingness to pay and have real data on secondary market prices.

Overall, by selling returned and excess goods into the secondary market, the lifecycle of product is extended, thus reducing the amount of unnecessary waste and providing an additional revenue stream for the retailer.

Ben Whitaker, B-Stock’s EMEA director

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