Posts Tagged ‘Marsharlls’

Asset recovery is a disposition within a reverse logistics process that directs product segregation to categories that will in turn be sold on the the secondary market. The secondary market is the segment of retailers that sell product that did not sell in the primary sales channel. This includes a wide variety of sellers catering to many different levels of customers, everything from flea markets, to eBay, to Marshall’s, to pawn shops.

Asset recovery is a cash cow for many retailers and manufacturers.  In fact, when companies file for bankruptcy, they often keep their return centers operating simply because of the cash that is generated from asset recovery sales.  Due to the rise in imports and the push to develop sustainability programs, the percentage of total returns that is categorized as asset recovery and sold on the secondary market has grown significantly over the last ten years.

For most non-food retailers, half of the product flowing through their reverse logistics pipeline is sold on the secondary market.   Manufacturers also sell a significant amount of product on the secondary market.   An obvious sign of this is the explosion of outlet malls over the past few years. In 2009, total square footage of outlet mall space exceeded 58 million square feet. The vast majority of the space in these malls are occupied by name brand manufacturers.

Many of these manufacturers sell new goods, returned & refurbished goods, as well as recalled merchandise in these stores. Typically, these manufacturers also have well developed programs to sell to the larger secondary market retailers like Marshall’s, TJ Maxx, and Big Lots. These larger scaled secondary market retailers will buy large lots of single SKU’s that would be hard for a manufacturer to liquidate at a reasonable recovery rate.

In addition to the big named players there are many more salvage dealers that sell virtually anything, in any condition. Taken all together, the secondary market sales for the US is estimated to be in excess of $329 Billion, which is 2.3% of GDP. Clearly, the secondary market is BIG business and developing asset recovery processes and liquidation channels can have a major impact on a company’s cash flow and profitability.