November 21, 2024 • 36 mins
Struggling to compete with retail giants? Today, we’re discussing the challenges independent retailers face and innovative solutions that can help them thrive in a crowded market.
Join host Ellen Wood as she speaks with Melodie van der Baan, co-founder and CEO of Max Retail, about innovative strategies that empower smaller businesses to enhance sales and improve turnover.
Join us as we discuss:
Join host Ellen Wood as she speaks with Melodie van der Baan, co-founder and CEO of Max Retail, about innovative strategies that empower smaller businesses to enhance sales and improve turnover.
Join us as we discuss:
- Negotiating power against larger competitors like Walmart.
- Optimizing inventory management and boosting sales
- The economic and environmental implications of unsold inventory.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:06):
You're listening to Speaking of Supply Chain, a meeboch podcast.
This is a show for logistics professionals looking to learn
more about the latest innovations in supply chain. Each episode
will feature a conversation on topics such as mitigating supply
chain disruption and reducing risk, current automation trends, sustainability initiatives,
and more. Let's dive right in.
Speaker 2 (00:32):
Hello, and welcome to Speaking of Supply Chain, where we
explore trends, current events, and innovations impacting the logistics and
supply chain industries. I'm your host, Alan Wood. Last year,
over stocks were estimated to have cost retailers over five
hundred and sixty billion dollars in losses. In addition to
the lost volume from wasted stock, the excess carrying costs
(00:52):
account for nearly a third of that number. You may
recall that in twenty seventeen, one popular fashion brand faced
signal magnificant public outrage over their decision to destroy thirty
seven million dollars worth of excess finished product that hadn't sold. Today,
we're going to learn more about the financial and environmental
impacts resulting from this difficult to predict industry. I'm joined
(01:15):
today by Melody Vanderband, co founder and CEO of Max Retail,
to share her insights on how companies can mitigate excess inventory.
Welcome Melody, Hello, and thank you for having me Ellen.
Of course, So this is such a great topic, which
is inventory, overstock and what to do with it. So
(01:36):
how has the integration of digital technology and data analytics
transformed some of those inventory management practices, because I know
that's one of the cornerstones of Max Retail.
Speaker 3 (01:49):
Well, you know, it's been a long journey to getting
here today. Fashion has been very slow to adopt technology.
I was at a trade show last week where I
would say to twenty percent of brands were still taking
orders live in copy paper. So we haven't quite arrived
just yet. Okay ten years ago, yes, as of ten
(02:11):
years ago, point of sales were server based, not cloud based,
and so that was a huge shift. I would say
the biggest driver of our industry coming online is that
consumers are there. And so if you think about even
ten years ago, people were not shopping on Amazon as
they were before. They were not shopping online in general, right,
(02:36):
and that has really been the biggest push of brands
and retailers to come online is because they're realizing that's
where customers are and with that you have to evolve
your systems. So I would say retailers tend to be
notoriously reactive, not proactive. As you know, in technology, there
(02:57):
are early adopters, there are followers, and there are skeptics.
In retail especially, it takes a lot to get something
over the line. There have been a couple inventory management
systems for brands that really I believe that they paved
the way for other technologies, and I would consider these
to be Jure, New Order, Shopify, and fair. I would
(03:21):
say these are the four most successful companies to get
their retail industry to move forward when it comes to
inventory management. However, we have not made enough progress. So
I see plenty of retailers jumping on to different technologies
that will help them sell products, Max Retail being one
(03:42):
of them, but very few going out to seek ways
to better manage and plan and allocate for their inventory.
Speaker 2 (03:51):
Right because Max Retail is solving a problem in the
industry of unsold inventory. But if we could solve that
problem sooner than there would be unfortunately less for you
to do, but another problem for you to go fix.
Speaker 4 (04:05):
Maybe let's look at it that.
Speaker 3 (04:06):
Way, and that's one hundred percent how we look at it, Yes, Ellen,
And here's the irony. If retailers and brands were to
be more proactive about their inventory and how they plan
for it and how they replenish with shorter cycles, right,
we don't run out of a job to do. There
(04:26):
is still going to be inventory that doesn't perform always. However,
the retailers and brands would get more turns and so
they would actually use us more frequently. What we have
seen of retailers that leverage max Retail for their past
season inventory is eventually they get such a handle on
the past season inventory, they become more aware of where
(04:47):
they're over indexed in season, and they utilize our platform
sooner to get their cash out and bring in their
next shipment. And so we believe exactly what you said
to be true. We must solve problems upstream, and that's
why a big part of our roadmap at max Retail
is helping brands and retailers receive recommendations of where they're
(05:08):
over indexed so they can be more mindful. We're not
getting into planning, we're not getting into allocating, but we
absolutely can help them with a better job of understanding
their cell through and they're at risk inventory before it
becomes really a dead weight.
Speaker 4 (05:24):
Oh absolutely.
Speaker 2 (05:25):
What sort of factors are causing that lack of agility
in their inventory and their accuracy of forecasting for the
need and for the demand.
Speaker 3 (05:36):
So I think a big part of the problem is
how far out all of this planning takes place. When
I was in New York last week, the brands were
showing next spring. So here we are in the end
of Q three and we're showing Q one Q two goods,
and these retailers are placing orders for merchandise that they
(06:01):
will not receive for five to eight months out. What
happens next is the brand is going to batch all
of those orders together and then they're going to place
their orders with their suppliers of the materials. Those materials
have to be made. A lot of times they're not
just in stockholas. They have to be made for the purpose.
(06:24):
Then those materials have to get to the manufacturers to
be produced, and there's a timeline with all of this.
From there, it has to ship and clear and arrive
here safely to the United States. If it's not already
made here, and if you look at the port problem
that we're experiencing in this last week, you can see
(06:44):
how that's causing a supply chain issue. But these things
happen in sequences. Now, what happens when it hits the port, Well,
every order that is placed has a start date and
a cancel date, that is when a retailer is willing
to receive the shipment. And so let's say there's goods
that are sitting outside of the port right now, but
(07:05):
the cancel date for the order is October fifteenth. If
that merchandise doesn't get to Macy's Nordstrum Sacks wherever by
the fifteenth, that retailer can cancel the order and refuse
the goods. And now those goods are going back to
the warehouse and they have instantly become at risk inventory.
(07:26):
So you can see how the timeline for everything to
happen can leave a lot of room for problems along
the way.
Speaker 2 (07:35):
Absolutely, So we were just talking about some of those
situations where this inventory is at risk. So what are
some of the financial and operational risks associated with holding
that excess inventory? Because it's not just that now you
have the excess inventory, and you've got to figure out
what to do with it. This is going to cause
you problems.
Speaker 3 (07:54):
Yes, absolutely, it causes major financial problems. Most of the time.
These brands are produced on net terms with their manufacturers,
and so the immediate risk posed for a brand, for instance,
is that they have to pay that manufacturer, and if
those goods weren't received, then they don't have the money
to pay the manufacturer. And by the way, most brands
(08:18):
are not cutting to order. Cutting to order means you
only produce what was purchased. Most brands cut in surplus
because then the manufacturers give them a better price. So
now you've already overcut. You overcut, you got more than
you needed when it arrived, and now you have even
more because your retailer, for whatever reason, didn't receive it.
(08:39):
And the financial pain is not just hey, I need
the money to pay my manufacturer, but it's also you're
paying to store it now, so that merchandise is costing
you overhead, and a very expensive overhead. Three pls will
tell you our job is not to be a storage.
We're very expensive storage. Actually, get a lot of three
(09:01):
pls that reach out to me, and the three pls
say can you please help my customers because I only
make money when I pick and pack outside of being
an expensive storage unit. But this is not serving me.
I need you to sell their inventory. Yeah, so it
is a burden on the brand. It is a burden
on their threepl and you can imagine that manufacturer is like,
(09:22):
where's my money?
Speaker 2 (09:25):
Of course, I mean everyone needs to get paid. So
how do retailers balance that risk of the obsolescence of
their inventory things just sitting around and waiting, and the
balance of needing to meet the demand that they truly
do expect.
Speaker 3 (09:41):
Absolutely, So the problems that we've discussed thus far have
really been more of the brand's problems. So yes, let's
talk about that merchandise that successfully shipped to the retailer
that they received. There's a couple of ways that this
is solved. For if you have a big, notorious name
in retail and have gross margin guarantees, and what that
(10:03):
means is if your product doesn't sell on the floor
and you have to do a markdown, that you're going
to pay the brand less. Okay, that is one way,
and it's really if you think about it's like probably
the best solution because hey, let's mark it down and
see if we can get it sold. Even if we
make less money. Hey man, at least the brand isn't
stuck hold in the bag exactly. And if it can
(10:25):
get sold with the markdown, okay, let's think that's best
case scenario. The next scenario is when that big name
retailer says, I'm sending you back anything that doesn't have
a sixty percent sell through.
Speaker 4 (10:37):
Okay, and that's.
Speaker 3 (10:38):
Very convenient for the retailer, but once again inconvenient for
the brand. Now, what I see most frequently with my
core customer base, which is independent retailers. We're talking your
favorite store down every main street in America. We work
with over two thousand of these today with Max retail.
These are the ones who don't have a markdown allowance.
(11:00):
They cannot send goods back to their brand. And would
you believe it that for every small store you see,
they are sitting on an average of one hundred thousand
dollars of wholesale financial losses each year due to unsold inventory.
So you only have to walk a block and you
pass a million dollar problem of unsold inventory.
Speaker 4 (11:20):
That's got to be killing small and medium businesses.
Speaker 3 (11:22):
It's totally killing it. If you think about these small businesses,
if they could have that extra hundred thousand dollars in
their bank account, what could they do? Absolutely, they would
run a completely different operation. They could hire more people
in the community, they could write themselves a bigger check,
they could bring an inventory faster, which would produce more
gross margin for them, and so there's tremendous opportunity ironically
(11:44):
that is sitting on this sale rack unsolved for today.
And so what we see is today these independent retailers
their only solution is a marked down in store, and
that's on them, right. The brands aren't giving them an
a kickback for that. And why the markdowns don't work
is because there's only so many people who will walk
(12:06):
through that door every day. And that's why they use
max retail, because hey, if you're only going to have
x amount of feet walking in, you want those feet
buying full price, right, And yet you know you have
dollars sitting on that unsold inventory.
Speaker 2 (12:22):
Okay, So how does the process work to help these
companies offload their excess inventory more efficiently? Do you have
a success story you can share?
Speaker 3 (12:31):
Oh my gosh, I have my favorite success story so
we've been at this for a couple of years. And
fun fact, my background is as an independent retailer, Okay,
So I had a store for nine years in South Florida.
Before that, I was a distributor, so I sold to
over five hundred retailers around the United States. So I've
been seeing this problem in my life since around two
(12:51):
thousand and nine, and so it's a big part of
my course. So when we launched max Retail, I remember
it was about a year ago. There was one particular
custom and she was just getting so many sales on
Max Retail, like it was crazy, Like she was this
is like when we were still like a little baby company,
and she was getting like five to ten sales a day.
So I said, I just need to talk to this person.
(13:12):
So I called her up and I was like, Hi,
I'm Melody, I'm CEO of the company that you're using.
Speaker 4 (13:17):
What are you doing?
Speaker 3 (13:20):
And she said, well, I have a small store in
Wisconsin in a resort town and I didn't have a
solution for a couple of years. So I would just
take the past season inventory, put it in our basement
and bring it out every summer for the sidewalk sale.
And so when she started using max Retail, what she
(13:40):
said is I made it a habit every single day
to pull one item out of the basement and list
it on max retail. Okay, And she was just consistent
about it, ellen every single day. And then she would
wake up and she'd have another sale from Max Retail,
so she'd approve a sale and list another item, and
she just kept doing this and today she's made over
(14:03):
three hundred thousand dollars on our platform, and that, to
me is just so fulfilling. And we have plenty more
stories just like hers. And they're not even big retailers.
They're small retailers with massive problems of access, inventory and
no solution, but they are the core pillars of their community.
Speaker 2 (14:23):
Yeah, they don't have the negotiating power that Walmart does
or a Nordstrom. So these are fantastic solutions for these
smaller businesses that just want to get rid of their
inventory to be successful in their business, but they want
to offer the products that people want to buy. So
what are some of the key benefits that you're able
(14:45):
to deliver to your clients compared to those traditional tactics
like those clearance sales. I mean, Obviously, selling all the
stuff in your basement is hugely helpful for that small,
niche retail store. But you and I were talking earlier
about just some benefits of them learning how to plan
(15:06):
better for their next sales cycle.
Speaker 3 (15:09):
Absolutely, and there's a lot of amazing companies out there
that help independent retailers specifically do their planning. Of course,
the large big box retailers have entire divisions for planning. Absolutely,
so I would say the number one reason why independent
retailers today are so reactive about their inventory is because
they do lack that planning. And so I would suggest
(15:30):
a couple companies that are good for it. There's Management One,
There's Blax Retail. These are really strong companies for helping
independent retailers specifically learn how to use their data from
their point of sale and really plan better. And believe me,
I will once again, I will never be out of
a job for people doing a better job planning. And
we work very closely with these planners and allocators at
(15:53):
Max Retail. But what I would say the benefits of
Max Retail is when you mark down your inventory in store,
you're waiting, You're waiting for someone to walk in and
buy it, so you're losing what I call your opportunity cost.
So what I love to do this example. So let's
say I have this bag right here, better late than ugly.
(16:15):
It says, if I'm a brand, I'm going to make
this for probably two dollars. I'm going to sell it
to an independent retailer for ten dollars and they're going
to sell it in store for twenty. So let's say
I buy it today and everyone it's a big hit, right,
so it gets purchased immediately. Okay, I made ten dollars profit,
(16:37):
and what am I going to do? I'm going to
take my other ten and reinvest it. That is my turn.
So now I buy another bag and I sell that.
I do the same thing again, and I do this
for ten days from my ten dollar investment, I have
made one hundred dollars of profit. However, if I buy
(16:58):
this today and it doesn't sell tomorrow or the next
day or the next day, and ten days later I
sell it for twenty did I really win? I made
ten dollars, but I lost time. And that is why
max retail is a more powerful tool, because in a
few quick clicks, these retailers are able to in their
(17:20):
point of sale tag the items that aren't performing well.
That sends a product feed to max Retail and we
go ahead and find the images right the descriptions and
expose this inventory to over four hundred million end consumers.
Why so that we can get them paid the highest
price for that unit. Because if I don't get them
back as close to ten dollars as I can, it's
(17:42):
not enough meaningful money to place their next bet. And
time is of the essence mark down. It might take
six months to sell. If Max Retail can sell it
for you in ten twenty days, you get to place
your next bet. And that's why I love what we
do because it's about turn and in retail, turn is everything.
It's not about your margin that you got. You might
(18:05):
have one hundred percent sell through, but it took you
a year to do it. You might have sold it
at full price, but it took you a year to
do it. It's a false sense of accomplishment. And that's
why when we talk about how to manage inventory, ellen,
the most meaningful thing you can do is know when
you're losing your opportunity cost on an item and you
(18:25):
need to get your money out of it. So you
can bring in something else. And that is where supply
chain really hits home for this massive segment. There's two
million independent retailers between North America and Europe alone, and
if all of them paid attention to their turn, they
would run far more profitable businesses and have less inventory
(18:47):
on hand.
Speaker 4 (18:49):
That's amazing.
Speaker 2 (18:50):
So what are some practical tips that you would give
to a company a retailer looking to manage or reduce
their excess invent Obviously the tip of trying one at
a time and do it daily and make a daily
practice of the effort rather than letting time slip by
and hoping. I mean, obviously it's about getting up and
(19:13):
trying something. Even if it fails, try something. But what
else can they do to manage that inventory? Does it
come down to trying to negotiate better deals with the suppliers?
Does it come down to trying to have their own
online presence for their sales channels? Because I know a
lot of these smaller independent retailers don't necessarily have the budget,
(19:36):
or the staff or the capability to run their own
e commerce site.
Speaker 3 (19:41):
I agree with you, selling online is very tough. I
can attest as an independent retailer. I had, of course
a Shopify store right and what my customers would do
is go on my site just to see what I
had in and then they would come into my store
and buy from me because I had such a loyal
customer base. So what I would say, more important than
(20:03):
trying to grow your online presence is to grow your
social media presence. And so when merchandise comes in the store,
you have to be proactive about all of it. You
have to make sure you photograph it, yes, put it
on your site. Even if you're not planning on becoming
Thenextrevolve dot com, you can still get it exposed so
(20:24):
that you can promote it on TikTok, on Facebook, on Instagram.
These are where audiences are. And do you know YouTube
is still ten times as big as TikTok. Do not
underestimate YouTube. It is amazing. So I would say making
sure your merchandise is shot and being promoted, making sure
(20:45):
you understand what different social media your customers are on,
and also client telling. There's a client telling app called
one Shop, and it's super amazing for independent retail where
when merchandise comes in you can see exactly who's in
the past and clientele. So, Ellen, Yes, a big part
of making sure you don't have excess inventory is properly
(21:06):
promoting the items you have.
Speaker 4 (21:08):
Know who your.
Speaker 3 (21:08):
Customers are, have a fantastic CRM or a good point
of sale, right, You've got to know the power law
where eighty percent of your sales are coming from twenty
percent of your customers, right, Just really having a handle
on your new shipments to properly promote them so that
you can determine what's a dog. That's what we call it, Ellen,
(21:29):
We call it a dog something that's not going to sell.
If you've properly promoted it and it's not selling, then
you know it's going to be at risk as excess inventory.
If you can't sell it in the first thirty days,
you're not likely going to sell it in the next
three to six months.
Speaker 4 (21:45):
That's true.
Speaker 2 (21:46):
Yeah, So we've talked about a lot of clothing and
apparel and home goods types of things. What types of
products does max Retail really excel at pushing through this
cycle and getting sold because retail encompasses so many things.
And I know you said you don't do grocery and
(22:06):
that's a huge sector, but home goods pets.
Speaker 4 (22:10):
Oh my gosh.
Speaker 2 (22:11):
Pet supplies have just exploded in the past few years.
Speaker 4 (22:15):
Absolutely.
Speaker 2 (22:16):
As you said, clothes weren't purchased online ten years ago
to the degree that they are now. I feel like
I do half of my kids' school shopping online, and
Christmas shopping has already done. The Amazon wish list is created,
so those types of things. We're doing all of this
online shopping. But what types of goods really perform best
(22:38):
for your retailers.
Speaker 3 (22:40):
I would say, if you've heard of it, it sells
on max retail, if you've heard of it, right, And
what do I mean by that? I would say that
ninety percent of our customers today, the independent retailers that
we serve, they are the big thing in their small town. Okay,
there is no department store near them, and so they
are the source for buying those fantastic brands, whether it
(23:03):
be apparel, whether it be footwear, whether it be accessories.
And that's where there's this limiting belief that independent retail
is dead.
Speaker 4 (23:12):
But it is alive and well.
Speaker 3 (23:14):
And you know this if you just get in your
car and you don't take the highway, but take like
the main road and just drive north for the next
eight hours.
Speaker 4 (23:26):
Oh gosh, it.
Speaker 3 (23:27):
Will blow your mind how many businesses there are and
they're doing fantastic.
Speaker 2 (23:33):
That's amazing. So what about used items? I know that
that's a whole channel on Amazon is purchasing refurbished, factory
approved refurbished items. Is that something that is it also
available through max retail or is it only new condition
items that are just overstock.
Speaker 3 (23:53):
I would say in our core categories, which are contemporary apparel,
designer apparel, we dabble in luxury. We do have a
couple luxury where we see the most luxury is actually
pre owned, So we have what's been interesting is this
segment of independent retailers who buy contemporary apparel, but they
also sell luxury handbags in store and sometimes those are
(24:16):
not turning. So we'll see some luxury watches and those
can be pre owned as long as they have authentication,
that's fine. And then also we'll do some contemporary pre owned,
but it has to be excellent condition or it can
be returned, but it has to be with tags, right.
So we do have a couple sellers on our platform
that maybe they'll buy a palette of returned goods from
(24:38):
like a department store, and as long as they're in
excellent condition, they're able to list them on Max retail.
I would say ninety percent of our assortment is unsold
inventory that is past season, that is in a physical
retailer who carries anywhere between forty to sixty different brands
in store. I would say another five percent of our sellers,
(24:59):
or what I call the hacker retailers. And this blows
my mind. I found out about these same way. I
was like, who is that customer? I need to talk
to them. And the hacker retailer is fascinating. They actually
buy liquidation from brands and from retailers going out of business,
and in the past they were selling it on poshmark
or on eBay right, and then they found out about
(25:21):
Max retail, and they ask themselves, well, why am I
listing this stuff myself on these sites?
Speaker 4 (25:28):
Why am I doing all the work?
Speaker 3 (25:29):
Why am I doing all the work? Why am I
dealing with customer inquiries and return request Because on Max Retail,
sales are final. Once it's out of your store with
the prepaid label we give you, it's never coming back.
And so the hacker retailers love Max retail because now
they don't have to do anything. They just buy the
inventory and they stock it themselves and they use us
(25:50):
to sell it, so that that's pretty amazing. And the
last five percent of our sellers are brands. We do
have brands that work with us directly, and so they're
just short at right. Maybe they only have ten people
on their staff and they don't have someone to go
and do a past season liquidation strategy. Maybe the pricing
doesn't work for them and they need the money, they
(26:11):
can't give it away for pennies on the dollar. They'll
work with us as well, So we do a lot
of business with independence Hacker retailers and brands.
Speaker 2 (26:21):
So what do you feel or maybe you know what
the impact the environmental impact is of getting this inventory
out of these basements, out of these warehouses and to
the end consumer who wanted the item in the first place.
This is keeping a lot of material out of our landfills.
(26:42):
It's making sure that the economy is still chugging along,
which I know for a lot of people, especially during
the American election season, that's a huge topic. But environmentally
that's significant. What you're doing for the companies, for the
three pls, for these independent retailers to manage to keep
(27:03):
all of this inventory moving.
Speaker 4 (27:06):
Absolutely.
Speaker 3 (27:07):
I think one of the memories that stands out in
my mind the most is a brand that had inventory
sitting in their warehouse for three years and it was
over three hundred thousand pairs of shoes.
Speaker 4 (27:21):
Oh that's a lot of shoes.
Speaker 2 (27:23):
I mean, one would think that that's just going to
go to a landfill or it's going to be, you know,
a donation to some organization.
Speaker 4 (27:31):
But they were able to sell it.
Speaker 3 (27:32):
Yeah, we're able to help them sell it. And by
the way, on that note, I do want to give
a shout out to Souls for Souls. It's so l
Ees the number four and then Souls which is the
most amazing nationwide organization to donate access inventory too. So
when it is end of life from a brand before
(27:53):
they think of a landfill, call Soles for Souls. They
work with nonprofits across the country in poverty stricken communities,
in at risk families, homelessness. They are doing such incredible work.
So anytime we can refer someone to Souls for Souls
if they don't need the money, if they're considering a landfill,
if they don't want to leverage max retail to get
(28:15):
money back. We really love what they do over there,
so I just want to give them a little love here.
Speaker 2 (28:21):
I just have to say I love your attitude towards
just raising up the entire community. You know that your
company is solving a problem for a retailer or for
a brand, and that it could potentially put your company
out of business, but that doesn't matter because that'll open
another opportunity.
Speaker 4 (28:38):
And you're giving all of these.
Speaker 2 (28:40):
Kudos to these other platforms that are going to help
these retailers do a great and fantastic job at their business.
And you're promoting this charity that's going to take access
inventory and make sure it gets utilized by someone who
truly has a need for it. And that's just an
amazing thing for a business person these days, because a
(29:01):
lot of times it feels very selfish. If nothing else,
you know that it's all about building your own brand
up and amassing as much capital as you can, and
it's just very refreshing to hear all of the ways
that you are trying to build business for everyone.
Speaker 3 (29:19):
Thank you, Ellen, And you said it when we started
this podcast. Today there's over five hundred billion dollars of
unsold inventory annually. If I can chip away at this problem,
it'll be fantastic, but it's going to take a lot
of us to solve it.
Speaker 2 (29:38):
It is a five hundred billion dollar problem, a five
hundred dollars billion boon for the economies, whether in the
US or that's only I believe a US fact, and
I don't know that that's an international number.
Speaker 4 (29:54):
That's US dollars.
Speaker 2 (29:55):
So five hundred billion dollars back into the US economy
would be amazing, and that would be a benefit to everyone.
So I do understand your reasoning for wanting to raise
everyone up, but it's still an unusual thing. So I
am extremely pleased to have the opportunity to talk to
you today. What else do our listeners need to know
(30:18):
about Max Retail?
Speaker 3 (30:20):
So this we found out very early on in our journey,
is that no one wants anyone to know about their
dirty laundry. No one wants anyone to know how much
access inventory they have on hand. It's embarrassing, it's something
that we prefer not to think about, and yet it
is a massive opportunity for revenue.
Speaker 4 (30:40):
And so one of the.
Speaker 3 (30:41):
Core pillars of max Retail is that it's all anonymous ellen.
So when a retailer or brand is leveraging Max Retail
to sell their past season aged inventory, there is no
tie back to them. That inventory just becomes an item
that needs to be sold. And what's most power full
about it is a lot of times we see the
(31:02):
same item listed across multiple sellers, right, and what we
do in that case is we actually we group it
back together. It's still sitting in their stores, but on
max Retail, we now know that there's one hundred units
of these genes and that becomes a powerful assortment when
we're selling it online. There are a lot of our
e commerce partners, they require breadth and depth of products.
(31:26):
You can only qualify to sell on their site if
you have a certain volume. And when we work together
as a community, it unlocks these opportunities for.
Speaker 4 (31:34):
All of us.
Speaker 2 (31:35):
Yeah, you can pool those resources.
Speaker 3 (31:37):
Yes, that's what we do. We pool the retailer resources.
I always tell our community we are stronger together than alone.
The last unit on your sale rack isn't much, but
when it's all listed on max Retail, it's powerful and
we can all command a higher price for it, get
it sold. And I just love that. So you know,
when we talk about how are we solving for this problem,
(31:58):
it's challenging and we have to be creative, but I
really love it. But anonymity, teamwork, you know, working as
a community. These are really core things at MAX Retail
and sharing knowledge, which is why, as you and I
are talking today, Ellen, our biggest company value is share knowledge.
And if I can share it with retailers, with brands,
with you, with investors who are interested in the excess
(32:21):
inventory space and want to know more. By sharing knowledge,
we're all going to be able to make more of
an impact together.
Speaker 4 (32:27):
That's fantastic.
Speaker 2 (32:29):
I mentioned at the beginning when that one particular fashion
brand decided to destroy their inventory, their excess inventory, it
caused major public outrage. But I know when it comes
to some of those large brands, the luxury brands especially,
they can't allow for their product to devalue. And this
(32:50):
gives them the opportunity, especially with that anonymity, to continue
to have their product available to the marketplace and let
it devalue and not put it in a landfill and
cause major public outcry.
Speaker 3 (33:05):
Yeah, that is a major reason why brands work with
us directly. Is the anonymity. And I think the other
really important thing to know is when you're looking at
past season inventory. And what I love about your podcast
is we're talking about supply chain, and we're talking about
like the end of the line of the supply chain
here right. And what I've found to be so true
and amazing is that when there is unsold inventory of
(33:28):
a brand or of an independent retailer, that same exact
item was purchased in another location in season, it was
worn and enjoyed by someone, and that person might be
done with it and reselling it on Poshmark tomorrow as
pre owned. Meanwhile, you have the exact same item still
(33:49):
sitting in a warehouse or sitting in an independent retailer
that's never had the opportunity to be worn. And so
in these cases is when we will mark an item
of certain brands that are really notorious as pre owned
because it is past season and it has been worn
by other people, and when we market as pre owned,
(34:10):
nobody gets mad. End consumers don't get mad when they
get an item that they bought and it's got the
tag on it. You're not going to piss anyone off.
So we have found sometimes even just how you present
that item as pre owned can make a big difference
when it's past season, that it's not a brand new
item being sold by the brand at a discount and
just being anonymously sold as if it has been worn
(34:32):
and you just surprise, You just surprise the end consumer
with a little of protect the brand integrity in the process.
Speaker 2 (34:39):
Absolutely well, I think that brings us to the end
of this episode. Thank you so much for sharing your
insights and your knowledge with us today. I've learned so
much about the end of the supply chain and what
can be done to make sure that that leftover inventory
after a sales cycle is not just left to the dumpster.
Speaker 4 (35:01):
Absolutely to our listeners.
Speaker 2 (35:03):
If you have a suggestion for a topic or would
like to be a guest on the show, like Melody,
we'd love to hear from you. You can contact us
at podcast at meboch anytime. As always, thank you for
listening to Speaking of Supply Chain. If you enjoyed our show,
please rate and review us on whatever podcast platform you prefer.
We are available on Apple Podcasts, Amazon Music, and Spotify,
(35:24):
and be sure to tune in next time.
Speaker 1 (35:31):
Meeboch Consulting is one of the largest and most globally
recognized supply chain consulting, engineering, and advisory firms. For nearly
fifty years, we've helped clients achieve supply chain excellence and
sustainable competitive advantage across the entire spectrum of the supply
chain by delivering improvements and innovation strategically, tactically, and digitally.
(35:52):
To learn more, visit meeboch dot com. You've been listening
to Speaking of Supply Chain, a meboch podcast conected with
us by subscribing to the show in your favorite podcast player.
If you like what you've heard, please rate the show
that helps us to keep delivering the latest in supply
chain information. Thanks for listening. Until next time,
You're listening to Speaking of Supply Chain, a meeboch podcast.
This is a show for logistics professionals looking to learn
more about the latest innovations in supply chain. Each episode
will feature a conversation on topics such as mitigating supply
chain disruption and reducing risk, current automation trends, sustainability initiatives,
and more. Let's dive right in.
Speaker 2 (00:32):
Hello, and welcome to Speaking of Supply Chain, where we
explore trends, current events, and innovations impacting the logistics and
supply chain industries. I'm your host, Alan Wood. Last year,
over stocks were estimated to have cost retailers over five
hundred and sixty billion dollars in losses. In addition to
the lost volume from wasted stock, the excess carrying costs
(00:52):
account for nearly a third of that number. You may
recall that in twenty seventeen, one popular fashion brand faced
signal magnificant public outrage over their decision to destroy thirty
seven million dollars worth of excess finished product that hadn't sold. Today,
we're going to learn more about the financial and environmental
impacts resulting from this difficult to predict industry. I'm joined
(01:15):
today by Melody Vanderband, co founder and CEO of Max Retail,
to share her insights on how companies can mitigate excess inventory.
Welcome Melody, Hello, and thank you for having me Ellen.
Of course, So this is such a great topic, which
is inventory, overstock and what to do with it. So
(01:36):
how has the integration of digital technology and data analytics
transformed some of those inventory management practices, because I know
that's one of the cornerstones of Max Retail.
Speaker 3 (01:49):
Well, you know, it's been a long journey to getting
here today. Fashion has been very slow to adopt technology.
I was at a trade show last week where I
would say to twenty percent of brands were still taking
orders live in copy paper. So we haven't quite arrived
just yet. Okay ten years ago, yes, as of ten
(02:11):
years ago, point of sales were server based, not cloud based,
and so that was a huge shift. I would say
the biggest driver of our industry coming online is that
consumers are there. And so if you think about even
ten years ago, people were not shopping on Amazon as
they were before. They were not shopping online in general, right,
(02:36):
and that has really been the biggest push of brands
and retailers to come online is because they're realizing that's
where customers are and with that you have to evolve
your systems. So I would say retailers tend to be
notoriously reactive, not proactive. As you know, in technology, there
(02:57):
are early adopters, there are followers, and there are skeptics.
In retail especially, it takes a lot to get something
over the line. There have been a couple inventory management
systems for brands that really I believe that they paved
the way for other technologies, and I would consider these
to be Jure, New Order, Shopify, and fair. I would
(03:21):
say these are the four most successful companies to get
their retail industry to move forward when it comes to
inventory management. However, we have not made enough progress. So
I see plenty of retailers jumping on to different technologies
that will help them sell products, Max Retail being one
(03:42):
of them, but very few going out to seek ways
to better manage and plan and allocate for their inventory.
Speaker 2 (03:51):
Right because Max Retail is solving a problem in the
industry of unsold inventory. But if we could solve that
problem sooner than there would be unfortunately less for you
to do, but another problem for you to go fix.
Speaker 4 (04:05):
Maybe let's look at it that.
Speaker 3 (04:06):
Way, and that's one hundred percent how we look at it, Yes, Ellen,
And here's the irony. If retailers and brands were to
be more proactive about their inventory and how they plan
for it and how they replenish with shorter cycles, right,
we don't run out of a job to do. There
(04:26):
is still going to be inventory that doesn't perform always. However,
the retailers and brands would get more turns and so
they would actually use us more frequently. What we have
seen of retailers that leverage max Retail for their past
season inventory is eventually they get such a handle on
the past season inventory, they become more aware of where
(04:47):
they're over indexed in season, and they utilize our platform
sooner to get their cash out and bring in their
next shipment. And so we believe exactly what you said
to be true. We must solve problems upstream, and that's
why a big part of our roadmap at max Retail
is helping brands and retailers receive recommendations of where they're
(05:08):
over indexed so they can be more mindful. We're not
getting into planning, we're not getting into allocating, but we
absolutely can help them with a better job of understanding
their cell through and they're at risk inventory before it
becomes really a dead weight.
Speaker 4 (05:24):
Oh absolutely.
Speaker 2 (05:25):
What sort of factors are causing that lack of agility
in their inventory and their accuracy of forecasting for the
need and for the demand.
Speaker 3 (05:36):
So I think a big part of the problem is
how far out all of this planning takes place. When
I was in New York last week, the brands were
showing next spring. So here we are in the end
of Q three and we're showing Q one Q two goods,
and these retailers are placing orders for merchandise that they
(06:01):
will not receive for five to eight months out. What
happens next is the brand is going to batch all
of those orders together and then they're going to place
their orders with their suppliers of the materials. Those materials
have to be made. A lot of times they're not
just in stockholas. They have to be made for the purpose.
(06:24):
Then those materials have to get to the manufacturers to
be produced, and there's a timeline with all of this.
From there, it has to ship and clear and arrive
here safely to the United States. If it's not already
made here, and if you look at the port problem
that we're experiencing in this last week, you can see
(06:44):
how that's causing a supply chain issue. But these things
happen in sequences. Now, what happens when it hits the port, Well,
every order that is placed has a start date and
a cancel date, that is when a retailer is willing
to receive the shipment. And so let's say there's goods
that are sitting outside of the port right now, but
(07:05):
the cancel date for the order is October fifteenth. If
that merchandise doesn't get to Macy's Nordstrum Sacks wherever by
the fifteenth, that retailer can cancel the order and refuse
the goods. And now those goods are going back to
the warehouse and they have instantly become at risk inventory.
(07:26):
So you can see how the timeline for everything to
happen can leave a lot of room for problems along
the way.
Speaker 2 (07:35):
Absolutely, So we were just talking about some of those
situations where this inventory is at risk. So what are
some of the financial and operational risks associated with holding
that excess inventory? Because it's not just that now you
have the excess inventory, and you've got to figure out
what to do with it. This is going to cause
you problems.
Speaker 3 (07:54):
Yes, absolutely, it causes major financial problems. Most of the time.
These brands are produced on net terms with their manufacturers,
and so the immediate risk posed for a brand, for instance,
is that they have to pay that manufacturer, and if
those goods weren't received, then they don't have the money
to pay the manufacturer. And by the way, most brands
(08:18):
are not cutting to order. Cutting to order means you
only produce what was purchased. Most brands cut in surplus
because then the manufacturers give them a better price. So
now you've already overcut. You overcut, you got more than
you needed when it arrived, and now you have even
more because your retailer, for whatever reason, didn't receive it.
(08:39):
And the financial pain is not just hey, I need
the money to pay my manufacturer, but it's also you're
paying to store it now, so that merchandise is costing
you overhead, and a very expensive overhead. Three pls will
tell you our job is not to be a storage.
We're very expensive storage. Actually, get a lot of three
(09:01):
pls that reach out to me, and the three pls
say can you please help my customers because I only
make money when I pick and pack outside of being
an expensive storage unit. But this is not serving me.
I need you to sell their inventory. Yeah, so it
is a burden on the brand. It is a burden
on their threepl and you can imagine that manufacturer is like,
(09:22):
where's my money?
Speaker 2 (09:25):
Of course, I mean everyone needs to get paid. So
how do retailers balance that risk of the obsolescence of
their inventory things just sitting around and waiting, and the
balance of needing to meet the demand that they truly
do expect.
Speaker 3 (09:41):
Absolutely, So the problems that we've discussed thus far have
really been more of the brand's problems. So yes, let's
talk about that merchandise that successfully shipped to the retailer
that they received. There's a couple of ways that this
is solved. For if you have a big, notorious name
in retail and have gross margin guarantees, and what that
(10:03):
means is if your product doesn't sell on the floor
and you have to do a markdown, that you're going
to pay the brand less. Okay, that is one way,
and it's really if you think about it's like probably
the best solution because hey, let's mark it down and
see if we can get it sold. Even if we
make less money. Hey man, at least the brand isn't
stuck hold in the bag exactly. And if it can
(10:25):
get sold with the markdown, okay, let's think that's best
case scenario. The next scenario is when that big name
retailer says, I'm sending you back anything that doesn't have
a sixty percent sell through.
Speaker 4 (10:37):
Okay, and that's.
Speaker 3 (10:38):
Very convenient for the retailer, but once again inconvenient for
the brand. Now, what I see most frequently with my
core customer base, which is independent retailers. We're talking your
favorite store down every main street in America. We work
with over two thousand of these today with Max retail.
These are the ones who don't have a markdown allowance.
(11:00):
They cannot send goods back to their brand. And would
you believe it that for every small store you see,
they are sitting on an average of one hundred thousand
dollars of wholesale financial losses each year due to unsold inventory.
So you only have to walk a block and you
pass a million dollar problem of unsold inventory.
Speaker 4 (11:20):
That's got to be killing small and medium businesses.
Speaker 3 (11:22):
It's totally killing it. If you think about these small businesses,
if they could have that extra hundred thousand dollars in
their bank account, what could they do? Absolutely, they would
run a completely different operation. They could hire more people
in the community, they could write themselves a bigger check,
they could bring an inventory faster, which would produce more
gross margin for them, and so there's tremendous opportunity ironically
(11:44):
that is sitting on this sale rack unsolved for today.
And so what we see is today these independent retailers
their only solution is a marked down in store, and
that's on them, right. The brands aren't giving them an
a kickback for that. And why the markdowns don't work
is because there's only so many people who will walk
(12:06):
through that door every day. And that's why they use
max retail, because hey, if you're only going to have
x amount of feet walking in, you want those feet
buying full price, right, And yet you know you have
dollars sitting on that unsold inventory.
Speaker 2 (12:22):
Okay, So how does the process work to help these
companies offload their excess inventory more efficiently? Do you have
a success story you can share?
Speaker 3 (12:31):
Oh my gosh, I have my favorite success story so
we've been at this for a couple of years. And
fun fact, my background is as an independent retailer, Okay,
So I had a store for nine years in South Florida.
Before that, I was a distributor, so I sold to
over five hundred retailers around the United States. So I've
been seeing this problem in my life since around two
(12:51):
thousand and nine, and so it's a big part of
my course. So when we launched max Retail, I remember
it was about a year ago. There was one particular
custom and she was just getting so many sales on
Max Retail, like it was crazy, Like she was this
is like when we were still like a little baby company,
and she was getting like five to ten sales a day.
So I said, I just need to talk to this person.
(13:12):
So I called her up and I was like, Hi,
I'm Melody, I'm CEO of the company that you're using.
Speaker 4 (13:17):
What are you doing?
Speaker 3 (13:20):
And she said, well, I have a small store in
Wisconsin in a resort town and I didn't have a
solution for a couple of years. So I would just
take the past season inventory, put it in our basement
and bring it out every summer for the sidewalk sale.
And so when she started using max Retail, what she
(13:40):
said is I made it a habit every single day
to pull one item out of the basement and list
it on max retail. Okay, And she was just consistent
about it, ellen every single day. And then she would
wake up and she'd have another sale from Max Retail,
so she'd approve a sale and list another item, and
she just kept doing this and today she's made over
(14:03):
three hundred thousand dollars on our platform, and that, to
me is just so fulfilling. And we have plenty more
stories just like hers. And they're not even big retailers.
They're small retailers with massive problems of access, inventory and
no solution, but they are the core pillars of their community.
Speaker 2 (14:23):
Yeah, they don't have the negotiating power that Walmart does
or a Nordstrom. So these are fantastic solutions for these
smaller businesses that just want to get rid of their
inventory to be successful in their business, but they want
to offer the products that people want to buy. So
what are some of the key benefits that you're able
(14:45):
to deliver to your clients compared to those traditional tactics
like those clearance sales. I mean, Obviously, selling all the
stuff in your basement is hugely helpful for that small,
niche retail store. But you and I were talking earlier
about just some benefits of them learning how to plan
(15:06):
better for their next sales cycle.
Speaker 3 (15:09):
Absolutely, and there's a lot of amazing companies out there
that help independent retailers specifically do their planning. Of course,
the large big box retailers have entire divisions for planning. Absolutely,
so I would say the number one reason why independent
retailers today are so reactive about their inventory is because
they do lack that planning. And so I would suggest
(15:30):
a couple companies that are good for it. There's Management One,
There's Blax Retail. These are really strong companies for helping
independent retailers specifically learn how to use their data from
their point of sale and really plan better. And believe me,
I will once again, I will never be out of
a job for people doing a better job planning. And
we work very closely with these planners and allocators at
(15:53):
Max Retail. But what I would say the benefits of
Max Retail is when you mark down your inventory in store,
you're waiting, You're waiting for someone to walk in and
buy it, so you're losing what I call your opportunity cost.
So what I love to do this example. So let's
say I have this bag right here, better late than ugly.
(16:15):
It says, if I'm a brand, I'm going to make
this for probably two dollars. I'm going to sell it
to an independent retailer for ten dollars and they're going
to sell it in store for twenty. So let's say
I buy it today and everyone it's a big hit, right,
so it gets purchased immediately. Okay, I made ten dollars profit,
(16:37):
and what am I going to do? I'm going to
take my other ten and reinvest it. That is my turn.
So now I buy another bag and I sell that.
I do the same thing again, and I do this
for ten days from my ten dollar investment, I have
made one hundred dollars of profit. However, if I buy
(16:58):
this today and it doesn't sell tomorrow or the next
day or the next day, and ten days later I
sell it for twenty did I really win? I made
ten dollars, but I lost time. And that is why
max retail is a more powerful tool, because in a
few quick clicks, these retailers are able to in their
(17:20):
point of sale tag the items that aren't performing well.
That sends a product feed to max Retail and we
go ahead and find the images right the descriptions and
expose this inventory to over four hundred million end consumers.
Why so that we can get them paid the highest
price for that unit. Because if I don't get them
back as close to ten dollars as I can, it's
(17:42):
not enough meaningful money to place their next bet. And
time is of the essence mark down. It might take
six months to sell. If Max Retail can sell it
for you in ten twenty days, you get to place
your next bet. And that's why I love what we
do because it's about turn and in retail, turn is everything.
It's not about your margin that you got. You might
(18:05):
have one hundred percent sell through, but it took you
a year to do it. You might have sold it
at full price, but it took you a year to
do it. It's a false sense of accomplishment. And that's
why when we talk about how to manage inventory, ellen,
the most meaningful thing you can do is know when
you're losing your opportunity cost on an item and you
(18:25):
need to get your money out of it. So you
can bring in something else. And that is where supply
chain really hits home for this massive segment. There's two
million independent retailers between North America and Europe alone, and
if all of them paid attention to their turn, they
would run far more profitable businesses and have less inventory
(18:47):
on hand.
Speaker 4 (18:49):
That's amazing.
Speaker 2 (18:50):
So what are some practical tips that you would give
to a company a retailer looking to manage or reduce
their excess invent Obviously the tip of trying one at
a time and do it daily and make a daily
practice of the effort rather than letting time slip by
and hoping. I mean, obviously it's about getting up and
(19:13):
trying something. Even if it fails, try something. But what
else can they do to manage that inventory? Does it
come down to trying to negotiate better deals with the suppliers?
Does it come down to trying to have their own
online presence for their sales channels? Because I know a
lot of these smaller independent retailers don't necessarily have the budget,
(19:36):
or the staff or the capability to run their own
e commerce site.
Speaker 3 (19:41):
I agree with you, selling online is very tough. I
can attest as an independent retailer. I had, of course
a Shopify store right and what my customers would do
is go on my site just to see what I
had in and then they would come into my store
and buy from me because I had such a loyal
customer base. So what I would say, more important than
(20:03):
trying to grow your online presence is to grow your
social media presence. And so when merchandise comes in the store,
you have to be proactive about all of it. You
have to make sure you photograph it, yes, put it
on your site. Even if you're not planning on becoming
Thenextrevolve dot com, you can still get it exposed so
(20:24):
that you can promote it on TikTok, on Facebook, on Instagram.
These are where audiences are. And do you know YouTube
is still ten times as big as TikTok. Do not
underestimate YouTube. It is amazing. So I would say making
sure your merchandise is shot and being promoted, making sure
(20:45):
you understand what different social media your customers are on,
and also client telling. There's a client telling app called
one Shop, and it's super amazing for independent retail where
when merchandise comes in you can see exactly who's in
the past and clientele. So, Ellen, Yes, a big part
of making sure you don't have excess inventory is properly
(21:06):
promoting the items you have.
Speaker 4 (21:08):
Know who your.
Speaker 3 (21:08):
Customers are, have a fantastic CRM or a good point
of sale, right, You've got to know the power law
where eighty percent of your sales are coming from twenty
percent of your customers, right, Just really having a handle
on your new shipments to properly promote them so that
you can determine what's a dog. That's what we call it, Ellen,
(21:29):
We call it a dog something that's not going to sell.
If you've properly promoted it and it's not selling, then
you know it's going to be at risk as excess inventory.
If you can't sell it in the first thirty days,
you're not likely going to sell it in the next
three to six months.
Speaker 4 (21:45):
That's true.
Speaker 2 (21:46):
Yeah, So we've talked about a lot of clothing and
apparel and home goods types of things. What types of
products does max Retail really excel at pushing through this
cycle and getting sold because retail encompasses so many things.
And I know you said you don't do grocery and
(22:06):
that's a huge sector, but home goods pets.
Speaker 4 (22:10):
Oh my gosh.
Speaker 2 (22:11):
Pet supplies have just exploded in the past few years.
Speaker 4 (22:15):
Absolutely.
Speaker 2 (22:16):
As you said, clothes weren't purchased online ten years ago
to the degree that they are now. I feel like
I do half of my kids' school shopping online, and
Christmas shopping has already done. The Amazon wish list is created,
so those types of things. We're doing all of this
online shopping. But what types of goods really perform best
(22:38):
for your retailers.
Speaker 3 (22:40):
I would say, if you've heard of it, it sells
on max retail, if you've heard of it, right, And
what do I mean by that? I would say that
ninety percent of our customers today, the independent retailers that
we serve, they are the big thing in their small town. Okay,
there is no department store near them, and so they
are the source for buying those fantastic brands, whether it
(23:03):
be apparel, whether it be footwear, whether it be accessories.
And that's where there's this limiting belief that independent retail
is dead.
Speaker 4 (23:12):
But it is alive and well.
Speaker 3 (23:14):
And you know this if you just get in your
car and you don't take the highway, but take like
the main road and just drive north for the next
eight hours.
Speaker 4 (23:26):
Oh gosh, it.
Speaker 3 (23:27):
Will blow your mind how many businesses there are and
they're doing fantastic.
Speaker 2 (23:33):
That's amazing. So what about used items? I know that
that's a whole channel on Amazon is purchasing refurbished, factory
approved refurbished items. Is that something that is it also
available through max retail or is it only new condition
items that are just overstock.
Speaker 3 (23:53):
I would say in our core categories, which are contemporary apparel,
designer apparel, we dabble in luxury. We do have a
couple luxury where we see the most luxury is actually
pre owned, So we have what's been interesting is this
segment of independent retailers who buy contemporary apparel, but they
also sell luxury handbags in store and sometimes those are
(24:16):
not turning. So we'll see some luxury watches and those
can be pre owned as long as they have authentication,
that's fine. And then also we'll do some contemporary pre owned,
but it has to be excellent condition or it can
be returned, but it has to be with tags, right.
So we do have a couple sellers on our platform
that maybe they'll buy a palette of returned goods from
(24:38):
like a department store, and as long as they're in
excellent condition, they're able to list them on Max retail.
I would say ninety percent of our assortment is unsold
inventory that is past season, that is in a physical
retailer who carries anywhere between forty to sixty different brands
in store. I would say another five percent of our sellers,
(24:59):
or what I call the hacker retailers. And this blows
my mind. I found out about these same way. I
was like, who is that customer? I need to talk
to them. And the hacker retailer is fascinating. They actually
buy liquidation from brands and from retailers going out of business,
and in the past they were selling it on poshmark
or on eBay right, and then they found out about
(25:21):
Max retail, and they ask themselves, well, why am I
listing this stuff myself on these sites?
Speaker 4 (25:28):
Why am I doing all the work?
Speaker 3 (25:29):
Why am I doing all the work? Why am I
dealing with customer inquiries and return request Because on Max Retail,
sales are final. Once it's out of your store with
the prepaid label we give you, it's never coming back.
And so the hacker retailers love Max retail because now
they don't have to do anything. They just buy the
inventory and they stock it themselves and they use us
(25:50):
to sell it, so that that's pretty amazing. And the
last five percent of our sellers are brands. We do
have brands that work with us directly, and so they're
just short at right. Maybe they only have ten people
on their staff and they don't have someone to go
and do a past season liquidation strategy. Maybe the pricing
doesn't work for them and they need the money, they
(26:11):
can't give it away for pennies on the dollar. They'll
work with us as well, So we do a lot
of business with independence Hacker retailers and brands.
Speaker 2 (26:21):
So what do you feel or maybe you know what
the impact the environmental impact is of getting this inventory
out of these basements, out of these warehouses and to
the end consumer who wanted the item in the first place.
This is keeping a lot of material out of our landfills.
(26:42):
It's making sure that the economy is still chugging along,
which I know for a lot of people, especially during
the American election season, that's a huge topic. But environmentally
that's significant. What you're doing for the companies, for the
three pls, for these independent retailers to manage to keep
(27:03):
all of this inventory moving.
Speaker 4 (27:06):
Absolutely.
Speaker 3 (27:07):
I think one of the memories that stands out in
my mind the most is a brand that had inventory
sitting in their warehouse for three years and it was
over three hundred thousand pairs of shoes.
Speaker 4 (27:21):
Oh that's a lot of shoes.
Speaker 2 (27:23):
I mean, one would think that that's just going to
go to a landfill or it's going to be, you know,
a donation to some organization.
Speaker 4 (27:31):
But they were able to sell it.
Speaker 3 (27:32):
Yeah, we're able to help them sell it. And by
the way, on that note, I do want to give
a shout out to Souls for Souls. It's so l
Ees the number four and then Souls which is the
most amazing nationwide organization to donate access inventory too. So
when it is end of life from a brand before
(27:53):
they think of a landfill, call Soles for Souls. They
work with nonprofits across the country in poverty stricken communities,
in at risk families, homelessness. They are doing such incredible work.
So anytime we can refer someone to Souls for Souls
if they don't need the money, if they're considering a landfill,
if they don't want to leverage max retail to get
(28:15):
money back. We really love what they do over there,
so I just want to give them a little love here.
Speaker 2 (28:21):
I just have to say I love your attitude towards
just raising up the entire community. You know that your
company is solving a problem for a retailer or for
a brand, and that it could potentially put your company
out of business, but that doesn't matter because that'll open
another opportunity.
Speaker 4 (28:38):
And you're giving all of these.
Speaker 2 (28:40):
Kudos to these other platforms that are going to help
these retailers do a great and fantastic job at their business.
And you're promoting this charity that's going to take access
inventory and make sure it gets utilized by someone who
truly has a need for it. And that's just an
amazing thing for a business person these days, because a
(29:01):
lot of times it feels very selfish. If nothing else,
you know that it's all about building your own brand
up and amassing as much capital as you can, and
it's just very refreshing to hear all of the ways
that you are trying to build business for everyone.
Speaker 3 (29:19):
Thank you, Ellen, And you said it when we started
this podcast. Today there's over five hundred billion dollars of
unsold inventory annually. If I can chip away at this problem,
it'll be fantastic, but it's going to take a lot
of us to solve it.
Speaker 2 (29:38):
It is a five hundred billion dollar problem, a five
hundred dollars billion boon for the economies, whether in the
US or that's only I believe a US fact, and
I don't know that that's an international number.
Speaker 4 (29:54):
That's US dollars.
Speaker 2 (29:55):
So five hundred billion dollars back into the US economy
would be amazing, and that would be a benefit to everyone.
So I do understand your reasoning for wanting to raise
everyone up, but it's still an unusual thing. So I
am extremely pleased to have the opportunity to talk to
you today. What else do our listeners need to know
(30:18):
about Max Retail?
Speaker 3 (30:20):
So this we found out very early on in our journey,
is that no one wants anyone to know about their
dirty laundry. No one wants anyone to know how much
access inventory they have on hand. It's embarrassing, it's something
that we prefer not to think about, and yet it
is a massive opportunity for revenue.
Speaker 4 (30:40):
And so one of the.
Speaker 3 (30:41):
Core pillars of max Retail is that it's all anonymous ellen.
So when a retailer or brand is leveraging Max Retail
to sell their past season aged inventory, there is no
tie back to them. That inventory just becomes an item
that needs to be sold. And what's most power full
about it is a lot of times we see the
(31:02):
same item listed across multiple sellers, right, and what we
do in that case is we actually we group it
back together. It's still sitting in their stores, but on
max Retail, we now know that there's one hundred units
of these genes and that becomes a powerful assortment when
we're selling it online. There are a lot of our
e commerce partners, they require breadth and depth of products.
(31:26):
You can only qualify to sell on their site if
you have a certain volume. And when we work together
as a community, it unlocks these opportunities for.
Speaker 4 (31:34):
All of us.
Speaker 2 (31:35):
Yeah, you can pool those resources.
Speaker 3 (31:37):
Yes, that's what we do. We pool the retailer resources.
I always tell our community we are stronger together than alone.
The last unit on your sale rack isn't much, but
when it's all listed on max Retail, it's powerful and
we can all command a higher price for it, get
it sold. And I just love that. So you know,
when we talk about how are we solving for this problem,
(31:58):
it's challenging and we have to be creative, but I
really love it. But anonymity, teamwork, you know, working as
a community. These are really core things at MAX Retail
and sharing knowledge, which is why, as you and I
are talking today, Ellen, our biggest company value is share knowledge.
And if I can share it with retailers, with brands,
with you, with investors who are interested in the excess
(32:21):
inventory space and want to know more. By sharing knowledge,
we're all going to be able to make more of
an impact together.
Speaker 4 (32:27):
That's fantastic.
Speaker 2 (32:29):
I mentioned at the beginning when that one particular fashion
brand decided to destroy their inventory, their excess inventory, it
caused major public outrage. But I know when it comes
to some of those large brands, the luxury brands especially,
they can't allow for their product to devalue. And this
(32:50):
gives them the opportunity, especially with that anonymity, to continue
to have their product available to the marketplace and let
it devalue and not put it in a landfill and
cause major public outcry.
Speaker 3 (33:05):
Yeah, that is a major reason why brands work with
us directly. Is the anonymity. And I think the other
really important thing to know is when you're looking at
past season inventory. And what I love about your podcast
is we're talking about supply chain, and we're talking about
like the end of the line of the supply chain
here right. And what I've found to be so true
and amazing is that when there is unsold inventory of
(33:28):
a brand or of an independent retailer, that same exact
item was purchased in another location in season, it was
worn and enjoyed by someone, and that person might be
done with it and reselling it on Poshmark tomorrow as
pre owned. Meanwhile, you have the exact same item still
(33:49):
sitting in a warehouse or sitting in an independent retailer
that's never had the opportunity to be worn. And so
in these cases is when we will mark an item
of certain brands that are really notorious as pre owned
because it is past season and it has been worn
by other people, and when we market as pre owned,
(34:10):
nobody gets mad. End consumers don't get mad when they
get an item that they bought and it's got the
tag on it. You're not going to piss anyone off.
So we have found sometimes even just how you present
that item as pre owned can make a big difference
when it's past season, that it's not a brand new
item being sold by the brand at a discount and
just being anonymously sold as if it has been worn
(34:32):
and you just surprise, You just surprise the end consumer
with a little of protect the brand integrity in the process.
Speaker 2 (34:39):
Absolutely well, I think that brings us to the end
of this episode. Thank you so much for sharing your
insights and your knowledge with us today. I've learned so
much about the end of the supply chain and what
can be done to make sure that that leftover inventory
after a sales cycle is not just left to the dumpster.
Speaker 4 (35:01):
Absolutely to our listeners.
Speaker 2 (35:03):
If you have a suggestion for a topic or would
like to be a guest on the show, like Melody,
we'd love to hear from you. You can contact us
at podcast at meboch anytime. As always, thank you for
listening to Speaking of Supply Chain. If you enjoyed our show,
please rate and review us on whatever podcast platform you prefer.
We are available on Apple Podcasts, Amazon Music, and Spotify,
(35:24):
and be sure to tune in next time.
Speaker 1 (35:31):
Meeboch Consulting is one of the largest and most globally
recognized supply chain consulting, engineering, and advisory firms. For nearly
fifty years, we've helped clients achieve supply chain excellence and
sustainable competitive advantage across the entire spectrum of the supply
chain by delivering improvements and innovation strategically, tactically, and digitally.
(35:52):
To learn more, visit meeboch dot com. You've been listening
to Speaking of Supply Chain, a meboch podcast conected with
us by subscribing to the show in your favorite podcast player.
If you like what you've heard, please rate the show
that helps us to keep delivering the latest in supply
chain information. Thanks for listening. Until next time,
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