The resale industry, worth $644 billion, includes a wide range of items from electronics to unusual items.

In a 130,000-square-foot warehouse in Garland, Texas, the aisles are filled with returns from various retailers, including Amazon, Walmart, Target, Wayfair, and more, as they are being liquidated.

AlixPartners' Sonia Lapinsky stated that liquidators are currently purchasing large quantities of the product, packaging and palletizing it for resale. This resale can occur on platforms such as eBay or to individual consumers, making the industry significantly larger than ever before.

Since 2008, the liquidation market has more than doubled, reaching a staggering $644 billion in 2020, according to data from Colorado State University.

"The mafia used to control a lot of this, as it was an effective way to conceal money since returns were not closely monitored, particularly 40 years ago," stated Zac Rogers, an assistant professor of supply chain management at Colorado State University.

In 2021, the percentage of merchandise sold that was returned increased to 16.6% from 10.6% in 2020, with online purchases having an average return rate of 20.8%, up from 18% in 2020. Processing a return can cost retailers up to 66% of an item's original price, according to Optoro.

Tony Sciarrotta, executive director of the Reverse Logistics Association, stated that the huge amount of returns that have to be sold at a loss is detracting from the profitability of companies and causing them to raise their prices, which is causing everyone to be very worried about price increases right now.

The destruction of returns that aren't liquidated contributes significantly to carbon emissions and landfill waste in the United States, with an estimated 16 million metric tons of carbon emissions and up to 5.8 billion pounds of landfill waste generated annually.

Liquidators are now profiting from the pain point of mainstream retailers, with thousands of companies operating in the booming space. One such company is GoodBuy Gear, which specializes in safely liquidating items for babies and young kids.

According to Kristin Langenfeld, CEO and co-founder of GoodBuy Gear, purchasing a used item results in an 82% reduction in its carbon footprint, and consumers are increasingly making wise decisions. This, she believes, is driving the surge in liquidation, as consumerism has shifted from new to used.

Sustainable shopping options are a growing priority for younger shoppers.

Bill Angrick, CEO of Liquidity Services, stated that the circular economy aims to ensure that these items are given a new home, connected with a family or a young consumer, and kept away from landfills. He founded the company in 1999 as Liquidation.com with an initial investment of $100,000 from his savings.

Angrick stated that he and his father used to collect used books and recyclable bottles. However, after the advent of eBay, they began experimenting with the platform. They discovered that a marketplace model could generate value for a wide range of used items.

Scoreboards, kayaks and knives

Liquidation.com's first major sale was a $200,000 marine vessel for the state of Georgia in 2000, a year after its launch. The company went public under its new name Liquidity Services in 2006. Its revenue peaked in 2012 but trended downward for the next seven years. However, it experienced a resurgence during the Covid pandemic.

B-Stock Solutions, founded by Howard Rosenberg after six years at eBay, is another major player in liquidation services, running branded marketplaces for large clients like Amazon, Walmart, Home Depot, and Costco.

Rosenberg explained that companies usually prioritize the larger 99% slice of the pie rather than spending a significant amount of time and effort on the smaller portion.

Liquidity Services offers a range of marketplaces for selling returned items, including Liquidation.com for pallets and individual items, Secondipity for direct sales of individual items, and GovDeals for unique items.

Our marketplace provides construction equipment, including bucket trucks for power and utility companies. We also offer road paving equipment, gymnasium floors, and scoreboards to publicly funded colleges and universities.

The U.S. Postal Service, out-of-service military vehicles, and items left behind at TSA checkpoints are also handled by Liquidity Services, including 14 pounds of assorted knives.

Many returned electronics are damaged and cannot be resold. Liquidity Services refurbishes hundreds of TVs daily, selling them for 60% to 70% of their original price. With a supply chain backlog causing a shortage of new goods, refurbished electronics have become increasingly popular. Noise-canceling headphones and TVs are in high demand, as are multimillion-dollar refurbished items like microchip manufacturing machines.

According to Angrick, Fortune 500 companies are utilizing used equipment from our marketplace because the shipping time is shorter in the circular economy compared to manufacturing a new product, shipping it overseas, and waiting for it to arrive at a port that may be backlogged for six to eight months.

Retailers are increasingly selling refurbished items directly as demand for secondhand items increases. Amazon has dedicated sections on its website for used goods, refurbished items, overstock, and a tongue-in-cheek daily deal site called Woot that sells a $10 "Bag of Crap."

Now, in addition to its online outlet selling open-box appliances and TVs, it also has a store with refurbished computers and more.

According to HP's manager of North America returns, Julie Ryan, the refurbished product has a high recovery rate of 80% to 100%, depending on market seasonality. However, the market is currently experiencing strong demand due to supply shortages on the forward side.

Another trend has emerged as a result of the liquidation boom. Across the country, numerous discount stores are opening their doors, with names such as Dirt Cheap and Treasure Hunt Liquidators. Customers eagerly line up, sometimes even camping overnight, to secure the best deals after weekly drop-offs of liquidation pallets. They sift through large bins of returns in search of popular items they can resell for a profit.

According to Sciarrotta of the Reverse Logistics Association, stores such as Bargain Hunt, Ollie's Bargain Outlet, eBay, and Amazon have started selling returns to consumers because 90% of the time, there is nothing wrong with them.

Liquidity Services is capitalizing on the direct-to-consumer trend by offering a new AllSurplus Deals warehouse in Phoenix, where customers can pick up items they've won in online auctions that usually start at $5. This is particularly useful for liquidating bulky items, such as kayaks, which would be prohibitively expensive to ship. Angrick reveals that Liquidity Services will open a second AllSurplus Deals warehouse in Dallas later this year.

Take an exclusive tour inside a Liquidity Services warehouse to witness the thriving business of processing and reselling excess and unwanted goods on the secondary market.