There’s a booming shadow industry emerging from the retail apocalypse
Thousands of stores across the US are shutting down and holding liquidation sales to try and purge their merchandise before they close.
But what if the stores aren’t completely emptied by the time they turn out the lights for good? What happens to all that leftover merchandise?
Often it ends up going to wholesale distributors, which buy the excess merchandise, then turn around and sell it to other firms – like third-party Amazon sellers or discounters like TJ Maxx and Marshalls.
Business is booming for one such company, called United National Consumer Supplies, or UNCS, according to the company’s CEO, Brett Rose.
“It’s an exciting time to be us,” Rose told Business Insider. “All of a sudden we’re doing business with Macy’s and Bed Bath & Beyond when pre-2008 they wouldn’t have taken our call.”
Rose started UNCS out of his garage 15 years ago. Back then, the company was doing one transaction a month. Now, it’s doing about 10,000 transactions a year.
UNCS is like a middle-man between suppliers and retailers. The company doesn’t just handle excess merchandise from closing stores, it also helps connect suppliers to new buyers.
Right before Sports Authority filed for bankruptcy last year, for example, the sporting goods company had ordered hundreds of paddle boards.
When news hit of the filing, the supplier that made the paddle boards got cold feet about getting paid for the products – which they had already manufactured.
So the supplier cancelled the shipment and contacted UNCS, which found other buyers for the boards, Rose said.
UNCS is also helping healthy retailers better manage inventory – something that has become increasingly important in the volatile and highly promotional retail environment. Retailers are running much leaner now, meaning they try to tightly manage inventory levels to avoid ending up with excess goods on their balance sheets.
When retailers don’t order enough, UNCS helps find another supplier who can immediately fulfill a new order. When they order too much, UNCS helps them get rid of it by finding another buyer.
Many times, those other buyers are third-party Amazon sellers, or what Rose calls “Amazon millionaires,” who run distribution businesses out of their homes reselling excess inventory.
“Retailers like Macy’s are now competing with the Amazon millionaires – this whole generation of entrepreneurs who start their businesses with only a computer and a credit card,” Rose said. “Everything you read about the retail industry is sad and scary and doomsday. I think it’s going through an evolution.”