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B-Stock CEO Howard Rosenberg Profiled for Forbes' Daily Cover Story

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The EBay Veteran Cashing In On The $369 Billion Returns Boom

Howard Rosenberg takes a moment to sift through the inventory of America’s rejects. It’s mid-December and the holiday shopping spree is at a fevered pitch, but inside this 120,000-square-foot warehouse on the outskirts of Phoenix, a hodgepodge collection of returned items sits in rows of boxes stacked 10 feet tall. Twenty-eight-pound bags of dog food, brownie mix, toys and weighted blankets are lined up alongside vacuums, sporting goods and patio furniture.

“It’s just very random,” says Rosenberg, the founder and CEO of B-Stock Solutions, poking around the glut of unsold goods belonging to several of the nation’s largest retailers. The 53-year-old eBay veteran, who has a head of gray hair and dons a checkered sports coat his wife picked out, has flown in from San Francisco for the day. He spends little time in warehouses like this one, owned by a company called Freeport Logistics, but the items packed into them are his lifeline. His Silicon Valley company, which runs online auctions for dozens of retailers trying to get rid of millions of returned and overstocked items, sold about $2 billion worth of heavily discounted merchandise on their behalf in 2019. That helped his 160-person firm generate estimated revenue of $150 million.

In 2018, Americans bought a record $3.7 trillion of goods, according to the National Retail Federation. Ten percent of those purchases were made online. These days that almost always means free shipping and lenient return policies. As a result, return rates for online purchases can be as high as 30%, triple the rate of in-store purchases, according to Rosenberg. As much as half of all returns will be put back on the shelf, while the rest get liquidated, destroyed or thrown in a landfill, according to Forrester Research. It’s a phenomenon so big it’s now being tracked along with holiday sales milestones like Black Friday and Cyber Monday–January 2 is now National Returns Day. “The analogy I always use is that the light [the retailers] have seen way off in the distance they now realize is a train coming at them,” says Rosenberg, describing their panic when faced with mountains of returns.

“We are giving products second, third or fourth lives. Instead of it going to a landfill, it will get sold to someone.”

Retailers come to B-Stock for help to quickly unload goods they can’t put back on shelves. Through its online auction site, B-Stock sells the products in bulk, posting them under marketplaces branded by retail chains, sold off in time-limited auctions to the highest bidder. It offers retailers access to 570,000 resellers, ranging from mom-and-pop discount stores to independent eBay super sellers who operate 21st-century versions of the discount bin.

Macy’s recently offloaded 493 pieces of dinnerware and other items by Lenox, Waterford and other brands for $2,050. Best Buy sold 53 scratched and dented washers and dryers for $16,200. Dick’s Sporting Goods offered 7,434 golf clubs, baseball gear and hunting accessories with a retail value of $276,147 that by the third day of a weeklong auction had a high bid of $20,716. It’s pennies on the dollar, but Rosenberg says this competitive process enables chains to make 30% to 50% more than they used to earn on excess inventory.

Of course, this is basically making the best of a bad situation–liquidating product means the retailer bought wrong and risks losing money on the item. But it’s a common problem, which is why more than 50 of the nation’s largest retailers and manufacturers, including Amazon, Target, Walmart, Macy’s, Home Depot, Best Buy, Unilever and Whirlpool, are customers. Last year, sellers liquidated 78 million items on the platform.

“We are giving products second, third or fourth lives,” says Rosenberg, over the whir of a forklift. He points to a treadmill. “Instead of it going to a landfill, it will get sold to someone.”

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