A greener disposition: tips for tackling excess inventory

Figures vary by industry, but excess inventory is produced in essentially every commercial sector. 

Within the global fashion marketplace, an estimated 30% of production goes unsold; that number approaches 38% in the U.S. food system, where 80 million tons of surplus food become food waste. In total, the value of these unsold goods in the U.S. is thought to exceed $740B.

The environmental impacts are hefty, and sustainability is a major driver towards improved disposition, the process of donating or liquidating excess inventory. But according to Charles Cushing, founder of StartOps, there’s “more than one bottom line.” With countries in the EU levying regulatory pressure to prevent the destruction of unsold goods, or to incentivize the sale of donated merchandise, the monetary incentives are clear.

Notably, even before growing StartOps from an operations community into an ops “USEletter” and vendor database, Cushing had firsthand experience with liquidation and resale. Keep reading to discover some of the reasons why disposition is needed, what vectors influence choosing a disposition partner, and what services might be a match for your business needs.

Unexplained inventory discrepancies? Parabola can help.

Inside the secondhand market

Before building StartOps, Cushing got his hands dirty as COO of Twice, a clothing reseller that was acquired by eBay in 2015. Twice had an interesting role as both a disposition service for its seller-customers, as well as a user of those services itself.

Twice’s model worked by providing free shipping labels to its users, whose clothing would be sent to Twice for grading. Shipments ran the gamut, from like-new goods, to pieces that “looked like a dog ate them.”

Those unsellable items had to go somewhere, and Twice started out with weekly pickups from Goodwill. Soon, they were carting off a packed truck every day, and that pace left little room for error; if even a single trip was missed, clothes would come “spilling out of the warehouse.” Thus began the journey into the “very offline” inventory disposition space.

Through some “random Googling,” Cushing stumbled on an inventory liquidator that specialized in apparel. He negotiated a price per pound and scheduled less-than-truckload (LTL) pickups as needed. Beyond increased reliability, the revenue from re-selling cast-offs helped meaningfully improve per-item margins. This partnership lasted through acquisition, which required Twice to sell all excess inventory, and finally send off its last load.

Navigating the liquidation landscape

Cushing’s search for a disposition provider brought him into a no-man's-land, and a dozen years later, the space is still much less developed than the commerce companies that find themselves wading into it. Selling excess inventory is a historically low-tech endeavor, and that can come with a lack of visibility into the disposition process. New startups are bringing transparency, but it can still be challenging to be sure you’re matching with the right service.

As with many partnership considerations, Cushing advises returning to core principles wherever possible.

First, there are basic supply chain questions: What is the actual good being disposed of? Clothing and electronics, for example, follow vastly different paths to renewal, refurbishment, resale, or disposal. Seeking out other operators in your space might help you understand what options are available, and even find close matches to your particular use case.

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The other major consideration is the vectors influencing your search. Cushing asks: “How much value are we trying to recover? How traceable and sustainable is the process? What is the impact on the brand?” Goodwill might be a great outlet for spring closet cleaning — less so for a company that wants to recoup its costs, or maintain its brand integrity by retaining control over where its excess inventory ends up.

What are my options?

Trusted resources like StartOps are a handy place to look for disposition providers, but it can still be a helpful exercise to think through the pros and cons of some of the available options.

General donation

Goodwill, or a similar local secondhand shop, is an easy place to start. Godwill has outlets across the U.S., and vetting for sale takes place only after donation, so there are few barriers to disposal. Your Goodwill donation receipt can translate into a quick tax writeoff, but there’s no transparency after that initial contact, and Goodwill’s logistics network is less optimized for the volume required by enterprise users.

Good360 is a more operationalized alternative: The organization matches nonprofits in need with donations from retail juggernauts like Amazon, Nike, and Walmart. Good360 earns high marks for sustainability — they source donations carefully, and match them with local recipients to reduce emissions — but since donations are driven by urgent needs, those needs might not match up with your business’s excess inventory.

Tech re-use and recycling

With a secure chain of custody, and full visibility into the afterlife of your e-waste, Happen Ventures prioritizes putting you at ease as you hand off your most sensitive materials. Happen Ventures also has a re-use first ethos, and aims to rehome donations wherever possible, before turning to recycling. Again: points for sustainability, but don’t expect to recover any value beyond a writeoff.

Apparel renewal and liquidation

Apparel resale is a relatively robust vertical within the inventory disposition space, but startups like (re)vive are still innovating. (re)vive works with brands to determine resale standards, then sorts returns, deadstock, and damaged goods for refurbishment or disposal. They use a unique multichannel process: return some refurbished goods to brands for sale as-new; pass the remaining refurbished items to its marketplace of influencer resellers; and dispose of only the merchandise that can’t be revived. This model gives partners greater ability to maintain brand integrity, while keeping an eye on sustainability, and even recovering value.

Resale marketplace

Another startup with a similar model is Ghost, which takes merchandise across durable goods categories, and resells them on a discreet marketplace. While (re)vive touts the benefits of its marketplace in increasing brand awareness, Ghost takes the opposite route: only its buyers can see which brands use the platform, and sellers have total control as to channels, retailers, and localities of resale. Word has it they’re selective about the sellers they accept, so it’s not a last-minute solution, but this is the best option for a business that wants to maintain total control over brand integrity.

The future of excess inventory

Sustainability concerns don’t always translate into changes in consumer habits — but there’s evidence that companies that tout their environmental or social advantages grow faster than those that don’t. Brands like H&M and Brandy Melville have come under fire in recent years for their disposition practices, and it’s clear that consumers at least want to buy more responsibly.

Remember the adage that there’s more than one bottom line; sustainability efforts have to create wins for the consumer too, or they won’t take root.

Cushing highlights Dispatch Goods, which partners with meal kit services to create a sustainable circular system for reusing food packaging. The logistics are simple for the consumer, and the packaging itself is attractive: slim, durable, and made of shiny stainless steel. Dispatch Goods estimates these containers last for 1,000 uses, at a fraction of the price of so much disposable packaging, loosening margins and passing savings to the consumer.

Whatever the solution you choose, a disposition partner isn’t a magic bullet: Sustainability starts inside the house. Even before excess inventory becomes a concern, you can get better visibility into your inventory with software like Parabola, which quickly and automatically syncs data across many inventory tracking platforms. And when you decide it’s time to clean up, Parabola can help you build that new SOP too.