Consumers ‘are willing to spend’ on big-ticket items online, Liquidity Services CEO says

Liquidity Services CEO William Angrick spoke with Yahoo Finance Live anchor Akiko Fujita about retail inventories, consumer spending online, and the company’s business model.

Video Transcript

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AKIKO FUJITA: Retailers are aggressively slashing prices as inventory continues to pile up at stores across the country. Walmart and Target just some of the big names warning about a hit to profit, as supply outstrips demand. But that's meant a big boon for at least one company that collects surplus and returned goods.

Let's bring in the CEO of Liquidity Services. We've got William Ingram joining us from Bethesda, Maryland. Bill, it's good to have you on the show today. Let's start by talking about your business model because you've got a lot of visibility on where we are right now with the oversupply issue. Talk to me about where you're getting your inventory in from and what you're seeing.

WILLIAM ANGRICK: Well, thank you for having me. Just as a backdrop, we're the world's largest commerce company for the circular economy. It certainly includes retail supply chain, which represents about 20% of our business. But we're doing about $1.4 billion of gross merchandise volume transacted per year with 5 million registered buyers sourcing from roughly 16,000 sellers, which include retailers, manufacturers, and government agencies.

And we've been doing this for over 20 years. We're sort of a constant cyclical, whether retailers are expanding or contracting. We're there to reduce their supply chain costs, make them more efficient, free up their space and working capital, and allow them to be more green by reducing transportation and handling costs.

And what we've seen, really, coming out of this pandemic is consumers have rediscovered travel, rediscovered entertainment. They're getting out of their house. With the warm weather, they want to explore. And that has resulted in a trade-down of sorts in the value of goods they purchased. And I think even the most world sophisticated companies can't always forecast that.

And so our job is to reduce the friction and reduce the cost of rebalancing their inventory. And we provide physical facilities throughout North America. We have eight distribution centers where retailers and the vendors who supply them can move those goods to allow us to quickly sort, manage, and then recover value on those items through our marketplace.

AKIKO FUJITA: What's that--

WILLIAM ANGRICK: And that's been very attractive.

AKIKO FUJITA: What's that meant in terms of the products you see coming through your warehouses? We've heard a lot from these retailers about those tradedowns we're seeing from big ticket items like TVs and furniture. What are you seeing reflected in your warehouses?

WILLIAM ANGRICK: Sure. We see everything you'd see in your living room, in your backyard, in your tool shed, in the garage. High value, high cube items, which are often bulky, including appliances and smart TVs. So all of these items, they take up space, and they tie up capital. So it's our job to help our clients reduce the storage and transportation costs and to quickly recover value.

How do we do that? We do that using the largest B2B auction platform in the world for maximizing value on the item sold. And in an inflationary environment, this is a boon for buyers. Both end consumers and small businesses buy on our platforms like liquidation.com and allsurplus.com to save money and help these retailers rebalance their inventory and supply chains.

AKIKO FUJITA: Bill, you mentioned the tradedowns that you're seeing with consumers. We've also heard a lot about consumers maybe thinking twice about things they've already purchased. A lot of stores being flooded with returns. What are you seeing on that front?

WILLIAM ANGRICK: Well, look, to incentivize customers to transition from in-person shopping to online shopping, they need to provide the convenience. They need to allow customers to shop without worry that if the item is not the right size or condition, they can return it. And that's been a covenant between retailers and consumers for the last 15 to 20 years.

And I don't think that's going away. I think retailers understand to retain loyalty, they must provide convenient returns. They just want to make sure that as a cost of doing business, they can minimize the impact to their profit and loss of managing the returns process of recovering value from the inventory.

And that's where we've made great gains. In fact, we integrate our marketplace with our retail clients' inventory management systems to allow them to quickly list and sell on our platform to recover that value. But I think consumers, even though they took a break, let's say, over the last spring, summer season, they're coming back in droves.

I think as you see over the next 12 to 24 months, there's just so much convenience from shopping at leading e-commerce and omnichannel players. Who wants to drive 45 minutes and park and go into a department store chain when you can use your iPhone and, with a few clicks, get everything delivered to your home?

And we've seen that people are willing to spend big ticket dollar items online, $5,000, $10,000 purchases. They bought the sofas, the appliances, the big home theater entertainment systems online. And I think that's a permanent shift in behavior that will ultimately allow these e-commerce and omnichannel leading companies to pick up GMV as we move through 2022 into 2023.

AKIKO FUJITA: Yeah, really quickly, Bill, what does this ultimately mean for your business? As you pointed out, you're helping a lot of these companies sort of house the inventory there, but who's on the receiving end?

WILLIAM ANGRICK: Yeah, I mean, we are the world's circular economy marketplace. So something that's no longer needed by a manufacturer or retailer or even a government agency is sold on our marketplace. And we've grown our business by more than 20% top line for the last eight consecutive quarters. And buyers seem to really like the idea of buying used for a couple of reasons.

One, they save money. Two, it's environmentally responsible. Why buy something that's newly manufactured when it's available right now? No supply chain issues, no port issues. It can be delivered right to your business or your home by buying on allsurplus.com, which is one of our marketplaces.

So, save money, better for the environment. Our business is growing 20% plus on a consistent basis. So we see a lot of opportunity to create value. We think digital platforms and online services are the way of the future. And we're leading the industry in the circular economy to make that happen.

AKIKO FUJITA: Yeah, it's an interesting perspective to follow here as we talk about the retail outlook, and particularly, the inventory story. Bill, it's good to have you on today. Liquidity Services CEO Bill Angrick joining us. Well, coming up next, a key part of Comcast's latest earnings--