If you have followed my blog for years then you know I closely follow the statistics and analytics of second hand businesses and auctions. While all the math and drawn out thesis can be nice…reality is a whole different ballgame. The reality right now is very strange and surreal.
What a wild time in the junk world this is. In our nearly 15 years of full time I would say demand for liquidation services & goods has never been stronger than in the current time but there is now a huge catch. That catch is exploding costs and overall very flat prices. How to balance all this is very challenging to stay relevant and above water month after month.
What do I mean by this? Prices for resale goods are flat to declining in the past year while costs to pickup, store, & sell have exponentially exploded. Demand to purchase goods by consumers is very strong but the blunt truth is our target customer has far less disposable income than say 24 months ago. (strange timing…I wonder where caused this? hmmmm.). Where they may spend $200 prior…it’s now $60 even though “they would have bought more because the deals were so good”. So in a nutshell a second hand store can sell nearly everything you put out at the right price in a longer timeframe but does that equate to enough profit to stay relevant?
From the looks of companies in this business….”NO” is a very easy answer as nearly no small retail stores are left (although 10+ tried in the last 24 months and failed). This is the time to go big or go home and most just don’t go. So there is only one way to survive and that is Volume. In this market if you are going to make it as a reseller or auction with fixed overhead you must do crazy volume because margins are tight. The merry go round is right back to the top point in that the more volume you do the more your cost to transport increase.
So what is the point of this? Enjoy any second hand stores while you can. There will be almost no new companies make it and you will see a handful of the “established larger” stores continue to grind and figure out all the angles. Look for flea markets to explode in the coming years as the only way to circumvent overhead and new tax regulations by part time sellers. Ebay is in deep trouble. This model puts companies like ourselves in both a powerful but yet disadvantaged position so it truly is a wild time to rationalize.
In the meantime there continues to be fewer auctions & sales for eight out of the last nine consecutive years….and the only reason for the one year being up was because Covid took sales to near zero. An ugly trend that has either bottom out and will rebound or the bulldozer is in full throttle. I am very intrigued to see where this goes from here. Hopefully the bulldozer breaks down and we have bottomed out. Unprecedented times in so many ways.