Current Warehouse Surplus

By: Sophia Wang

In Pittston, Pennsylvania, there is a giant warehouse, containing all sorts of products like bikes, furniture, hoses, and portable ovens. And better yet, it’s all available for large discounts! This warehouse, owned by the Liquidity Services, is one of thousands.

The Liquidity Services is a company that collects the surplus and returned items from retail stores, usually major ones like Target or Amazon. This type of warehouse sells the extra and/or returned goods that are sold.

Currently, with the lack of discretionary spending, (basically the non-essential items), the retailers have way too much items in their inventory.

Typically, a surplus is good. For example, we can all agree that having a surplus of money would be extremely beneficial. However, a surplus of inventory is sometimes bad news for a retailer, because causes stocking issues and other issues as well. For example, if a perishable item is in surplus, the retailer might bring prices down far enough that it takes a loss on the product rather than a profit.

Last year, when not all the products were able to be resold, there was a total of 761 billion dollars in lost sales. That highlighted the misjudgment in supply and demand, as many people are in a habit of returning everything they buy, since after the COVID-19 pandemic, online shopping increased, and with that, the convenience of returning items to the sellers.

In fact, the current glut is immense, and there might not be enough space to store it all. The US’s space availability is low, and space for warehouses is currently very sought after.

Charles Benincasa, a worker at different warehouse jobs, after seeing the sheer amount of boxes in the warehouses, is concerned about the economy. “Companies are losing a lot of money,” he said. “There is no free lunch.”

Links: https://www.nytimes.com/2022/07/30/business/retail-returns-liquidation.html, https://www.nytimes.com/2022/02/01/business/warehouses-supply-chain.html, https://smallbusiness.chron.com/retailers-surplus-inventory-36258.html