Our Investment In Max Retail
This press release originally appeared on Interplay on August 13, 2024.
Globally, retail sales represent a massive market, surpassing $29 trillion in 2023 and expected to grow to $33 trillion by 2026. Although sales are up, there is a not-so-glamorous side of the retail boom, as an effort to fuel sales has also resulted in a growing supply of unsold inventory. Brands overproduce more than $500 billion of goods annually, much of which end up in landfills or destroyed through incineration, leading to jump scare headlines such as Burberry burning £28.6 million in unsold goods to protect its brand. In addition to the devastating environmental impact, overstock is a heavy financial burden for brands, resulting in millions of dollars lost from unsold goods and other indirect costs like the cost to hold inventory in warehouses.
The issue of excess inventory does not only impact the large brands manufacturing these goods; small to medium sized multi-brand retailers also feel increasingly burdened by overstock. On average, SMB retailers, defined as multi-brand sellers with $500K-$3M in annual sales, fail to sell 30% of their inventory. For SMBs with tight margins, this loss has a material impact on the success of the business.
The overstock epidemic has not gone unnoticed, and today several technology startups with significant venture funding are working to reduce the burden of excess inventory. Companies such as B-Stock and Ghost, which have raised $72M and $68M in respective venture funding, seek to strengthen the B2B circular economy by providing marketplaces where brands can offload large quantities of excess inventory to willing buyers. There are also inventory management products like Syrup or Stocky, which aim to prevent the creation of excess inventory by providing predictive inventory planning tools.
With any luck, these players will have a meaningful impact on reducing the financial and environmental burden of excess inventory. However, the current solutions are built for brands manufacturing their own goods or moving large quantities of inventory. These products are not an effective or practical solution for SMB multi-brand retailers looking to recoup the value of individual items left unsold.
Enter Max Retail.
Max Retail is solving this issue for SMB, multi-brand retailers with a platform that enables these businesses to efficiently sell excess inventory directly to end-consumers via its innovative zero-inventory technology platform. Max Retail uploads excess inventory from thousands of retailers, consolidates it, and subsequently lists items across various retail e-commerce sites and resale marketplaces based on assortment, price, and lifecycle. By giving these retailers exposure to over 400 million new shoppers, Max Retail enables them to significantly broaden their market reach and recoup 85%+ of their wholesale price on inventory sold through the platform today.
The Max Retail team brings together industry veterans with a deep understanding of how the retail market works and the consumer trends that will drive the future. They’ve strategically cultivated relationships with sales channel partners that optimize returns for their retailer customers. For example, e-commerce activity is increasingly moving toward third-party marketplaces, which are estimated to be the largest and fastest-growing retail channel globally by 2027, adding more than $1.3 trillion in sales by 2027 and accounting for 38% of all global retail sales growth. Max Retail currently works with 3 of the top 5 of these marketplaces in the US, providing their retailer customers with the consumer traffic they need to increase sales on their excess inventory.
The Max Retail team is also leveraging the booming resale economy, which grew 15 times faster than the broader retail clothing sector in 2023. The move to resale is driven by consumer preference toward more affordable and environmentally friendly shopping, with 59% of consumers saying if they can’t find a good deal on an apparel item, they won’t make a purchase at all (ThredUp 2024 Resale Report.) With their sales channel partnerships, Max Retail allows retail companies to tap into this demand and drive sales that would not happen if items stayed sitting on the shelf.
We are proud to be investors in Max Retail and to partner with the amazing co-founders Melodie van der Baan, Morgan Bodstrom, and Damon Ciarelli as they combat the issue of excess inventory for SMB retailers. If you are interested in learning more about the business, please contact our team at ce@interplay.vc.
