RE­TAIL

How B.C.'S Big Box Out­let Store keeps other re­tail­ers' un­wanted mer­chan­dise out of the land­fill

BC Business Magazine - - Contents - By Fe­lic­ity Stone

Big Box Out­let Store has built a busi­ness by get­ting un­wanted goods back on shelves

For most re­tail­ers, sales peak in Novem­ber and De­cem­ber, ac­count­ing for 20 per cent or more of an­nual rev­enue, ac­cord­ing to the U.S.based Na­tional Re­tail Fed­er­a­tion. But for B.C.’S Big Box Out­let Store, Christ­mas ar­rives later. “The vol­ume in Jan­uary and Fe­bru­ary goes up by 50 per cent,” notes co-founder and president Mark Funk. “It’s the busi­est two months of the year for us.”

Funk’s com­pany pur­chases un­wanted prod­ucts—cloth­ing, house­wares, ap­pli­ances, tools and more—from ma­jor re­tail­ers and re­sells them in its stores (12 in B.C. and three in Cal­i­for­nia and Wash­ing­ton State). Af­ter the hol­i­days, some are sea­sonal clearouts, but most are gifts re­turned by cus­tomers. Re­turns make up half of the busi­ness the rest of the year, too: mer­chan­dise shop­pers didn’t want or that was dam­aged—for ex­am­ple, a lawn­mower that doesn’t work prop­erly. The re­pair staff will fix it or har­vest parts.

In ad­di­tion to re­turns, Big Box Out­let Store buys case lots that have been opened or are miss­ing some contents and sells the items (bot­tles of wa­ter, tins of food, rolls of pa­per tow­els) in­di­vid­u­ally. A five-pack box of, say, un­der­wear that only con­tains four pairs will be dis­counted. The com­pany also deals in dis­con­tin­ued, clear­ance and new goods, like fur­ni­ture, which is prof­itable be­cause it’s high-mar­gin.

Funk sees a bright fu­ture for re­verse lo­gis­tics, or re­turn­ing prod­ucts to the sup­ply chain. Chain re­tail­ers and big box stores have found work­ing with re­verse lo­gis­tics spe­cial­ists an im­por­tant com­po­nent of as­set re­cov­ery, es­pe­cially as the cost of han­dling the item in re­verse can be four times what it cost to get it to mar­ket­place, Funk ex­plains. “We’re kind of unique. We process and re­tail at the same time.” While most in the in­dus­try move goods on to re­sellers, Big Box Out­let Store is the largest in Canada that has its own stores and a di­rect re­la­tion­ship with the ini­tial re­tail chain.

Funk got his start in 1985, when he and Todd Friesen, then both 20 years old, bor­rowed from their fa­thers to ac­quire HB Dis­trib­u­tors in Sur­rey for $80,000. The com­pany had con­tracts with Cana­dian Na­tional Rail­way Co. and Over­waitea Food Group to buy and re­sell dam­aged mer­chan­dise. Within two years, they had

TREA­SURE CHESTS Con­tain­ers of prod­ucts wait to be sorted and sold

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