Max Retail channels excess inventory into the resale market

When Melodie van der Baan owned her own fashion boutique in Palm Beach Gardens, Florida, the biggest expense on her balance sheet was unsold inventory, which in her case were piles of top-notch branded merchandise.

The only recourse at the time was an informal network of “jobbers” who would drop by the store and offer 10 cents on the dollar for excess inventory. The buyers would then consolidate those items with purchases from other boutiques and sell them to an off-price retailer. The problem was that the economics of this arrangement were hard to justify.

“A lot of times at that price, you might as well just bring it to the consignment store, which is actually the No. 1 thing that an independent retailer will do, especially if the jobber won’t take it,” van der Baan told Retail Brew.

The alternative is keeping goods in the store and steadily marking them down in hopes of reclaiming a little more of their original investment. The problem with this approach is the opportunity cost of time. “They might get more like $30, $40, $50 for that same $100 item, but it could take them six, eight, 12 months [to sell it],” she said.

This experience in the trenches of the boutique fashion business inspired van der Baan to begin a multiyear experiment. In 2020, she launched Max Retail with the goal of finding a more profitable home for excess inventory, a key ingredient in the current off-price boom, which van der Baan is trying to redirect away from the bargain bin.

Swap till you drop

In the first iteration of the business, Max Retail launched a platform where boutiques could swap excess inventory of branded products at cost, in theory moving the item from a store where it wasn’t selling to a store where it would. The problem with this was that retailers were “too reactive,” van der Baan said—waiting until the end of the season to list their products on the exchange, at which point they were being “marked down everywhere.” 

In the next version of the business, the company partnered with an online flash-retail seller called Gilt Group, and while the arrangement was beneficial for brands looking to liquidate, for independent retailers, “it was still pennies on the dollar,” van der Baan said. She added that retailers told her, “Thank you for helping us get rid of our Covid-19 goods, but we never want to do that again. The prices are too low.”

That was when resale marketplace Poshmark reached out asking about Max Retail’s access to brand-name inventory, which was still being listed on its platform despite retailers’ disappointment with the Gilt partnership. When products started selling, Max Retail started serving as a bridge between boutiques and Poshmark.

This was the beginning of what would become the company’s’s current model. Between 2022 and 2024, 30 different marketplaces started listing products from Max Retail’s network of 4,000 boutiques nationwide, providing a product line for the former and an outlet for excess inventory for the latter.

Changing the math

Elizabeth LeGore, owner of Vagabond Apparel in Palm Beach Gardens—down the street from van der Baan’s old store—is one retail partner who has benefitted from the arrangement. Even after running her own warehouse sales, the store still gets saddled with multiple racks of unsold goods, which Max Retail then connects with buyers through its marketplace partners.

“I don’t think it’s the end all be all for stores, because I think you still have to be active at a store level,” LeGore said. “But it’s an amazing outlet for us.”

What does this kind of model mean for the off-price retailers currently gobbling up goods through liquidations and auctions?

For the largest players, such as TJ Maxx, not much, van der Baan said. However, as resale marketplaces become a more viable option for branded merchandise—stepping in as an alternative to liquidation—it could change the calculus for off-price, she explained.

“The more brands come onto third-party marketplaces, Max Retail, or the like, absolutely there will be less for the off-price world, ultimately,” she said.