While the focus of the 2016 Olympic Games is on the athletes and their remarkable feats, there is also a monumental yet under-the-radar task currently underway that involves auctioning off and processing global buyers’ payments for hundreds of thousands of items from Olympic villages and venues in Rio.
An online marketplace has been established to sell bulk quantities of items, ranging from furniture to fixtures, used by athletes staying at the Rio Olympic and Paralympic villages. RGS Events, an Olympic sponsor and project manager of global sporting events, is trying to sell a wide swath of items, including: 135,000 chairs, 42,000 tables, 20,000 beds and 10,000 wardrobes, according to a press statement.
RGS tapped B-Stock Solutions to handle the online auctions, which started before the Olympics and will conclude following the Games. Items will be available for delivery after the closing ceremony for the Paralympic Games in September.
Shortly after the opening ceremonies, PYMNTS caught up with Howard Rosenberg, founder and CEO of B-Stock, a technology provider overseeing the largest network of B2B liquidation marketplaces, to discuss how the company is handling many cross-border payments from winning bidders taking part in the large-scale international auction.
The bidding has begun
Rosenberg, who launched B-Stock in 2008 after spending several years working for eBay, where he launched and ran the company’s Private Marketplace business, said B-Stock’s platform is primarily option based.
“Think of giant retailers auctioning off pallet loads (and) truckloads of excess inventory to small business buyers, and those buyers can be located anywhere in the world,” he said. “So as a result of that, we generate over the course of any given month a fair amount of international commerce where international buyers are buying products from one of our sellers.”
The company’s solution provides RGS a team of marketplace management experts who oversee auction strategy, inventory uploads, logistics and customer support. The first round of auction items sold through the B-Stock Events marketplace will be shipped out to winning bidders in 40-foot containers, Rosenberg said.
Opening up the auction to bidders around the world, Rosenberg said, involves cross-border challenges in accepting payments from winners. Payments, he said, are “really a facilitation mechanism for the transactions we’re doing on our marketplaces.”
From Rio, with pre-owned love
Sold items will be exported out of Brazil, Rosenberg said, with containers scheduled to be shipped to distribution centers in about a dozen countries, including Canada, Ghana, Spain, the U.K. and the U.S. Some shipments will eventually be distributed further through reselling. Trying to navigate the cross-border payment waters can be a little rocky at times, Rosenberg acknowledged.
Trying to navigate the cross-border payment waters can be a little rocky at times, Rosenberg acknowledged.
“The primary challenges associated with accepting cross-border payments versus domestic payments are the fees for such payments are higher, and there are different regulation and compliance standards to be met, which also ultimately translates into higher cost for the recipient,” he said. “These challenges are not a big deal if one is accepting a small number of large payments, but as the amounts decrease and the number of payers increases, they can become more significant.”
Rosenberg said that being prepared for wide-ranging recipients means the company can better address cross-border clients’ needs by developing solutions designed specifically for each consumer.
“Every customer has their own rules, business process and methodology for running their company that we tailor the marketplace to fit around,” he said.
With most auctions, Rosenberg noted, the products will typically ship shortly after a payment has been received from a winning bidder. However, that’s not the case with the Olympic auctions, as it’s time based and the shipments are triggered by the end of the Games, he said.
He also noted the shipping disparities based on the overall size of the items being auctioned off.
“The difference is in the nature of the product, maybe the nature of each lot, meaning everything here is a full container load that can be loaded onto a cargo ship,” Rosenberg said. “Many of our marketplaces, they will sell as little as a pallet or 10 cellphones that can be packed in a box and sent by UPS. From that perspective, it’s a bit different.”
Payment, down to the wire
Typically, the liquidation market is cash-based, meaning a winning bidder pays in cash or by wire transfer, Rosenberg said, and retailers generally do not extend credit or accept credit cards.
“The primary reason is it is liquidation and [companies] want to be done with it,” he said, adding, “The seller just wants to do the transaction, get rid of the product, they are taking pennies on the dollar, they want to receive cash for it and then never have to worry about it again.”
When it comes to the Olympic auction listings, payments are limited to wire transfers, largely to avoid potential issues down the road, he said.
“The last thing you’d want to do is sell a truckload of anything, spend thousands of dollars to have it shipped across the country, and then have the buyer charge back that transaction,” Rosenberg said, noting why credit cards aren’t an accepted payment method. “Who is going to pay the thousands of dollars to send it back? It could create very tough situations.”
Allowing multiple cross-border payment options would have serious ramifications, he noted.
“In this case, if someone decided to charge back a shipment or were unhappy somehow with what they got, they can’t ship it back to Rio, because there isn’t going to be anyone there. Once the Games are over, everything clears out,” he added.
The thrill of victory? Awaiting results …
One of the hurdles facing B-Stock was how different it has been working an event, a first for the company, compared to their core business of helping retailers liquidate inventory.
“The nature of the product we’re selling — beds, chairs, crowd-control barriers, lockers, wardrobes — it’s a different kind of buyer than the vast majority of buyers in our network who want to buy shoes, apparel, appliances, clothing and all these consumer goods that we typically see running through our network,” Rosenberg said. “If you had asked me a year ago, would we have buyers who would want to bid on container loads of crowd-control barriers, I might have been a little skeptical – but it turns out there is no shortage of them.”
Developing an expansive consumer base in a short period of time was also an important part of the plan, Rosenberg said.
Whether or not it’s a gold medal-winning strategy is yet to be determined.
To download the August edition of the PYMNTS X-Border Payments Optimization Tracker™, click the button below.
About The Tracker
The PYMNTS X-Border Payments Optimization Tracker™ provides an organizing framework for evaluating the many players that help merchants optimize their cross-border clients effectively and efficiently.