During the early stages of the pandemic, many companies purchased large quantities of hand sanitizer. It may have been for employees, such as food service and retail or it could be a company that started selling hand sanitizer to its customers.
During the early months of 2020, a fast-growing diaper manufacturing and distribution company produced a ton of hand sanitizer to offer along with diapers for a national retail partner. The retail partner would also carry 32-ounce hand sanitizer refills in their stores.
The market demand for hand sanitizer dropped in late 2020 but the supply did not slow down. It seemed like every part of the supply chain was filled with hand sanitizer. When the retail partner stopped taking delivery, the distribution company was taken by surprise AND they were left with over 450,000 units of 32-ounce hand sanitizer that expired in a maximum of six months. This single SKU weighed over 900,000 pounds and filled 21 trailers.
Hand sanitizer is relatively easy to produce and can be quite costly to dispose of. Hand sanitizer is an environmental hazard and extremely flammable. The larger the quantity of hand sanitizer, the greater the issues and expenses. It was crucial that our client dealt with their inventory dilemma quickly.
The client explored donation and discount options but they found no interest and determined their only option would be to dispose of or recycle the remaining hand sanitizer. However, hand sanitizer is flammable and considered hazardous. It is not easy to recycle and the cost alone to recycle averaged around $25,000 per trailer. If the product was incinerated, the cost would average $40-$50,000 per trailer. Our client faced a conservative potential expense of over $500,000!
Why Net Trade
Net Trade was asked to assess the situation and propose solutions quickly! Net Trade had worked with a number of clients to successfully move hundreds of trailers of hand sanitizer bottles and wipes. The dilemma was the marketplace was completely flooded and the hand sanitizer was about to expire in six months.
The plan was simple: find greedy closeout buyers. Every trailer Net Trade could give away would save our client a lot of money. We started by offering the product for free and we quickly shifted to free and we would cover the costs for the delivery, helping us move a few trailers of sanitizer. Every offer made was met by a similar response – every other owner already had too much hand sanitizer. It was a race to the bottom. Net Trade decided to offer a buyer, one of the largest closeout chains in the US, cash payment and offered to pay for delivery. The buyer called their partner and said “They are paying us to take it, how can we say no!?”
Net Trade was able to move every load that afternoon. The client paid around $50,000 in fees and shipping costs. It was a lot of money, but it was better than paying $500,000 in disposal fees along with the cost of shipping to the disposal site.
Net Trade not only helped the company save a ton of money, but Net Trade helped reduce the company’s carbon footprint and energy consumption. Keeping consumers’ hands clean and helping keep the environment a cleaner space.