Howard Rosenberg and the value of being returned

A shoe sitting in a warehouse can look remarkably innocent. It has done nothing wrong. It may be perfectly well made. Yet to the person who borrowed money to buy it, that shoe has become a small, stubborn financial problem. Howard Rosenberg encountered this problem early, working in his father’s shoe business. Years later, he would spend his career arranging introductions between unwanted goods and people prepared to buy them.

Shoes that stayed too long

Born in Columbus, Ohio, Rosenberg grew up primarily in Hingham, Massachusetts. His father sold large-size women’s shoes through mail order and retail stores. Young Howard picked and packed orders, swept the warehouse and worked in an outlet selling women’s sizes 10 to 15. The merchandise represented borrowed money. The longer it stayed, the longer the money stayed tied up.

Around 1997, he built his father an online catalog. Excess stock began leaving the warehouse through this new route. It was a modest experiment with a useful result: the shoes had found more people who wanted them. There was no need to improve the shoes. The improvement was in the introduction.

That makes a satisfying beginning for a founder’s story, although a warehouse does not issue diplomas. Picking an order teaches a particular kind of attention. A product has a size, a condition, a location and a buyer. Get any of those wrong and someone has work to do. Long before an auction can look effortless on a screen, somebody must understand the box.

An auction hiding inside eBay

Rosenberg graduated from the University of Pennsylvania’s Wharton School and Harvard Business School. His career included investment banking and venture capital before he joined eBay in 2002. There, he found a recurring complaint from sellers: dependable inventory was hard to obtain. A successful seller could understand customers, pricing and listings, yet still struggle to find enough suitable products to keep growing.

His answer took shape inside eBay. He launched its Private Marketplace business in mid-2004, connecting enterprise inventory with business buyers through bulk auctions. By the company’s later account, that operation handled nearly $200 million in transaction volume during 2008. Bill Cornell, B-Stock’s fellow founder, brought experience developing the FairMarket auction technology that eBay had acquired.

The design acknowledged that selling a truckload is a different undertaking from selling a single item. A large retailer needs control over who can buy, which goods they can see and the rules of participation. A buyer needs enough information to decide whether a lot is worth pursuing. An auction needs both sides to feel that participation is worth their time.

B-Stock dates its founding to 2008. Rosenberg later recalled an investor term sheet and the beginning of platform work in January 2009. The timing placed its start amid the financial crisis. Commerce was under pressure, and he was building a business around merchandise that already had a problem finding its next destination.

The customer is one click away

The customer buying a sweater has a pleasant set of questions. Does it fit? Is the color right? Could another size work? The retailer receiving it back inherits a less pleasant set. Can it be resold as new? What will inspection cost? Where should it go? How much space will it occupy while someone decides?

Rosenberg understood why retailers made returns easy. “The cost of doing business is making returns simple,” he said in 2018. A shopper could readily choose another merchant offering a more forgiving policy. That convenience, however, left a physical task behind. The refund could happen quickly; the product still needed somewhere to go.

He also argued for speed. Holding stock means continuing to absorb depreciation and storage demands. Liquidation deserves deliberate attention because delay can make an already disappointing outcome worse. The commercial challenge is to recover value without letting the task consume more resources than the merchandise justifies.

“Nothing goes up in value sitting in a warehouse.”

Howard Rosenberg, 2018

The line is pointed enough to remember while walking past a clearance rack. It also explains why this business can be easy to overlook. Retail celebrates arrivals: a new collection, a product launch, a holiday display. Rosenberg’s attention went to the departure arrangements. Someone has to make those arrangements before the next collection needs the space.

After the medals, the furniture

In 2016, the idea acquired an unusually good setting. The Rio Olympic and Paralympic villages needed furniture for a temporary population. When the athletes went home, the furniture needed buyers. RGS Events tapped B-Stock to handle online auctions for an assortment including 135,000 chairs, 42,000 tables, 20,000 beds and 10,000 wardrobes.

The auctions began before the Games were over, with delivery available after the Paralympics. Buyers could be located around the world. That made payment and shipping practical concerns alongside price. A winning bid was one step in getting a very large amount of furniture out of one place and into many others.

The episode supplies a pleasingly literal illustration of a second life. An event ends on the calendar. Its equipment remains in the world. The usefulness of a bed does not expire with a closing ceremony, and a chair has no sentimental attachment to its previous assignment. Finding another use is a commercial task with a deadline.

A bigger room of bidders

Recognition arrived before the larger investment rounds. In 2015, B-Stock received the Growth Company of the Year award in the business-to-business category from the Harvard Business School Association of Northern California. The award recognized businesses that had scaled beyond the startup stage using less than $20 million in outside capital. Rosenberg accepted it for the company.

Spectrum Equity invested $65 million in B-Stock in June 2018. The announcement described a decade of profitable growth and plans to expand the company’s technology-based liquidation service. B-Stock said customers were achieving prices 30% to 80% higher than with their previous approach. Those were company-reported improvements in liquidation pricing, rather than a promise of recovering the original retail price.

Rosenberg’s comments about another investor, Susquehanna Growth Equity, reveal a preference for plain dealing. Explaining that partnership, he emphasized directness, honesty and knowing what to expect during the investment process. It is a telling set of qualities to single out. He was running a business in which strangers needed enough confidence to transact; he wanted clarity in his own dealings as well. A funding announcement supplies a number. His description supplies something more personal: an idea of what makes the relationship behind that number work.

That distinction matters. A better result on surplus inventory can still involve a loss against its initial value. The auction’s job is to discover what an interested buyer will pay under the circumstances. It cannot give a retailer back the original shopping season or restore an opened package to unopened condition.

For Rosenberg, the buyer’s discipline mattered too. In a 2016 interview, he urged resellers to study demand, read descriptions and understand sale terms. Liquidation goods could be sold as is. A low purchase price would offer little comfort to someone who had misunderstood the lot or could not sell it onward.

His examples of buyers included online merchants, discount shops, exporters and people organizing buying parties at home. This was a varied audience, with different costs and customers. A lot that suited one business could make little sense for another. Access to inventory created an opportunity; judgment determined what to do with it.

By 2021, Rosenberg described auctions attracting buyers from more than 130 countries. He offered a simple comparison: a seller could negotiate with one large retailer, or invite many smaller retailers to compete. He also pointed to businesses buying damaged televisions that others considered beyond economical repair. Different buyers had different ways of extracting value.

There is an appealing humility in allowing that someone else may know what to do with an object you have given up on. A retailer need not become an expert in every possible second use. It needs a workable way to reach people whose expertise, customers or cost structure make the goods worthwhile.

Giving someone else the keys

In March 2022, Rosenberg handed the CEO role to Marcus Shen, B-Stock’s chief operating officer. The announcement said Rosenberg would remain chairman. After 17 years in the business, he wanted a less active role in daily operations. Shen had already spent three years as COO, overseeing functions including product, engineering, finance and business operations.

The handover put unusual emphasis on what Rosenberg valued inside the company: a team concerned with buyers and sellers, and a culture employees could feel proud of. It is a useful detail in a story full of inventory. The product being traded might be a pallet, but the company doing the trading still depends on people choosing to work together.

Colleagues have described him as personable, transparent and able to motivate a team. Those assessments sit comfortably beside the emphasis on culture at his departure. His working life involved the unromantic business of clearing stock, yet the relationships around that work recur in how people describe him.

In 2023, the Reverse Logistics Association gave him its Lifetime Achievement Award. B-Stock’s current leadership page identifies him as founder and Shen as CEO. The distinction leaves room to see the work as a career rather than a permanent job title.

Rosenberg once described the outcome this way: “We are giving products second, third or fourth lives.” The ambition is practical enough to picture. A box leaves a shelf. Another business takes possession. The merchandise gets a further chance to be useful. For someone who began by packing shoes, there is a certain pleasure in how much of the story still fits inside a box.