CUSTOMER RETURNS / SALVAGE GOODS
Customer Returns are typically items that have been purchased from a store (or online store) but then returned by a customer. Stores have varying individual return policies as well as product liquidation policies which can affect the type & condition of products you may see in varying loads. Wholesale customer return goods are typically not tested by anyone prior to making their way into a return load. Many stores do not have separate programs for customer returns, and shelf-pulls (discontinued, end of season, overstocked goods) are commonly found in customer return loads. Depending on what store they come from and what category of product it is, working percentages on customer return loads can vary greatly.
Furthermore, working percentage definitions can also vary depending on the category of goods in question. Often when one refers to ‘working percentage’ of products they are referring to the ‘salable percentage’ of the load. (For example if we are talking about a 5-piece Bedding set and 1 piece is missing or damaged – though one may consider the item as ‘not working’ or ‘defective’ it still has a resale value and one can still recover a percentage of the product’s original value). Generally speaking, the recognized industry average when trying to estimate working percentages is said to be around 65-75% working, 20% repairable, and the remainder throwaway/scrap/parts, etc.
In practice, no individual load or pallet will have that exact breakdown, but these percentages are fairly representative when describing the average expected condition of the goods when purchasing them regularly. Ultimately, this is a rough approximation and the actual working percentage on any given pallet or load can be much worse or better.
In general, purchasing wholesale liquidation goods (including customer returns) and reselling them for profit is a tried, tested and proven concept. However, before launching into a business venture involving liquidation merchandise, you should know that:
• Typically, liquidators operate a no returns policy with all sales deemed final and all goods sold AS-IS irrespective of condition unless otherwise stated.
• Purchasing customer returns is not for everyone.
• There is a risk your purchases may not be profitable and this risk increases when purchasing customer returns.
• There is a steep learning curve that newcomers to the industry typically experience and one should expect to do much better once they have more experience with such goods.
• In many cases items are not retail-ready, and dealing with liquidation goods requires considerably more work in terms of researching, processing, pricing & creativity than dealing with new wholesale master case items.
In order to maximize your success with this type of merchandise, you need to be prepared to process, test, check and research pricing on the goods prior to selling them.
In the long term (and over several purchases), most people in this industry agree that the payoffs and returns are generally profitable and that the long-term risk is generally minimal.
Liquidation goods and customer returns are normally priced accordingly, and allow you to profit handsomely while still offering your own customers excellent deals on items.
Customer Returns typically have the following characteristics and stores can decide to liquidate these goods for a number of reasons:
• Defective when returned by the customer
• Cosmetic blemishes or slight defects
• Out of box goods
• Missing minor or major components (remove controls, manuals, covers, cables)
• In-store display items
• Damaged exterior packaging
• Items that the store does not want to or cannot re-shelve
• One or more features does not work
• Store is overstocked with such items
• Out of season items
• Discontinued items
• Defaced barcodes and/or labels
• Signs of handling – both external packaging and the item itself
Often, additional internal store tracking or return labels can be found on the items.
All customer return goods are always sold with no warranty or guarantee. Any warranties found with the goods are invalid and cannot legally be used.
Purchasing department store returns is not for everyone. This is not a ‘get rich quick’ scheme. The payoffs are high for those prepared to work hard and put effort in their purchases in order to create the highest possible return on investment. This is a ‘get-rich consistently with hard work & creativity scheme’.
• If you are not prepared to test items, do not purchase customer returns.
• If you are not prepared to repair items, do not purchase customer returns.
• If you only want to deal with 100% retail ready items do not purchase customer returns.
• If you are not prepared to expect a percentage of items to be out of box, defective, cosmetically blemished etc., do not purchase customer returns.
If you are prepared to test, fix, clean, cannibalize, be creative in sales, open new sales channels in order to get the most revenue back when needed, then consider purchasing.
Please do not get this wrong – after all we do not want to discourage you. This is a profitable business for the large majority and the industry as a whole is over $100 billion in size.
Bottom line for Buying Customer Returns is: if you are prepared to put in a fair share of work and effort, then this could be very profitable for you.