Sourcing Customer Returns - Buying Retail
Returns at Wholesale Prices

by Chris Malta & Robin Cowie

Published on this site: August 14th, 2006 - See more articles from this month

Retail overstocks and customer returns can be an excellent product source-as long as you understand what to expect when purchasing this kind of merchandise.

A Mixed Bag of Goods

Typically, returns are sold as pallets of assorted, dissimilar items-you'll find everything from snow boots to toy cars to staplers. Most likely, you'll also find some damaged goods among a pallet's wares. A portion of these items were returned because the customer damaged them, or they didn't work in the first place. In spite of the damages, many sellers feel they can make a profit. According to Jacques Stambouli of http://ViaTrading.com, a retail-return wholesaler, "The rationale is that, even with disposing of a high percentage of them, you're buying them cheaply enough that you can make a lot of money."

Weigh Your Options

Retail stores normally sort their unwanted goods into two categories-customer returns and overstocks.

Both have positive and negative points to consider:

1. Customer returns are items that were purchased, taken home, and brought back. Once opened, they can't be re-shelved.
   
   
   • The downside of returns is some of them were defaced by the
     customer or just don't work. A higher percentage of them are
     dented, have cosmetic damage, or are missing parts.
     
     
   • The upside of returns is they're usually more current,
     in-demand products-they were purchased for a reason. Many of
     them are still in perfect condition-they were only returned
     because the color, size, or model was wrong.
     
     
2. Overstocks are items that sat on a retailer's shelf too long.In spite of discounts, they simply didn't sell.
   
   
   • The downside of overstocks is that the retailer couldn't move them, regardless of multiple price cuts-the demand wasn't there. Moving them may be a challenge for you as well.
     
     
   • The upside of overstocks is that they're mostly clean, new, and probably still in their original packaging. You'll find comparably less damaged goods.

Mix Your Channels

When purchasing returns and overstocked merchandise, it's a good idea to have more than one outlet for reselling. Don't limit yourself to only eBay or only the flea market-not everything you buy will lend itself to a particular market. Some people even throw "pallet parties"-they're like Tupperware parties, only they're selling the contents of their pallets. Stambouli says, "We find that our most successful customers are the ones that know how to combine different channels."

Chris Malta and Robin Cowie of WorldwideBrands.com are the Writers and Hosts of the Entrepreneur Magazine EBiz and Product Sourcing Radio Shows. http://www.worldwidebrands.com/EMRinfo for more free eBiz info from Entrepreneur Magazine Radio!