What to look for when sourcing returned an excess merchandise.
(aka: how small store owners and resellers can bank on the busts of retailers and manufacturers)
Around $440 billion worth of merchandise is returned each year – a lot of which can’t go back on the shelves. But one retailer’s headache is another’s opportunity, and for online sellers, independent retailers and resellers, there has never been a better time to source returned and excess merchandise on the secondary market.
So, how do you navigate the secondary market to successfully sift through the bad and the ugly to get to the good? Here are some tips on what sellers should look out for when sourcing customer returns and excess merchandise:
It’s best to buy directly from the source
By purchasing directly from the retailer or manufacturer you can assume that there is no middleman involvement and no price mark up. Historically, it has been difficult for small to medium sized buyers to buy excess inventory directly from large retailers and manufacturers; however, today there are new, efficient systems that automate the manual work otherwise required for them to sell to larger buyer groups. One such tool is an online auction marketplace platform. These marketplaces provide a level playing field for all buyers to compete for the inventory, and they enable a direct relationship with the source via a transparent platform. Because they eliminate all negotiation over price, it is just as easy to have thousands of buyers involved as it is to manually sell to just a handful.
Source online from reputable sellers
Independent retailers, online sellers and resellers can often source inventory more affordably and efficiently by tapping into online auction marketplaces that sell returned and excess merchandise. There are numerous benefits to sourcing this type of product online including: greater product availability, detailed product descriptions, bulk quantities at your fingertips, shipping options, and a quick sales cycle. The key is to make sure you are buying from a known brand: many top retailers like Wal-Mart, Target, Costco and Best Buy have their own liquidation marketplaces while others leverage multi-seller marketplaces like B-Stock Supply or Liquidation.com. In the case of multi-seller marketplaces, be sure to use one that has a seller rating system, so you know you are buying from a reputable seller.
Purchasing inventory via these online-auction liquidation marketplaces can be a great way to secure inventory at an affordable, in some cases rock-bottom price, ensuring a better profit margin for you.
Understand what you are purchasing
It always pays to be detail oriented, especially when sourcing returned and excess inventory on the secondary market. Ideally, you will be able to view a full manifest of the inventory, but that is not always available. The key is to make sure you have as much available detail on the product(s) as possible before you buy, including a thorough description, actual image(s) of the inventory, lot size, shipping dimensions and costs, condition codes and technical information, if applicable.
Know your condition codes
Products sold on the secondary market can range from brand new in box to light use to salvage condition. Because this merchandise is typically sold “as is”, be sure to familiarize yourself with each condition category, keeping in mind that different retailers may categorize the inventory differently. A credible seller or marketplace will have a dedicated ‘conditions’ section with thorough descriptions for each of the conditions.
Product condition affects resale value of the item(s)
It’s important to think about what the resale value of the items will be: the better the condition of the item, the more you can sell it for. For example, new without tags will sell for slightly less that new with tags, while an item in its original packaging will fetch a higher price. You want to be sure you can still turn a profit when you break the lots down into individual items, so bid carefully.
Make sure you have access to a constant supply of product
It’s important to have enough product(s) to satisfy the needs of your buyers. By purchasing through a retailer’s online liquidation marketplace or a multi-seller marketplace that is regularly adding new retailers and manufacturers you will be able to ensure a constant, dependable flow of inventory.
Understand the Terms of Purchase
Do your research. Know exactly what you are buying, from whom you are buying, and what their specific policies are. A credible seller will provide thorough product descriptions, images, accurate condition codes, quality customer service and, most importantly, visibility into what the terms of purchase are.
Calculate shipping costs
It is important to calculate shipping costs into your budget. To reduce costs, look for inventory sources that have distribution centers near your geographic region and will either allow you to arrange your own shipping or will provide discounted rates on regional shipping. If you must source from farther away places, look for sources that have negotiated rates with major carriers.
You’re probably well versed in what the competition is doing and how much buyer demand exists for products. There are some great deals available on the secondary market, and it’s typical that larger lots allows for a lower cost per item, but you don’t want to purchase more than you can sell.
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B-Stock powers the largest network of B2B liquidation marketplaces connecting returned and overstock/new-condition inventory from top retailers and manufacturers- including nine of the top 10 U.S. retailers – directly to business buyers. Resellers can buy a few pallets to multiple truckloads of inventory across dozens of categories including: electronics, mobile, fashion, home décor, appliances and more.