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Companies and retailers far and wide deal with customer returns. But where do they all end up? And what’s the value in a simple store return? Well, there’s a lot you can do when you buy return pallets. Most notably, starting your own resale business! Since it costs retailers time and money to store, inspect, and restock returns, they instead choose to liquidate it. And more often than not, they end up in the secondary market because of resellers.
Historically, large retailers and manufacturers have sold this liquidation inventory in bulk (and at a loss) through negotiated transactions with a handful of buyers. These sales are generally at prices well below retail MSRP. Over the past few years, however, a shift has taken place. Many retailers are bypassing traditional liquidation methods and adopting technology-based programs for excess inventory into their overall business plan.
In this blog, we go over:
In the past, these items were sold to jobbers – or big liquidators – who would help companies liquidate by purchasing in bulk then break down pallets to sell them to smaller buyers at a markup.
Store returns, especially holiday returns, are a big problem for retailers to tackle. Not to mention the loss in profits by not selling or taking back merchandise. The problem is only exasperated during the holidays. This year alone, $112-$114 billion worth of merchandise will be returned to retailers post-holiday! That’s why B-Stock helps nine of the top 10 U.S. retailers deal with their returns, excess, and liquidation inventory.
So you want to get your hands on these store returns? Let’s go over a few simple things to note beforehand:
Wholesale is the sale of goods and merchandise to resellers and businesses. The wholesale price is usually fixed and the amount of product can vary substantially. The goods are usually sold – by the wholesaler – in bulk quantities with the intention of being resold by the purchaser. Something else to note: true wholesaling is generally not available to the standard consumer. On the other hand, liquidation typically means an organization is trying to turn excess, overstock, or obsolete goods into cash, quickly. For retailers, this merchandise costs money because 1) the goods depreciate with age, 2) they take up space in the warehouse, and 3) they tie up capital. This leads retailers to liquidate excess inventory.
Customer returns are also considered liquidation inventory. There are simply too many returns and not enough hands to inspect, process, and restock this kind of merchandise—meaning top retailers will liquidate their returned inventory, too. Learn more key differences between wholesale and liquidation here.
You may browse online for inventory, but purchasing directly from the source is always the best. Otherwise, you risk coming across sellers who have cherrypicked through return pallets themselves (keeping the best stuff) and are trying to sell the leftovers to you. It’s always important to do research every step of the way and look for trusted inventory sources.
A retailer’s official liquidation site, AKA inventory directly from the source, is the best way to go. You know you are getting inventory directly from the retailers and not a middleman. Plus, you can bid and win inventory at auction and you only have to pay the price you want. You can also find overstock inventory on liquidation sites, which has never been sold in stores. The best part is it’s usually in retail-ready packaging.
A resale certificate can be called different names depending on which form you use or which state your business is registered. Additional names for resale certificates include a reseller’s certificate, reseller’s license, resale license, or a sales tax exemption certificate. So check to see if you may have one of these already. What a resale certificate allows your business to do is purchase goods tax-free and pass on those savings to your customers. Of course, it is important that you charge sales tax later on during the transaction.
Each retailer will grade their returns differently on their liquidation sites. Carefully review auction manifests and marketplace condition codes to understand what exactly you’re buying before you place a bid. You wouldn’t want to mistakenly purchase non-functional or salvage inventory if you intend to sell to end consumers. We wrote a handy resource you can reference when purchasing returns: A Guide to Buying Customer Returns.
Once you’ve searched around for an auction you like, or you’ve registered to a handful of marketplaces that interest you, you will want to start bidding. When calculating how much to bid, take into account the following: shipping costs, retail price or MSRP for items, quantity and condition, plus the type of inventory you are bidding on. All of this will help you determine how much you’re willing to bid and what your potential profits will be.
Be familiar with online auction terms like proxy bids and popcorn bidding. Your proxy bid is the maximum amount you’re willing to pay. Our system uses your proxy bid amount to auto bid incrementally on your behalf. If a bid is placed in the last five minutes of an auction, the auction end time will automatically extend for an additional three minutes. This is called “Popcorn Bidding” and it gives all bidders an equal chance of winning an auction if a last-minute bid is placed.Browse Live Auctions
Always keep what your customers want in mind when sourcing return pallets directly from retailers. If you don’t have an idea of where you want to start, test the waters with a category you’re comfortable with. If you know the ins and outs of tech and other electronics, you can start there.
Asking yourself what type of products your customers want will help determine what retailers’ returns to go after. For example, if your customer base is looking for home & garden tools and materials, retailers like The Home Depot and Lowe’s are good options. However, if you only have customers for apparel items, these wouldn’t be your cup of tea. You would want to find a marketplace that caters to apparel buyers.
There are more than just blouses, dresses, and pants these days. Buyers have choices in terms of jumpsuits, rompers, denim, high fashion, moderate (basic tees, jeans, and skirts), contemporary (fast fashion and juniors), and traditional (suits and casual work attire) styles. Even loungewear, intimates, and sneakers are taking off! If you’re looking for apparel return pallets, check out Last Chance Auctions, QVC Liquidation Auctions, Lands’ End Liquidation Auctions, Hanesbrands Closeouts, or Amazon Liquidation Auctions.
Don’t miss A Guide to Buying Liquidation Apparel, Accessories, & Shoes if you’re interested in becoming an apparel reseller.
Home and garden is a huge category. So huge, in fact, it includes tools, small appliances, outdoor patio sets, grills & mowers, kitchen & bath, tubs & toilets. Other inventory includes hardware, plumbing, flooring, wood/lumber, machinery, and more. The prices are hard to beat—often lawnmowers or power tools are being liquidated at 10-15% of retail! There is also a steady demand for home & garden return pallets since this category isn’t subject to as many quickly changing trends (like apparel for instance).
Popular home and garden marketplaces you can find right here on B-Stock are: The Home Depot Liquidation Auctions, Costco Appliances & Home Liquidation Auctions, Lowe’s Liquidations, and Signature Hardware Liquidation Auctions. Home and garden buyers should also check out A Guide to Buying Liquidation Home & Garden Inventory for everything you need to know in this category of returns.
Everything from laptops, tablets, cameras, televisions, printers/scanners, and gaming consoles to headphones, smartwatches, desktop computers, and Bluetooth speakers are clumped into the consumer electronics category. Often, items are returned due to either item complexity or lack of problem-solving. Essentially, the product doesn’t solve the problem the customer is hoping it would, or they can’t figure out how to use it. There is a lot of value in consumer electronics. One way or another, you will always find shoppers looking for the newest tech, the perfect tech gift, or essential back-to-school supplies.
Head over to Target Auctions Liquidation, B-Stock Supply, Costco Wholesale Liquidation Auctions, BJ’s Liquidation Auctions, or Walmart Liquidation Auctions for consumer electronics auctions. Be sure to read A Guide to Buying Liquidation Consumer Electronics for the ins and outs of this category.
Everyone knows the value of cell phones—there is even a huge demand in emerging countries for used smartphones. You can purchase new and used smartphones from brands like Apple, Samsung, and Google in bulk quantities. Buyers include wholesalers selling to other wholesalers, or smaller buyers individually reselling cell phones on a site like eBay. Visit B-Stock marketplaces like Select Mobile Auctions, Superior Wireless Auctions, GameStop Wholesale, and Early Upgrade Auctions to source trade-in cell phones, accessories, and other devices.
Appliances are higher ticket items, which means higher profit margins. So you’d be smart to go after this category of returned, overstock, and scratch and dent inventory. In fact, returned or used appliances are often still functional and deeply discounted when liquidated. There are a few caveats to being a liquidation appliance buyer. Because this inventory is bulky and takes up space, you will need a physical storefront or warehouse to house this type of inventory. Additionally, they won’t be palletized inventory. Learn more by reading A Guide to Buying Liquidation Appliances.
Appliance retailers and manufacturers you can check out include: Best Buy Liquidation Auctions, Whirlpool Second Channel Marketplace, Costco Appliances & Home Liquidation Auctions, Sears/Kmart Overstock Auctions, Lowe’s Liquidation, and The Home Depot Liquidations Auction.
Some buyers buy and resell goods as a side gig. Then there are those who do this full-time. If you’re ready to turn buying return pallets into a business, then you will want to give How to Start a Liquidation Business a read. The most important thing is having a reliable source of inventory. You can check out live auctions and secure return pallets, overstock, and other liquidation inventory from the retailers you know and love—and at the price you want! When you register on B-Stock, you have access to brands and products from the world’s biggest retailers, so what are you waiting for?