Costco returns are one of the hardest types of liquidation loads to source because Costco does not have a single third party liquidation company handling disposition of all returned goods. The liquidation of returned goods is handled on a store by store basis, by way of salvage bidding contracts.
Ok, what the heck does that mean? Well, in theory, it means Costco will sell its customer returned items to the highest bidder who then agrees to take any and all returned merchandise from a single location, on an ongoing weekly basis.
Costco Returns – Fast Facts:
- Contracts to purchase Costco returns are awarded to salvagors (you or I) for a specific amount of time, i.e. six months to one year.
- Those that are awarded a customer return contracts must purchase all available returns on a weekly basis. Failure to do so will result in termination of the salvage contract.
- Due to the sheer volume of Costco returns a single store might have per week, the liquidation buyer must have a large warehouse to handle the large loads consistently. My estimate as to the average number of pallets per week, per store, would be 15-20 . Of course this will vary depending on store location, population size of surrounding area, and other factors such as the holiday season where store sales double if not triple.
- Costco does not sort customer returns into categories. Expect to receive any kind of store merchandise in a return load, from food to clothing and anything in between.
- Contracts to buy returns are often coveted and because of this, individual salvage buyers/companies do not let their contracts go. Bottom line, store salvage contracts are not easy to come by.
- A lot of companies engaged in buying Costco customer returns hold multiple location contracts.
For the reasons stated above, customer returns from Costco direct are often out of reach for most small liquidation buyers. For those just starting out or for those without a lot of capital, the only other way to source Costco goods is from someone (or some company) that holds current salvage contracts with Costco.
Please be aware: the world of liquidation product sourcing changes all the time. The above information is from my own direct knowledge, and may have changed since last I heard. If anyone out there has different information about sourcing Costco returns, please contact us or leave a comment below. Happy liquidation buying!
Related Post – How Clean Are Costco Returns?
Our 2019 Liquidators Guide chronicles 12 years of wholesale product sourcing experience and includes my personal black book of direct source contacts! As an industry expert, I'll share the success I've enjoyed along with the mistakes I've made buying and reselling liquidation merchandise.
If you are thinking about buying pallets of liquidation merchandise from a liquidator, broker, or direct from department stores, you need to check out The Liquidators Guide