Buying wholesale department store returns is very similar to the feeling you probably had when waking up on Christmas morning as a child. I am sure you can remember the excitement you felt with the anticipation of Santa bringing you a large cache of presents!
When you place your first order for department store returns there is a similar feeling of anticipation most people experience; a feeling of excitement! The feelings are much like that of buying a lottery ticket, you dream for a moment.
While awaiting your pallet of customer returns to be shipped you can actually visualize the type of merchandise you might receive and how much profit you can make reselling such items.
Ok, wake up! Are you awake? Let’s have a reality check in reference to purchasing wholesale department store returned merchandise. If you really want to be successful purchasing wholesale liquidation merchandise, you need to think realistically.
Variety of Merchandise – A pallet is a big mixture of merchandise, sometimes offering a wide assortment of goods..and sometimes heavy in one or two items or styles.
Think of it this way: if you ordered a customer returned electronics pallet you are going to receive some less desirable smaller items, such as cables, headphones, battery charges etc. along with high-ticket items. Likewise, when ordering customer returned clothing, you will probably receive some clothing related accessories including belts, wallets, purses, socks etc. Plan on receiving items within your pallet that will pose a challenge to resell….this is the reality of buying mixed, unseen liquidation merchandise.
Brand Protection – Don’t kid yourself here thinking you can bypass any reselling restrictions you agreed to upon purchase. Most department stores will not sell wholesale pallets of returns to you unless you agree to their strict reselling rules! Before you sign on the line, make sure you review their terms of resell. Some stores will not allow you to resell merchandise within a fifty miles radius of one of their retail stores. Other agreements require you to remove all reference to store brands [from merchandise] before you resell it. Did you read that agreement you signed before purchasing that pallet or were you too excited? Do not ignore brand protection agreements as it can come back to bite you in the rear, trust me. You could find yourself in the middle of stiff penalties and legal fees, which can literally deplete your working capital. Large stores have millions of dollars they use to protect their name and brand copyrights…..stay within their guidelines.
Damage Ratios – How much and how many broken items will you receive in that pallet you just ordered? Well, there is no way to tell as every pallet will arrive with a different damage merchandise ratio. Some items will be superficially damaged, such as issues with appearance or packaging. Other items will not function properly or be missing pieces.
In relation to electronics, you may be able to repair some items replacing damaged parts or purchasing missing cables. If buying a pallet of customer returned clothing and you receive jeans with a broken zipper…you may be out of luck. Try to be creative when reselling damaged merchandise. If you cannot fix a broken digital camera, try selling it to someone who can fix it…i.e on eBay or to a camera shop.
Unsellable Merchandise – This is inevitable with every pallet purchase, and you must have a plan in place to deal with damages beyond repair. Some items will go right into the trash, and this has direct affect on your bottom line.
Purchasing department store returns is not an easy way to make money, but if you keep your expectations where they should be and become creative, you can make a good living reselling what others have returned to the store for a refund.
Our 2020 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