The sheer number of consumer items that are returned year round amount to billions of dollars for retailers; the majority of returns flood customer service lines throughout January of each year. Most, if not all, returns within the first few weeks of the new year are simply due to either the wrong size, or inconsiderate gift giving. Whatever the reason, retailers attempt to reclaim as much revenue as possible from returned items.
As a small retailer or auction seller, we are interested in purchasing clean, undamaged consumer returns,. As you will see, flooding the secondary market (liquidation) is not the only way big box giants deal with raw merchandise returns:
Items returned to stock – If items are new and not compromised in any way returned items can be returned to retail stock. This represents the best option for the retailer.
Vendor credit – Large retail stores sometimes have vendor agreements, whereby all returns of said products are full or partially refunded by product vendors. I think the best example of this type of vendor / store relationship would be agreements in place for the retailing of cosmetics. Most stores accept product returns for makeup that was purchased and brought back to the store having being used at least once. These returned lipsticks, eye shadows, etc. are typically fully refunded to the store by the cosmetics distributor.
Refurbished – A large portion of returned items, once they have been sorted, can be refurbished to full factory specifications. These refurbished items are then re-packaged and resold in an attempt to reclaim revenue. There are third party service providers who do nothing but refurbish broken electronic items.
Secondary Markets – This is the area we are most interested in, being a wholesale buyer! Returns that do not fit into one of the other categories are often liquidated in pallet and truckload quantities for the eBay, small store, and flea market sellers. This process if often handled by a third party reverse logistics company (sources found within our wholesale guide).
Recycling – One of the last options a retailer will consider when dealing with raw customer returns is that of recycling merchandise to recoup dollars from glass, metal, plastic, and precious metals (from computer/electronic components).
Landfill – As a last resort, some customer returns will indeed end up in one of the many landfills that dot the Country. While this is not the most desired solution, some merchandise will not be salvaged.
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