The great thing about purchasing overstock or shelf pull items is the fact that small resellers can get their hands on big name brands. Everyone knows that the big brand names sell very well especially if you are an eBay seller. It is not that there is not a need for non-branded or generic items; rather everyone wants to get a great deal on items that would normally cost much more in a retail store.
When a large retailer such as Best Buy or Walmart liquidates shelf pulls, overstock and customer returns, they have strict guidelines in place to protect their own brand names. These retailers understand that the small business owner who might purchase a pallet or truckload will be reselling these items within their own market and thereby, could become competition. There is also a fear that the small retailer will resell an item and the end consumer might try to return it to the originating store for a refund or store credit.
It is not just the stores who might take issue with the reselling of store exclusive names, but be aware that manufactures’ of well-known brands. Manufacturers also police the market, especially online, to make sure their brands are not being sold at pricing that might dilute an item’s perceived value. Those that resell on eBay might be familiar with the Vero program.
The VERO program, or Verified Rights Owner Program, was set up by eBay to assist well-known brands offering the ability for a manufacturer to request specific auctions be taken down or removed if that auction in any way violates a brands’ trademark, copyright, and/or other legal rights.
In the case of liquidation merchandise, often-large big-box retailers will require the reseller to remove labeling, packaging, or interior documentation that would in some way identify a products brand or origin. This de-labeling requirement often is presented to the liquidation buyer in the form of a purchase agreement. This agreement must be signed before a liquidation buyer can purchase returns, shelf pulls, or overstock. Those who sign brand protection agreements can be subject to large fines if the original retailer discovers any evidence of noncompliance. When I say large, I mean large fines! The average eBay seller or flea market vendor does not have capital to fight such claims, and therefore, should cease and desist at that time.
Here is portion of a purchase agreement filled with all kinds of legal jargon:
Purchaser further agrees to remove or obliterate any and all sales tickets, documents, labels, legends, stencil information, manuals, instructions, price tags or any other materials or information on the packaging or on CLOSEOUT and/or SALVAGE MERCHANDISE which in any way identify any original providers of CLOSEOUT and/or SALVAGE MERCHANDISE, such as department stores, catalog or mail-order companies or any affiliated or related company. Failure to condition merchandise in a manner that it is not returnable to the originating retail store for credit or cash refund, will be deemed a breach of this agreement. In addition to any other remedy Purchaser will pay twenty thousand dollars as liquidated damages to Acme Closeouts
Those that are interested in purchasing liquidation merchandise will more than likely have some questions about brand protection, please feel free to comment below and I will share my experience with you. I have been signing agreements like this for ten years.
This is one of our many Liquidation Boot Camp posts where we talk about the basics of liquidation product sourcing. If you’re new to the idea of purchasing liquidations, please review more Liquidation Boot Camp Posts here.
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