A favorite free time occupation nowadays seems to be buying and reselling wholesale merchandise online, with a number of sellers claiming significant profits and some even making this a full-time job. However, is it all plain sailing and as rosy as some would lead you to believe? Is buying pallets of returned merchandise from wholesalers or liquidators the real deal?
The Promise and the Expectations
If you listen to the hype you’d think that buying a pallet of returned or refurbished merchandise from a wholesale supplier and selling it online on websites like eBay or Amazon is a straightforward deal.
In simple terms, buying cheap merchandise to resell online for a profit is the way to go. First, you’d have to find an undersupplied niche market to exploit. Once you have pinned down the niche segment, it is time to find the supplier and the majority of resellers turn to wholesale suppliers and liquidators as these promise the lowest prices, the highest quality and the largest profit margin.
The merchandise is packed in pallets and delivered to your address, already sorted and ready for sale. All you’d have to do is unpack the pallet, take photos of each product, list it online with a markup and look at buyers competing for your products.
This is a perfect storyline, a possible one. However, it is a long road to success, and it is much easier if you look at all the facts.
Resale business is a profitable one, make no mistake about it, but there are steps one needs to take in order to make it worth your time and effort. Yes, the steps are as noted above, but there is more to those steps than meets the eye.
Let us start with the quality of merchandise. As noted above, the hype would let you believe it is all high-quality and perfect condition when the reality is far from it. Since we are focusing on returned merchandise, you have to know that there is a chance you might receive a “bad batch” or a pallet full of merchandise that is not easy to sell or can’t be sold at all is high, especially if you jump into the venture without much thinking.
Although the majority of wholesale suppliers and liquidators will promise high-quality merchandise, it is only the reputable companies that can deliver on this promise. Merchandise gets returned all the time. In fact, at least 30 percent of products bought online are sent back to the seller. Reasons for this are many. Either the customer made a mistake and ordered a wrong product, the seller may have shipped a wrong product, or a wrong color, or size. Maybe the product is not working as described, all these make a list of valid reasons for a product to be returned.
However, some of these products do get returned unopened, meaning they remain in factory condition, but the retailer is not allowed to place this product on the market as new and has to list it as customer return, or refurbished product. Retailers, as well as manufacturers, usually turn to wholesale supplier or liquidators to dispose of these products at significantly reduced prices.
Wholesalers usually buy these products and resell them with a slight markup to end users, while liquidators will act as a bridge between the retailer or manufacturer and the end users and sell the items as quickly as possible.
In both cases, you can score some great deals, and stocking up your business with returned merchandise can be a profitable venture. But the process is not as simple. The best thing you can do is browse the internet for a while, or visit your local wholesalers and liquidators, compare prices, go to industry fairs and gather experiences of other buyers. This is very important because it will help you filter the reputable sources from the unreliable ones.
We can only suggest you pay attention to the merchandise you are buying in the first place. If a wholesaler or a liquidator is withholding information, or the manifest (a list of products contained in a pallet) is not complete, it is probably smart to walk away from that supplier. Reputable sources will have full details on the merchandise contained in the pallet as well as offer you quality support service if any issues do come up once you receive the merchandise.
The next step you need to take is to sell the merchandise for a profit. In an ideal scenario, you’d simply unpack the merchandise you bought, take some photos and list the items online. In reality, you first have to inspect the merchandise. If you haven’t been careful and bought maybe a pallet of refurbished electronics, laptops or smartphones from an unreliable source, as we noted earlier, you could end up with a pallet of unsellable products that are faulty, damaged, broken or simply scrap.
If you have done your job correctly and received merchandise you can work with, you still have to inspect it, take as many photos as you can and then list it online. Prior to listing the products online, and even before buying them, you have to look at the market compare prices and see what your purchase limit is and how you should price your products to remain competitive and make a profit.
Whether you prefer to sell merchandise on eBay or Amazon is a personal preference. But if you’d like to secure an advantage for your Amazon venture, check out our “Ultimate Guide to Selling on Amazon” which will help you through the process from the start until the end.
Should I Buy Returned Merchandise?
This is a question only you can answer, as working with branded and new stuff or returned merchandise both have their pros and cons. What we can say is that putting an effort into preparation, research and sourcing the right suppliers and merchandise can result in significant profits in the end. Even those that have made it in the business have previously probably failed a number of times before finding their golden nugget.
To conclude, don’t believe the hype, believe your own research, hard work and effort. That always brings positive results.