Every entrepreneur wants to increase the profit margins of their business. In doing this, you want to maximize sales and minimize the costs. To help your business flourish, you want to sell high-quality products at low prices to attract customers, increasing both your sales and customer demand for your products, gaining you a bigger market share. This is now possible by selling customer returns, sourced from liquidators.
However, there are some major factors that you should keep in mind before considering these products. Have in mind that you are buying customer returned items, which will not always be in top condition. However, working with the right supplier can help you choose only the items that suit you and will bring you profit.
Check for Defects
Firstly, the products should be checked for defects – if possible before you buy them, because merchandise conditions are something you build your reputation on. If you can’t inspect them yourself, carefully read any information on the manifests and listings. If you are running a large-scale operation, as your sourcing costs would be decreased, you may want to consider hiring a supervisor to look for defects before they’re repackaged, or listed for sale. Remember that you don’t want customers returning these products back to you.
Buying customer returns without inspecting the products or even your source can be detrimental to your business. Cases of misrepresentation are not uncommon so use every bit of information you can get before buying a wholesale lot or pallet of customer returned merchandise. Misrepresentation means the wholesale supplier or liquidator represented the goods as is good condition when they are really damaged items.
To avoid problems, always look for the manifest. Reputable liquidators will have a detailed manifest about the items contained in a wholesale lot. If the information is incomplete, or missing stay away from the pallet.
Secondly, make sure that the suppliers you are signing contracts with are reliable and authentic. Their business should not be involved with any scams or regulatory investigations. Make sure wholesale liquidators you’re doing business with are a trustworthy source to buy from, and read reviews. Customer reviews are probably the best indicator of how a company is doing. Bad reviews usually mean you should stay away from that supplier. Positive reviews and experiences are a sign that doing business with that supplier should help you grow your business.
Know Your Business
You need to keep your own business in mind. Not all palletized items will help you fulfill your customer demands, or contribute to your business model. You do not want to pile up unsold stock in your inventory. If your business is dealing with electronic gadgets, don’t just buy clothes or footwear from liquidators, just because the price is cheap, no matter how good the quality is for the deal being offered. If you don’t know the market, it’s a lot more work. Even buying additional electronics like smartphones, laptops, tablets or any other accessories might be a bit too much, especially for a newcomer.
Branching out into other segments is not completely out of the window if you plan on growing your operation. However, this should be done gradually and only after you have built a customer base that shows demand for a certain product you don’t have in your offering.
Pricing Customer Returned Merchandise
The next factor when looking for customer return items is the price of the products. You should do some market research about the price of the same product from different businesses and compare them. This can help with budgeting. Some liquidators may even offer bulk buying discounts. Reviewing prices will not only help you when selling items but also when buying them because you will have to add the purchase costs into your total budget and set a purchase limit that will ensure you are making a profit in the end.
On the sale end, you don’t want your prices to be higher than your competition. Even though you might be able to offer much lower prices, keep them just below your competition as going too low might turn the customers away as they might think some sort of a scam is taking place.
Repairing Defective Customer Returned Products
The last factor is to consider the effort it takes to fix some products that might be broken or are in need of repair when buying wholesale pallets. Is the product worth putting in the required effort and labor? Would the amount it costs to make repairs exceed the selling price? These questions must be answered before you make your decision to buy untested customer return items from liquidators.
Also, it is advised to use more than one channel to sell the products you got from liquidation sales. These channels can be online selling or opening outlets. Wholesale buying is a lucrative small business venture with a lot of potential if done correctly.
If you are a newcomer to the business, finding your feet in the market is the most important thing. Jumping into one market segment on a whim is not advisable. Spend some time trying to find the little pockets of high demand and try to fill these pockets. These pockets are called niche markets and this is what a starter should look for to make sure the business gets off the ground.
In addition to the five points explained above, you can enhance your chances of success by following our Ultimate Guide to Selling on Amazon, which, in case you decide to use this online platform, is the best source of information on how to make your business a success.