Start Your Own Resale Business with Customer Returns

Whenever you thought starting your own resale business, whether through an online marketplace or by opening a physical store, it always revolved around brand new merchandise straight from the manufacturers. But with a limited budget and high minimum purchase requirements set out by manufacturers, your dream never really took off. You were restricted to buying smaller amounts of merchandise, and the returns were not worth your time.

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But, what if we told you that you could start a resale business buying merchandise in bulk, at reduced prices and that it doesn’t have to be brand new from the manufacturer? What if you could stock up your resale business with merchandise that has been returned by the customers, shelf pulls and other products at a fraction of a wholesale price, without compromising the quality? Does this sound interesting? Read on and find out how you can stock your business with customer returns and make a decent profit while you’re at it.

Understanding Customer Returns

In the world of large retailers, customer returns are a part of the business, something they have to deal with every day. With the throughput that the likes of Amazon, Walmart or Target have, you are bound to have customers returning merchandise. In terms of statistics, around 30 percent of online sales get returned to the seller. Sometimes it is malfunctioning merchandise, or items damaged during transport, or mistakes during the ordering process. At other times, it is just buyers using the generous money-back guarantees and the warranty period to turn in the merchandise for a refund or to swap it in for something else.

Whatever the reasons for the return, the merchandise now has to go through a specific process. Retailers have dedicated departments for such merchandise. These departments receive the customer returned items, review them, refurbish if necessary and repack them.

Now, while some merchandise needs repairs, other doesn’t because it has been returned in its original packaging, unopened, basically brand new. However, despite its condition, these items can’t be put back on the store shelves and can’t be sold as new. They become, what is called B stock.

This means that the retailer has to find another way of selling on this merchandise that would otherwise be sitting in the warehouse, taking up valuable space. This new channel is liquidation wholesale. This means that the merchandise is essentially sold at prices below wholesale, but in the same manner, in bulk.

Now, in order to get you to the next step, let’s look at how the sales process works.

Understanding Liquidation

Once the products get reviewed and graded, they are sorted and packed together into pallets of wholesale merchandise. There are two ways you can get to this merchandise: through wholesale suppliers or through liquidation companies.

Wholesale suppliers are your traditional avenue. People turned to wholesale suppliers thinking they are providing you with brand new, top-quality merchandise at wholesale prices leaving room for profit when selling retail. You’d basically buy pallets of merchandise, piece out all the items and sell them individually for a profit. That certainly is an advantage.

Liquidation companies operate in a similar fashion, they will buy merchandise in bulk and auction it off or sell it immediately for a profit. The distinction is the price. LIquidation price is way below wholesale price. But in the olden days, this was due to the type of merchandise that was liquidated, or should we say, the condition of the merchandise. It was usually low-quality items and products that were left behind in the office space of the companies that got shut down. This may include anything, from printing paper to used office furniture. The lower prices were often due to the lower quality.

However, over recent years, liquidation companies have started using the potential that the internet offers. They have started providing platforms, liquidation websites that allow the retailers to liquidate their merchandise directly through them. Why would this be interesting for someone starting a business? If you play your cards right, you can end up buying only the merchandise you need to cater for the demand of your customers.

But before we get to how to buy and what to look for, make sure you are setting up your business correctly.

Setting up a Profitable Online Business

The first thing you have to consider is the legal requirements set forth by the state you live in. Make sure you get well informed on the requirements a resale business might have. Make sure you file the right documentation with the governing bodies and that you keep track and follow through with your tax obligations. Look for all the information at your local regulatory bodies.

Now that you have completed the legal part, it is time to build a business. Starting from the ground up, and if you’ve never run a resale business before, it is essential that you build a good, solid base to work on. That base is a supply chain of high quality.

This is why liquidation companies are often ahead of wholesale suppliers. Wholesale suppliers do a lot of work before they put products out on sale. They also review the merchandise, cherrypick the best items and make sure each pallet maximizes the profit.

Liquidators operate a bit differently. Usually, liquidators bought a lot of used and pieced out scrap to resell, but nowadays their websites serve as platforms for retailers to reach a wider audience and liquidate their merchandise faster while providing it to the smaller buyers. This means that you can buy from an online liquidation platform, Direct Liquidation, that is used by giant retailers like Amazon and Walmart.

You can basically buy Amazon return pallets, directly from Amazon by using Direct Liquidation, because Amazon uses Direct Liquidation to get rid of its overstock pallets. This way the wholesalers’ markup is avoided and you get to buy Amazon pallets at prices well below wholesale.

This is your supply channel. Once you have that in place, it is time to make sure the merchandise is right for you and actually brings you profit.

How Customer Returns Benefit Your Business

There are several benefits you will reap from buying through liquidation companies. The first is the obvious one: the price. When starting a business, the basic principle is to buy low and sell high. Buying liquidated merchandise covers the first part of that principle. This leads to a higher profit margin on resale. It also raises a huge question: is the quality also compromised?

As noted above, the merchandise that was usually liquidated was either used or scrap. While a large portion of such merchandise is still liquidated, a fair portion of it is in great condition and waiting to make you money.

You can always find out in what sort of condition the merchandise in a pallet is if you look closely into the manifest. This is a packing list showing you the details of the items within a pallet. This means that you have to know the grading system (fairly simple) and only purchase items that are in demand and that are of A quality.

The remaining portion of the online resale business is the resale part. We have shown you what is the best option and basically where to look for this sort of merchandise, so the next question you should be asking yourself is, where is the liquidation store near me?

Direct Liquidation is a goTRG company.

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