Starting a Liquidated Merchandise Resale Business During the Coronavirus Pandemic

“We live in strange times,” is a sentence often heard on the media nowadays. The truth is, everyone has felt the impact of the Coronavirus pandemic and has had to deal with the situation the best they can. Countries closed borders and businesses closed their physical stores. You would think that this would hurt retailers beyond repair. However, it seems that with more people staying at home, online sales have grown as buyers are pushed to order merchandise online.

With the growth of online sales, retailers have experienced an increase in customer returns. Statistically, some 30 percent of products ordered online are returned by the buyers for various reasons.

The volume of returned items leads to a number of business opportunities, especially in the resale business. There will be more merchandise available and the demand is growing as well.

Whether you already own a resale business, or you are thinking of starting one, here are a few things to consider and understand that might help you on your way.

  • The Coronavirus pandemic is affecting buyers’ behavior with social distancing and work from home advice resulting in more people buying online.
  • A growing number of online sales means a growing number of customer returned merchandise.
  • Retailers have a larger volume of returns to deal with and are expediting the sales of such merchandise through liquidation companies. 
  • Customer returns are a potential stock for your resale business.
  • Finding the right source for liquidation merchandise is essential.

Coronavirus Changing Customer Behaviour

The measures taken globally to prevent the spreading of the Coronavirus mean that many countries have gone into lockdown. People have been advised and in many places ordered to stay home and many businesses have decided to take measures and only keep essential staff in the workplace while the rest have been ordered to work from home.

What this means is that people have begun to buy essentials like groceries online but the demand for other merchandise has grown too. Retailers are reporting an increase in online sales and in their app downloads that allow people to browse their merchandise easily, and make purchases.

Higher purchases mean higher returns. According to the U.S. National Retail Federations, customer returns for retailers such as Amazon, Walmart, or Target have hit over $260.5 billion over a one-year period. This is where an opportunity for resale business owners, or someone thinking of becoming one, arises.

What Are Customer Returns

Customer returned merchandise comes in all shapes and sizes. And, with an annual worth of $260.5 billion, this is a cake you should be having a piece of. This is a large market and retailers would rather focus on brand new merchandise than on the products that have been returned from their customers.

And the name says it all, these are products that have been purchased and returned by customers to retailers. The reasons can vary. 23 percent of products are returned because the buyer received a wrong item. 22 percent of products are returned because the buyer expected the item to look different than it actually does. In other cases, customers are simply using the money-back guarantee or free return policy. In a significant number of cases, the returned merchandise is brand new. All these products are often returned in their original packaging. But not all of them find their way back to the shelves.

Rather than going through the merchandise to single out and find unopened packages, retailers decide to liquidate merchandise. This means that the returned items, and some other products like shelf pulls or overstock, are sold in bulk to liquidation companies like Direct Liquidation that are capable of handling high volumes of merchandise. The price these are sold at is well below wholesale prices. It is a logistical hassle retailers don’t want to deal with and selling merchandise to liquidators is a way to recover some of the money invested in these products as well as to free up warehouse space.

How Can Customer Returns Boost Your Business?

The main selling point for customer returns is their price. You are buying in bulk at prices below wholesale. This means that you can buy items you are interested in for pennies on the dollar and resell them through your online e-commerce channels while staying competitive in the market. It also means you are freeing up a margin for profit.

No matter what you focus on in your line of business, you will be able to find products through liquidation companies like Direct Liquidation. Retailers like Walmart and Amazon have a large number of products on offer. And with the sales volumes, you can be sure that the stock will keep coming in. This reduces the risk of running out of stock when you most need it.

And the current situation with the Coronavirus lockdown measures plays nicely with the way you can purchase liquidated customer returns. You can basically find an online liquidator that deals with customer returns and buy from them.

We at Direct Liquidation provide you with customer returns from major retailers and the purchase process is fairly easy. But, before looking over the purchase process, there are some words of caution that have to be said.

All Customer Returns are not Equal

While many liquidators may claim to offer you Amazon customer returns, or returned merchandise from any other major retailer, this may actually not be true. In fact, with more people staying home and turning to online purchases, the pool for potential scam victims has also grown. Don’t be one of the victims. You don’t want to be lured in by a website simply saying they offer the cheapest customer returned merchandise from major retailers. You may find yourself paying for merchandise that will never show up at your door, nor will you get your money back. 

To avoid these pitfalls, make sure you research the industry. We at Direct Liquidation pride ourselves on working with major retailers and our track record is the proof of our quality. But if you’d like to look around for yourself, here are a few pointers.

Do your research and make sure you are working with reputable companies. Going over the products and services the company is offering as well as their customer reviews can do the trick. It can show you which companies have the most satisfied customers. And going over these reviews on independent forums or review websites is often a good indicator of the quality of a liquidator. 

In addition, all major liquidation companies like Direct Liquidation will accept multiple payment methods. You can also contact customer service and ask questions if you are not fully sure how things work. We will have people at hand to help you with your choices and the needs you may have.

wholesale pallets

How to Buy Customer Returns?

This process is also fairly easy. You are required to create an account at Direct Liquidation and, once this is done, you can browse our online store. Once you find the pallet you are interested in, you can either bid on it at an online auction or pay for it immediately if the buy now option is available and you like the price.

Once you are through with the purchase, you can arrange the delivery of the merchandise. You have a few options, one is to arrange your own delivery through a company. The other is to let us provide you with certain options and quotes that are often the best you will find. In some cases, you may be able to pick up the merchandise yourself if the distribution center is close by and you have the right vehicle for the job. Once all this is arranged, you are basically set.

But again, a few words of advice. Make sure you know what you are buying. There are various types of customer returns and the merchandise comes in all shapes, sizes and conditions, so here are a few pointers on how to find the right pallet.

Read the Fine Print when Buying Liquidation Merchandise

It is important that you read all the information provided to you by us so that you can make informed decisions regarding your purchases and your business. The majority of our merchandise is liquidated by retailers and there are various ways we can sell the merchandise.

buying wholesale

Some pallets are sold ‘as is’, which means these are unsorted customer returns that the retailer packed up and we are selling them without reviewing the items. These lots may present a risk as you don’t know the condition in which the merchandise is in. But they can also be profitable because they are sold at a lower price point. This means that one or two brand new items in the pallet could not only return your investment once you resell them but can actually already push you into the black on that particular pallet.

If we review the items or refurbish them this will all be included in the pallet description. We will also include a manifest: a packing list showing you what is inside each pallet, the type, the quantity, and the condition of the merchandise. If it has been refurbished by us, you also get a 90-day warranty on the products.

Refurbished products are restored to their ‘as new’ state. This brings them to a higher price point, but these are also more attractive to the resale market. The same goes for closeouts, overstock and shelf pulls. These are basically brand new products that the retailer never got to sell but had to free up space for new merchandise, either in the store or in the warehouse.

Now that you know where to look for information, let’s look at ways you can make the purchase even more cost-effective.

Increase Your Savings Potential

As there are other costs associated with running your business in addition to the pallet purchasing costs, you have to make every penny count. Especially if you are just starting out, your budget may be limited. This is why it is important to find out where you can save money.

First, if you are running a resale business, contact your local tax office and inquire about the resale certificate. If you are buying merchandise strictly for resale, you can get a tax exemption, which means you pay less for the merchandise in the first place.

Direct Liquidation has a large network of distribution centers in the United States and Canada. This also gives a way of saving money on the purchase. You can browse the merchandise stored and sold at the distribution center closest to you. This will save you money on the delivery costs. 

And although the Coronavirus measures may at the moment be preventing you from picking the merchandise up yourself, you may be able to pick up the merchandise yourself and eliminate the delivery costs completely, once the restrictions are eased. All this frees up the margin for profit and boosts your chances of taking your business to the next level

It has to be said that the unsorted customer returns themselves can present savings opportunities. If you don’t mind putting some more effort in, you can buy these pallets and, especially in the case of electronics, mix and match items. You can maybe refurbish them yourself. Use one item as a parts donor to assemble and repair three other units. All this is work you can do to give yourself the best chance of making a profit. The risk with this kind of merchandise is higher, but the rewards can be significant.

What is left is to make sure you go over the merchandise you buy as soon as you receive it. Put some effort into presenting the items as best you can and provide detailed descriptions of the products to your customers. A bit of extra effort from you will make a huge difference in the presentation. Your customers will appreciate that and if you offer quality products, they will return for more.

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