I receive many requests for wholesale store

return merchandise. And while there is a

big demand for it, I prefer to focus on

wholesale overstock merchandise.




It is understandable why so many

buyers look for store return merchandise.

This category enables them to buy

brand name and designer products

for less than the price of overstock

merchandise.




But the challenge is that the expectations

of buyers is not based on the reality

of what store returns consist of.




People make assumptions of what store

return merchandise is, see how

low the wholesale price for returns is,

and rush to make a buying decision.




I am a big believer in providing

as much information to my customers

as possible, since I believe

that a long term business relationship

will always outweigh a one time sale.




That's why I would like to make sure

you understand the difference between

returns and overstock.




So let's back up a bit and start from

scratch.




I would like to define for you

these two important categories

that you will see advertised

on closeout websites.




Overstock merchandise is generally

merchandise that a retailer had too much of

and decided to liquidate to a wholesaler such

as myself.




Picture a department store that has racks of

designer dresses and needs to clear them

out before the new shipment of

dresses arrives next week.




Department stores are known

for constantly turning over their

merchandise since they want everything in their

stores to look brand new.




It is for this reason that many department

stores will have new overstock

merchandise pallets every week!




They would rather sell their overstock

merchandise at a loss than to

cram their stores with unsold inventory.




Products become store returns for

a different reason.




Store return merchandise is merchandise that

customers actually purchased and then 

brought back to the store. The retailer

will then liquidate that merchandise to

a wholesaler.




If you have ever visited a department

store I am sure you have seen people

going to up the cashier with items

that they want to return.




So why do I prefer not to deal with store returns?




Because since store return merchandise

consists of products that were bought and

then returned, there can be a very high 

percentage of damaged merchandise.




So while the wholesale price of store return

merchandise can be 20-30% less than that

of overstock merchandise, it can have a

much higher percentage of damaged merchandise

which would offset any benefit

from the lower wholesale price that you

are paying.




Let's say for example a pallet of

overstock dresses has an

original retail value of

20,000.00, and you purchase

it at 20% of the original retail value.




Your price for the pallet will be

4,000.00




If you buy a store return pallet

of dresses with an original retail value

of 20,000.00, you might only pay

15% of the original retail value,

which comes out to 3,000.00




Yes, you are saving 1,000.00,

but what if half of the dresses

are damaged?




Then your actual price for the undamaged

dresses is 6,000.00




Now the challenge with store return

merchandise is that you do not

know for certain what percentage

of the items will be damaged.




You can get lucky and purchase

a pallet with hardly any damages,

or get a pallet where 90% of the 

merchandise is damaged.




So if every store return dress

is in brand new condition you

just saved yourself 1,000.00,

but if every dress has some

damages then you most likely are out

the cost of the pallet.




I say most likely since you might

be able to salvage your purchase

by repairing the dresses or

selling them as is at a huge discount to your

customers.




It is for this reason that I believe

you should only purchase store

return merchandise if you

can have the damaged merchandise

repaired, or if you can realistically 

sell it to your customers at a discount.




For example, a store return dress might

have a broken zipper. So if you can fix it,

or your customer is willing to have it fixed, then

it can make sense to purchase store return

dresses.




The same would apply to electronics, 

apparel, furniture, and other categories.




You always should disclose the

category of products that you

are selling.




Ideally you should visit wholesalers

and take a look at the store return

pallets that he or she has for sale.




This will give you a realistic idea of

what you can expect, although it

still won't guarantee what other

pallets might look like.




I love when customers

visit my closeout warehouse,

this way they can see the

merchandise in person

and make their own selections.




Having said that, from my experience

I have seen that usually about

50% of the contents of a store return

pallet are in brand new condition,

25% of the contents are slightly damaged,

and 25% are beyond repair.




The reason why the items will be in different

conditions is because people have many reasons for

returning products to a store.




Some people return products that they

received as a gift, others change their

mind because they feel that the price

that they paid was too high, others

return an item because they don't like

the product itself, and others return

merchandise because it either came damaged, or

they damaged it.




Another good tip is to become familiar with the

return policy of the retailer from which

the store return pallets originated from.




If the retailer has a very liberal return policy

you can expect a high number of broken items.




If the retailer only accepts returns that are in

brand new condition, then you should expect 

almost all of the items to be in brand new condition.




I say almost, because salespeople are known

to accept returns in any condition from their 

favorite customers. Retailers actually

encourage this practice since they

want to keep a good relationship

with their good customers.




In the past I did wholesale store return

dresses, but now I focus exclusively

on overstock dresses.




I feel it makes more sense for customers

to pay a drop more and know that every

dress will be in brand new condition.




And since my wholesale prices on

my dresses are already super low,

my customers are happy to

pay such a low price and know

that they are going to receive

excellent merchandise.




I actually try to set my wholesale prices

on my overstock merchandise 

for less than what others charge for

store return merchandise, this

way my customers can get the 

best of both worlds, brand new

merchandise at below wholesale prices.