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Buying wholesale customer returns for resale

Discussion in 'General Business Forum' started by Feldon, May 16, 2013.

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  1. Feldon

    Feldon Guest

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    I am considering buying customer returns from the likes of Argos and catalog companies. Without going into specifics i'm looking at a niche product (s) which is electrical. My understanding is that a lot of these pallets are untested returns which can mean anything from nothing wrong with item just customer did not want it to faulty / missing parts and damaged packaging. Obviously you get what you pay for as the saying goes and typically the cost is around 15% of r.r.p.

    My idea is to take a short course to enable me to carry out basic repairs to any faulty items and then re-sell at a considerable saving on retail cost but still allowing me a good margin via a mix of retail channels.

    I'm still in the planning stage so looking for any advice from others who might have tried similar idea's buying from the likes of Marthill, Argos Clearance, Gem Wholesale etc and anything else i might need to consider.
    Posted: May 16, 2013 By: Feldon Member since: Jan 1, 1970
  2. Root 66 Woodshop

    Root 66 Woodshop UKBF Big Shot Free Member

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    TBH Gem Wholesale isn't that bad... A few years back now I bought a pallet for £250 full of electricals from TV's to kettle's.

    Nothing was wrong with any of it which was a bonus except for believe it or not... you'll like this!!! Batteries in remotes!

    Kettle's were supplied with the wrong kettle leads - easily sorted that for a couple of quid from Tesco's.

    I had about 20 kettles which I sold all for £10 each (not the cheap and basic kettle either although the brand fails me right now).

    Then there were the TV's - hence batteries, some folk just don't realise that these products are kept on the shelf for x weeks/months... A battery has a shelf life it's always good practice to stick in brand new batteries with every purchase. ;)

    12 TV's sold for £99 each (£300 quid TV's too)

    Hi-fi's sold at £50 each

    I didn't make a massive margin, I could have been greedy but that wasn't my aim.
    Posted: May 16, 2013 By: Root 66 Woodshop Member since: Nov 22, 2011
  3. Talay

    Talay UKBF Big Shot Free Member

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    £250 for a pallet with RRPs of £5000 plus as extrapolated from the above seems to be a thing of the past with current percentages from around 10% on kettles up to around 25% on big ticket items such as washing machines.

    Have a look here
    Posted: May 16, 2013 By: Talay Member since: Mar 12, 2012
  4. Root 66 Woodshop

    Root 66 Woodshop UKBF Big Shot Free Member

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    Well as I said, it was a few years back :)

    However, look at the third pallet... if only half of the products are saleable and are able to turn around quickly, OP would be looking at a fairly reasonable profit margin - even if it requires a few quid to replace faulty parts.

    The 8th Pallet - a nice profit margin to be had there, especially if all the products are put out with an "unboxed" ticket...

    The money is there, just needs to look at what Gems are available... pardon the pun ;)

    If OP can pay a visit to them to inspect the pallets (which they do allow) you'll get more feel of your soon to be stock and get a bit of knowledge before it actually arrives of what is needed to be done.

    Posted: May 16, 2013 By: Root 66 Woodshop Member since: Nov 22, 2011
  5. Feldon

    Feldon Guest

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    Ideally I would like to visit the wholesaler first, however Gem is a long way to travel for me, where as Marthill who are similar and Argos Trade/clearance are a lot closer for me to inspect goods.

    Did you ever have experience of dealing with either of these two Haunted?
    Posted: May 16, 2013 By: Feldon Member since: Jan 1, 1970
  6. Root 66 Woodshop

    Root 66 Woodshop UKBF Big Shot Free Member

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    Sorry but no, it was a one off to see how it would go just before I closed my shop down.

    I wanted to try and get something in to draw people into the shop that I owned which was a small Electrical Wholesalers. I went for an Electricals pallet because of the obvious relation to the shop, albeit of a completely different nature.

    All of the products that I sold were prior to Xmas - therefore all advertised as "cheap stocking fillers". :)

    Although, I personally don't know anyone who has a sock that could cover a 22" TV! :D
    Last edited: May 16, 2013
    Posted: May 16, 2013 By: Root 66 Woodshop Member since: Nov 22, 2011
  7. Feldon

    Feldon Guest

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    Haunted, just seen your website, that's quite a change from Electrical Wholesale /Retail to Haunted Tours etc. I can certainly see that it is a more interesting line of work but just out of interest why did you close or sell down the electrical retail shop? I can think of loads of reasons as i use to have my own chain of shops but i guess i am more specifically seeing if it was related to the industry.
    Posted: May 16, 2013 By: Feldon Member since: Jan 1, 1970
  8. diviachi

    diviachi UKBF Newcomer Free Member

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    I have an electrical shop and I've dabbled in this, buying stock from both eBay and graded wholesalers to do up and sell on. It was a bit hit and miss and I found that you have to go on your common sense and instincts. Some of the lots I picked up were great, nothing wrong with the stuff except people changing their minds and claiming items were faulty to get a refund, or being too dim to read the instructions.

    Most items could be repaired, if you put the time and effort into it. Some were simple (like the previous poster said, batteries is a classic example!) but I had to admit defeat on some of the repairs due to either problems sourcing parts or simple time to profit ratio. Be prepared to spend a lot of time cleaning as well, some of the stuff was in a right state when I got it.

    A couple of words of experience, stay away from many of the wholesalers who sell exclusively reconditioned or graded stock. If I ordered 100 items, I seemed to send 102 back. Also, keep an eye out for the smaller rip-off merchants who sell stuff as 'untested' when they've really stripped out all the good parts and filled the case back up with faulty bits from other units.

    There's definitely profit to be made, if you have the right sales outlet, but be prepared to skim the best items and dump the rest!
    Last edited: May 16, 2013
    Posted: May 16, 2013 By: diviachi Member since: Jan 19, 2012
  9. Root 66 Woodshop

    Root 66 Woodshop UKBF Big Shot Free Member

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    HaHa! Not related to the industry at all.

    I ended up shutting my Electrical Wholesalers down when I fell ill. I ended up spending 2.5months in Hospital - When I came out I had a choice to try and fight back the customer base I had, or just let it go.

    Due to the illness I decided it would be best to just let it go.

    Not exactly "Haunted Tours" as such. I run a team of Paranormal Researchers based in the NW. We have 4 team members who are members of ASSAP as of which we'll be doing some training soon to become AAI (Approved ASSAP Investigators).

    We do hold "Ghost Hunts" for those that wish to do one, but we tend to stay away from these due to the media & hype that is currently out there, plus the fact majority of locations these days want silly money where only the groups with a larger following can afford to pay.

    Our "Ghost Hunts" are more to show folk that are interested in the Paranormal "How too" rather than "there's a ghost". :)

    We go into locations to debunk and help the public who think that they're "haunted" rather than go in and claim that they are.
    Posted: May 16, 2013 By: Root 66 Woodshop Member since: Nov 22, 2011
  10. Hazzman

    Hazzman UKBF Newcomer Free Member

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    I got a cracker pallet one time from a liquidation website that is only operating now in US and not UK anymore, full of 40 printers that were all customer returns.

    Most where the same model too, any that didnt work had the same error code on them so set them aside, raided the boxes and took the brand new inks still in them which were sealed and sold them online on amazon etc. Made about £200 on inks alone from broken brand spanking new printers which had a sensor fault with them I couldn't fix, around 55% of them. The broken ones I sold in local paper for anyone who knew about them as they took up a lot of space for around £50 to get them out of the road.

    The rest where other makes of printers etc that where working fine, sold them online as well, biggest cost was postage using a courier, but the pallet originally cost with VAT and delivery around £280 and I made after all expenses around £400 profit so was worth it. Takes time going through customer returns but some gems are to be found.

    Hope this helps, but not all batches are as lucky as ones I got.

    Posted: May 16, 2013 By: Hazzman Member since: Apr 1, 2012
  11. Chris34

    Chris34 UKBF Regular Free Member

    522 143
    I started out in business doing catalogue returns 4 years ago. I could write a book on it. The returns can look good but when you way up the time it takes to sift through it all and clean it all up and make the repairs you quickly realise that there are far easier ways to make money.

    If you're lucky 50% of the pallet will have working items. Most of them will require attention, either cleaning them up as some are in a right state or repackaging them. It is pot luck really, sometimes you will be trying really hard to just get your money back, others you might spend £250 and get 3 £80 items which are new so it means that anything else on the pallet that works is pretty much pure profit.

    The problems I found was that of the items that were broke, most are irreparable. Try taking apart a modern kettle and you will quickly realise that these things are not designed to be fixed like they used to.

    The only things I found that were fixable were things like doors on microwaves, sometimes the latch mechanism is broke so the door won't lock, you just need to find the same latch mechanism off another door from a microwave that is broke beyond repair and install it. Also sometimes the glass on the door has smashed so you just put it to one side and eventually you will find a replacement door from another microwave that you can easily switch over. Steam Generator irons were also fixable, a lot of the time they leak and it's the plastic piping that's inside the base unit that has gone brittle and split, so it's a bit fiddly but fixable.

    The main problem I found was keeping the supply line going. There are times when it's really difficult to get hold of the type of pallets you need. When the supply line dries up then effectively you are then a sitting duck because you are fast running out of stock and you haven't got any coming in. It's for this main reason that I was forced to stop doing it, it's just not viable on its own. As a bit of a sideline, like a bonus would be ok but not for a serious business.

    I looked at doing a repair course, the only course I could find was somewhere on the eastern side of England, think it was between Nottingham and York but it could have been as far east as Norwich, it was a long time ago and I didn't keep the details but it was definitely on the eastern side and I think it was about a 3 week course and covered all appliance repairs and testing, it did seem like the ideal course. Think it was about £800+ VAT but don't quote me on that.

    One thing I would say is to stay away from the Argos pallets, they were the worst. I think it speaks volumes for the type of customer they have there. You would find appliances that worked but looked like they had been used for about a year. I put it down to the customers knowing the returns policy inside out and basically using them for the maximum amount of time they could get away with and then exchanging them for a brand new one.

    Also what Diviachi says is spot on. You get people buying at source, stripping out all the good stuff and then re-wrapping the pallet and selling it as untested returns on a single pallet basis. If you were to do this and stand half a chance then I would look at buying a 40ft container full of pallets, they are your best change of getting original source stuff.

    I spoke to a big supplier of catalogue returns about 4 years ago trying to get hold of a regular delivery. The supplier was surprised that I was making any money out of it as they had given up on the electricals side about 5 years previous stating that they had decided there was no money to be made in it anymore. At that point they reckoned the best way of making money was to buy container loads of flat packs and open a shop and sell it. Not my cup of tea but it sounded feasible as the flat packs are always available in huge quantities at massive discounts and it's always brand new. In fact I got a few pallets from John Lewis and it was spot on, ha saying that I've still got a wooden filing cabinet next to me under my desk, John Lewis' price £180 my full pallet price £100 (there was about a £1,000 worth of furniture on the pallet)

    Sorry for the long post, as I said at the start, I could write a book on it ;)

    Posted: May 17, 2013 By: Chris34 Member since: Feb 3, 2009
  12. Hazzman

    Hazzman UKBF Newcomer Free Member

    4 1
    Hey Chris thanks for the post thats another way to make money on the topic you could write a book about experiences with customer returns and publish it as a book on amazon kindle LOL or on a blog giving people advice on it :)

    Yeah it can be hit and miss mind you every other pallet I ever ordered after my printer experience didn't turn out as lucky as the first like you say most of the pallets specially ones on Ebay I found have al lthe good stuff taken out like you described, they may not have tested them but took out the perfect stuff that isnt visibly damaged etc which usually tends to be the working stuff :(

    I have moved away from trying to sell individual items etc and ebay to providing services for businesses in the process of market researching how to get customers for a document scanning business with help of steps to work programme so if you ever need thousands of documents scanned at a good price let me know lol

    flat pack i think is a good business to be in your right that the savings on it are huge and some stuff people are still after which you can make a tidy sum on freight containers are the way to go but where i live in northern ireland any pallets coming from the mainland or containers to here cost a fortune, but me sending one of those over to mainland is cheaper which i can never understand lol

    hopefully one day ya can make a business from it again hte repairing and fixing things. gotta be money somewhere man just gotta sniff it out :)
    Posted: May 17, 2013 By: Hazzman Member since: Apr 1, 2012
  13. Talay

    Talay UKBF Big Shot Free Member

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    A few years ago when I between one thing and another I looked at office chairs and returns.

    On the face of it, there seemed money for old rope but in reality, the weight of shipping killed off most of the online trade and it was difficult to wholesale them out to small B&M shops at sensible prices.

    The daft thing is that there is still a gap in that market because punters exist all over and chairs are available, just no-one has found a way of putting the two together using returns on a moderate to large scale.
    Posted: May 17, 2013 By: Talay Member since: Mar 12, 2012
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