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February 2013

Retail Returns and the Bottom Line

Retail consultant Curtis Greve has an interesting article on his blog entitled “The 5 Myths about Product Returns.” In reading the article, it’s important to keep in mind that the myths are from the supplier’s point of view—the company that has to accept the returns—and not that of the customer or retailer.

Greve’s myths are:

  1. Store Returns are junk. In fact, only about 20% of returns are defective.
  2. There’s no need to rush processing returns. Actually, for every month that goes by, returns lose 10% of their value.
  3. Dedicated returns management is unnecessary. The truth is, it’s too complex for someone to handle on the side.
  4. Managing a returns center is relatively easy. Not when you never know what’s coming when.
  5. Special software to handle returns is unnecessary. In reality, returns require a wholly different process.

Noting that “the average manufacturer spends between 9% and 14% of sales on returns,” Greve makes a strong case for how an efficient returns department can bolster the bottom line.

In recent sales news, Business Wire’s January 2013 retail report comparing sales of this January to those of January 2012 shows gains across the board. Every store in the Specialty Apparel and General Merchandise categories posted increased sales figures.  In Specialty Apparel, Ross Stores led the pack with a gain of 39%, from $483 million in Jan. 2012 to $672 million in Jan. 2013. The Gap and TJX Companies followed at a 36% increase—from $833 million to $1.13 billion for The Gap; and from $1.4 billion to $1.9 billion for TJX Companies.

In General Merchandise, Macy’s barely led with an increase of 34.6%, from $1.337 billion to $1.799 billion. Kohl’s followed with 34.0%, from $844 million to $1.132 billion.  

Make returns profitable for you: check out the marketplaces in the B-Stock Sourcing Network to bid on liquidation inventory directly from major retailers.  

Purchasing Liquidation Inventory for Your Store

How often have you been to a store and seen products at great prices and wondered how they managed to buy these items cheaply enough to make a profit selling at those prices? This is most commonly seen at small family run stores or bargain outlet chains.  They are able to do this because they know how to buy liquidation inventory in the secondary market.

If you are a small business owner running a bargain outlet or clearance store, you too can purchase liquidation items from large retailers.  It is just imperative that you be very careful to do so in a way that minimizes your financial risk.  It can be very profitable if you have a good sales channel direct to consumers (your store, ebay, Amazon, etc.).

Many stores have their own suppliers for certain items that they keep in stock at all times, and there is nothing wrong with that. However, for some items that you may not sell all the time, purchasing liquidation inventory on an opportunistic basis can work great.  In fact, many brick and mortar store operators also offer this type of merchandise through an eBay stores or on Amazon.  

Large retailers always have excess, liquidation inventory to get rid of, but they are not always willing to deal with small buyers.  Some forward thinking retailers are opening their liquidation sales to a much broader audience and that is what the average small business person has to look for.  Access is the key.  I recommend you check out the B-Stock Sourcing Network to see one great way to get this sort of access for your business.