Returns are a part of doing business, and Amazon’s generous return policy means that you’re likely to have pallets of returned merchandise sitting in your warehouse. Unfortunately, returned merchandise isn’t always in sellable condition regardless of what your return policy is.
Going through your returned inventory can often be a disheartening and frustrating task, especially when some of those returns are fraudulent. You can be proactive about reducing your return rate.
So what are your options when you have pallets of returned merchandise accumulating storage fees at the Amazon fulfillment centers or taking up space in your warehouse? One option many sellers use is just to create a removal order for Amazon to dispose of the inventory for $0.15 per item.
However, if your merchandise can be salvaged or refurbished, then it may be worthwhile to have Amazon return inventory to you for $0.50 per item. In previous years, Amazon has offered free removals before the start of the holiday season. While this isn’t a guarantee, you could always utilize those free removals to avoid storage fees.
If you’re having Amazon return inventory to you, then you believe that they’re still worth recovering. Recovery takes a lot more time and effort to go through each item, but some solutions will help you with your returned merchandise.
Enter the liquidators and refurbishing companies. These businesses help you recover some amount from your returns, and some will accept your removal orders straight to their warehouses.
One option that exists is to bundle up your inventory and sell it in bulk to liquidators. Many online auction liquidators exist to auction off pallets of damaged and returned goods to others who are willing to sift through and inspect the merchandise.
Even Amazon has Liquidations by Amazon (LBA), a pilot program that Amazon says will return roughly 10% of the selling price, of which you receive 90% with the other 10% going to the broker. Of course, if you believe your items are worth more than 10%, then you can try the online liquidation and auction companies.
A quick search returned these liquidation companies that facilitate in liquidating Amazon stock.
- 888 lots
Those websites will auction off inventory and send you the proceeds, though the exact process differs from one company to the other.
If you’re unwilling to liquidate your inventory, then you can try companies that will handle returns for you, including refurbishment and packing. One such business is Returnbase. Returnbase inventories, inspects, grades, and resells items at market value.
Returnbase claims it will strive to recover value for your products, and if it can’t, then you have the option to recycle or donate the item. This option is perhaps the best option for sellers looking to recover maximum value, especially for high-value categories like electronics.
If online liquidators like liquidation.com and Returnbase are not an option for you, then you can head to the local auction companies or list the pallets or lots on marketplaces like eBay. While local auction companies may not necessarily attract the same crowd as online sites like liquidation.com, you’ll at least deal with some business in person rather than through the internet. You can search for local auction companies on Google.
Selling your returned inventory on eBay can lead to other issues as well, but it may be better than paying Amazon to dispose of your inventory. Keep in mind that any inventory you sell that is private label may ultimately end up on your listing at a lower price, so if you want to maintain control over quality and reputation, then you may want to avoid liquidating your inventory. In fact, many manufacturers specifically destroy their merchandise instead of liquidating inventory to maintain their brand reputation, price, and perceived quality. They’ll write off the damaged inventory on their taxes. These are factors that you should consider since you may ultimately end up providing support or warranty claims for products that customers purchased at a steep discount.
Some sellers have suggested using local services like Facebook and Craigslist, and while those are viable options for smaller sellers, listing the volume of returned merchandise on those marketplaces and having to deal with individuals is a time-consuming process. You may be able to sell pallets locally, but you’ll still have to arrange a meeting, payment, and pickup.
Ultimately, you’ll have to consider whether the labor costs of having to sort, refurbish, grade, list, and ship the returns are worthwhile. For low-margin items, you may be better off selling it as a pallet. Any losses will be more than made up by the savings in time, labor, and space. For high margin items, you may still benefit from using a company like Returnbase. Even if these companies take a percentage of the fees, you’ll do no more work than creating the removal order to ship straight to their warehouses.