Many who start a dollar store are looking for strategies to differentiate their store from the rest of the crowd while adding to their profits. They examine adding shelf pulls, closeouts, and even customer return merchandise to their merchandise product mix in their store. The plan is to pay much less for these items and then resell them as items you just don’t find in the typical dollar store. Their vision includes king size profits in return for their efforts. While there are some real positives associated with this strategy there are certainly some disadvantages to consider as well. In this article I will present 6 of the disadvantages to buying, sorting and reselling store return merchandise when you start a dollar store.
1) Customer returns are not the new merchandise you received when you first start a dollar store. This is likely a big change for your normal business model where all merchandise on display is new, and never before used. Really examine whether moving in this direction will work successfully in your store. Make sure this is something your shoppers will embrace as a means of receiving added value for their shopping dollar. Make sure the added costs associated with this merchandise don’t erode your profits.
2) All of the merchandise must be carefully sorted before being offered for sale. Customer return merchandise is often bulk packed with tens or even hundreds of different items mixed together. As a result you will need to sort the items first to locate matching or similar items and next to lump like-department items together for additional inspection.
3) All of the merchandise must be thoroughly inspected prior to being offered for sale. This is very different from your experience when you first start a dollar store. Where a quick once over looking for broken or damaged packaging is adequate for new items, these items will need individual, one-by-one examination. Often the examination will reveal a flaw of some type.
4) There will be ‚waste‘ in the merchandise you receive. It is almost a guarantee that there will be items with flaws, hard use, or other issues making them unsalable at almost any price. Orders with too many of these reject items can wreak havoc with your profits.
5) Most liquidation and closeout sellers offer these items for sale ‚as is, where is‘ so there are typically no guarantees of any kind. You own the merchandise you receive. While many suppliers of merchandise make returning or receiving credit for merchandise difficult, this is an absolute for these items.
6) In most cases these items will be available only for a limited time. In other cases there may be limited quantity available. In all cases while these items are generally well-priced and the amount of time available for you to order is short. It is important to remember since these items likely won’t be available in the future they are not a means of bringing shoppers back for follow-up purchases.
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