Friday, May 27, 2016

Understanding Liquidation Merchandise Condition


Seems like every trade or profession in the world has its own unique set of technical jargon and yes the liquidation industry is no different. While there are a plethora of terms regarding everything from shipping to payments we are going to address today the various terms for category conditions.
Closeouts - Excess merchandise from either a retailer, wholesaler or manufacturer. Typically these goods never made it to a retailers shelves so condition would be equivalent to straight from the manufacturer with all original tags, packaging and with minimal defects.
Shelf Pulls - Merchandise that was previously offered for sale by a retailer that were not purchased. Typically this is premium grade merchandise items will have their manufacturer tags and packaging and have a minimal amount of defects. Fox Liquidation’s standard defect rate on shelf pull lots is 5% or less, anything exceeding this threshold would be issued a store credit.
Customer Returns - items that were offered for sale by a retailer that were returned. This merchandise is generally in mixed condition. Items may or may not have tags or packaging, may show signs of wear, use or be damaged or missing pieces. Fox Liquidation’s average rate of defect with customer return lots is between 20-30% this is a general guideline lots can have a lower or higher rate of defect it varies lot to lot.
Refurbished - Commonly found in electronics and hardware categories these are goods that have been tested and repaired to restore them to good working order. These items are generally not in original packaging but are repackaged into generic packaging.
Salvage - This lower grade merchandise consists of either damaged or customer return items that can no longer be sold as new merchandise. Probably one of the riskiest grades of merchandise items may need repairs or can only be used for parts.
Defect rate - Refers to the average percentage of damaged or distressed merchandise for a particular category of merchandise. There are no set industry standards so if a wholesaler or liquidator does not explicitly list this it’s always good to ask. Bear in mind if it sounds too good to be true then It probably is. If you are being offered a shelf pull lot with a 15% defect rate chances are it’s not a shelf pull lot but a customer return lot. Alternately if it’s a customer return lot with a 5% defect rate the sirens should be going off because this sounds like a scam.