Customer Returns – Profit
Customer Returns – Profit
So, how do you make profit with a stock that could be damaged or dirty or unboxed? How do you make profit from products that have been rejected by customers of a retail store?
Well, our customers are divided in two big categories: wholesalers and refurbishment centers. The first category buys big quantities and re-sells to retailers that either sift the goods and only sell the working items or leave them as they are and sell them to refurbishment centers – in both situations they sell them with a nice profit. The latter of the two categories buys this type of products, they use the damaged goods as spare parts and they test, clean, repair all damages or replace damaged parts of the products, giving them a second chance to life.
There are many reasons why refurbishment centers are a very good idea. First and foremost, the fact that everyone can afford to replace their way-too-old washing machine, their refrigerator or can purchase an item they could not afford as new. Secondly, we live in a world with an increased awareness of the ecology and a world more environmental-friendly. Refurbishing products means less pollution from those factories that produce new items.
So, how do these centers make profit?! They purchase customer returns in very low prices, they remove the unrepairable items and re-sell the ones that can and will be reconditioned in a much bigger price. Of course, there are employees to be paid, bills etc, but even after all of these are taken into account, the profit exists.
Let’s take for example one of our returned stocks:
Full truck small kitchen appliances – most wanted on the market!!!
1000 pcs mixed brands Kooper, DCG, Master, Bimar, Sinotech customer returns SDA and cooling/heating products for 6 €/pc.
Different items, with retail prices from 20 to 150 €/pc
Let’s say average: 45 €/pc
We will consider 20% unrepairable, therefore out of 1000 pcs, we will have 800 pcs.
45 x 800 = 36000 minus 6000 (investment) minus transport ~ 2000 – labour – bills = the profit can reach to approx. 20000 €.
Or, let’s take into consideration the small refurbishment center or a small reseller, the one that cannot afford to purchase 1000 pcs in one go.
He can purchase smaller quantities, like 5 pallets of this: http://www.arll.co.uk/returns/mixture-of-products/quest-mixed-pallets---customer-returns_182
1 pallet can have from 50 pcs to 150 pcs, but we will make calculation for the minimum of 50 pcs.
The price per pallet is 280 €, which means €5.6/pc.
Retail prices from 10 to 100 €/pc, average 40 €/pc.
20% unrepairable will be 50 pcs.
5 plts x 280 €/plt = 1400 € + transport (500 € approx.) = 1900 €
After re-selling: 200 pcs x 40 €/pc = 8000 € – 1900 € – bills and refurbishing = a minimum of 4000 €.
So, there is profit for small and for medium size re-sellers that go in the returns business.
To all of you, full speed ahead, as there are many customers waiting for a cheaper vacuum cleaner or a kitchen robot!!!
International Sales Manager
ATTRACTING REAL LEVERAGE Ltd