In the past week, the spotlight has shifted to the changes regarding return policy of retail giants like Amazon and Walmart. The year 2020 witnessed online sales skyrocket to a staggering $565 billion, accompanied by approximately $102 billion in returns—a higher return rate than in previous years. Unsurprisingly, the pandemic played a significant role in this surge, as more consumers opted for online shopping over traditional brick-and-mortar stores. However, the convenience of online shopping sometimes comes at the cost of being unable to physically inspect items, leading to an increase in returns.
It’s evident that the retail landscape is undergoing a transformation as companies adapt to a world where physical stores attract fewer customers while online shopping continues to thrive. Retailers are grappling with the financial implications of accommodating a growing number of returns, especially for lower-cost items. As a response, many have adopted a new approach: allowing customers to keep or donate such items in exchange for a full refund.
While several stores have kept this policy relatively low-key to mitigate potential fraud, larger purchases may still necessitate a return to the original store. However, for smaller, less expensive items, customers should expect to receive a full refund without the need to return the product.
So, what does this shift mean for resellers?
Within the reselling community, concerns have arisen about how these changes might impact inventory. Resellers who purchase liquidation, including returns from Amazon—a key player in the “keep it” return policy—are understandably apprehensive. Will this lead to reduced inventory or higher prices for resellers?
Low Inventory or Increased Prices?
Some resellers may recall how prices for storage unit items surged when the show “Storage Wars” gained popularity on A&E. The high demand led to prices that were nearly unaffordable for many resellers. Naturally, when “Extreme Unboxing” aired in August 2020, resellers feared a similar scenario unfolding in the realm of pallet sales.
However, the situation may not be as dire as anticipated. While there could be occasional price increases due to supply and economic factors, the liquidation market has its limitations. Unlike storage units, which can contain a wide range of items, including collectibles and unique finds, pallets primarily consist of standard retail merchandise. Resellers can expect items that are similar to what they would find in physical stores.
The primary concern might be a decreased supply of return pallets from these stores. While in-store returns and some online returns will still be available, there may be fewer return pallets in circulation. Retailers like Amazon, which lack physical merchandise stores for returning items, may see an even more pronounced shortage of return pallets.
Nonetheless, it’s crucial to remember that there are alternative sources of inventory, such as overstock and shelf pull pallets. These categories are generally more reliable in terms of product condition and fraud prevention, albeit with lower profit margins due to higher initial costs.
Adapting to a Changing Liquidation Landscape
The world of liquidation is ever-evolving, and it’s essential to stay attuned to shifts like these. While we cannot control the policies of major retailers, we can take charge of our own businesses. Keep an eye out for those elusive return pallets, but also be prepared to diversify your inventory sourcing strategy. If you’ve primarily relied on return pallets, now is an opportune time to explore other avenues of liquidation, whether through lots, different types of pallets, or alternative sourcing methods.
In this dynamic environment, adaptability is key. Good luck navigating the evolving landscape of reseller return policies in 2021!
