Start Your Own Retail Store With Returns

How To Start Your Own Retail Store With Returns

Start Your Own Retail Store With Returns

The retail industry provides for the livelihood of every one in four Americans. It is in fact, one of the fastest growing segments of the economy.

Every year several new retail businesses are setting up operations. If the retail business has spiked your interest as well, there are primarily two ways you can get involved:

  • You can set up a good old brick and mortar retail outlet
  • You can also start your retail store online

When you realize that the retail industry accounts for 25% of the employment, it does sound like there is good profit in the industry.

However, be it a brick or mortar retail store or an online one, every store has a return policy; because the fact is when a retailer doesn’t offer returns, customers are highly unlikely to buy from them.

Apart from returns, there is always that factor of overstock merchandise. As much as these two are the last things a retailer wants, returned goods and excess merchandise too present a great retailing opportunity.

Read on to understand how you can set up your own retail store with returned products and overstock merchandise.

Buying Overstocks and Returns

Several times retailers order too much of a specific inventory, or may have trouble selling it. Either way, they are now stuck with excess merchandise that they don’t want to keep on the shelf until it sells itself.

It simply adds to the carrying cost and they would love to get rid of it and are happy to offer it to a reseller for a deep discount.

There is a similar policy on buying returned goods. When a customer returns an item, there are typically four ways that it is dealt with.

  • The item may just be a misfit for the customer and doesn’t have any damage, in which case the retailer can repack and resell it
  • The item is intact, however, it no longer qualifies as brand new, in which case it can be sold under the label – as good as new.
  • The item may have slight damages, not immediately visible to the naked eye, in which case it can be sold as something which is used but like new. There are also situations when depending on the condition of the item it may be further classified as used – very good, used – good, used – acceptable.
  • There are also times when the retailer may need to refurbish the item and sell it under that category.

Again these returned goods can be bought from the original retailer at a very good price.

This should give you an idea that there is still a huge opportunity for setting up a retail store with returned goods and overstock merchandise. 

Why you should be investing in a retail store selling returned goods

Returned and excess merchandise can be a great source of income for the fact that it is available for a much cheaper price than it is at the original retail store.

For example, if a pair of sunglasses cost $200 in the market when it has been returned or lying on the shelf for a long time, the retailer will be ready to offer it to you for a much lower price of about $30-40.

investing in a retail store

If you sell it for even twice that price, it is still a steal deal for the consumer. About one-third of the items that are bought in retail get returned. This means you have a steady supply of inventory to furnish your retail store.

Also, you are paying less for goods that appear new. These goods are as good as new, and you will be able to buy them for less than half the price. If you do a little research and take make good buying decisions, assessing the quality of the goods and the market trends that surround it, you will be able to generate quite a profit margin.

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How to set up your own retail store with returns

Before you go about setting up your retail store selling returned items there are a few things you will need to take into consideration.

First off you will need to do a good analysis of the market. Understand the target price, and factor in the direct and indirect costs, so that you will be aware of what is the profit you will be able to attain from this investment.

Also remember, not every piece of returned merchandise is a business opportunity. Keep in mind its long-term value before you buy such an item because some of them just need to be flushed down the drain.

You will also need to keep tabs on the price your competitors are offering, understand the customer’s price resistance, and follow the manufacturer’s standards.

Should I go to an online store or a brick and mortar shop?

You can work it out either way. Store retailers always get a huge volume of walk-in customers. Online selling too is changing the entire retail landscape.If your store is not online, you might be missing out on a lot of opportunities.

However, what kind of store you choose to set up also depends on the type of merchandise you are selling. Each type of retailing has its own strengths and weaknesses.

Hence, a meticulous research needs to be put in before you get started.

Creating your success story

You will need to do a little math on your margins, sales to stock ratios, the turnover and return on investment. Once you have done all your research and are ready to get started, there are several ways to promote your sales.

Creating your success story

First off you already have the advantage that you are offering goods at quite a low price. Be it an online store or a brick and mortar shop there are always ways to grab your target customer’s attention.

For example, you can also run sales which will help you attract new customers, create a cash flow and move your goods. You can also use social media to your advantage.

Create a good floor plan and you are well on your way to making profits with returned goods. Remember, like any business, it’s all in the numbers.

Think big, take it slow, and you are good to go.


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