If you want to succeed in the closeout business you need to become familiar with the following terminology that is frequently used in the wholesale industry.
Wholesale: The business of supplying merchandise to resellers, such as boutiques, flea market vendors, eBay sellers, and other types of resellers.
Off Price: Refers to merchandise, whether it is apparel, footwear, jewelry, or other items that are non-branded or have generic labels, and are sold at a discount to the regular wholesale price of similar items.
Closeouts: A closeout is a product line that a manufacturer or retailer wants to move out, and therefore it is being closed out. In other words the owner of the merchandise is selling the product at a price that is below the wholesale or retail rate in an attempt to clear it out.
Shelf Pulls: This is merchandise which is being taken off the shelves or racks by a retailer that has decided to no longer sell the item. For example a retailer might decide that the quality of the item does not match the rest of her inventory, or she quickly realizes that her customers are not interested in the item, and she would rather sell it out and recover some or all, of the money she spent purchasing it from her supplier.
Store Returns: This category refers to retail merchandise which was purchased at the store level and then returned to the retailer either because the customer changed his mind or the item was damaged, or became damaged. Since many national retailers such as Wal-Mart, K-Mart, Macy’s, and JC Penney, appreciate the lifetime value of a customer, they will have very liberal return policies. This means that a customer can make a purchase of a brand name dress shirt and return it for any reason. From my experience in dealing with store return pallets I have seen on average about 50% salvageable merchandise which can be sold as is, 25% of merchandise which can be sold after being fixed, and 25% of merchandise that is beyond repairs. If you decide to purchase store return products you need to make sure that you will be able to make enough money on the sellable inventory to offset the unsellable items.
Irregulars: These are items such as clothing which can have minor defects and have been rejected by major retailers, or are being sold directly by the brands since they didn’t pass muster under their high quality inspections. The most popular items in this category for resellers are T-Shirts, socks, and underwear by brands such as Fruit of the Loom and Hanes.
Overstock: This category results from overproduction by a factory. Often factories overproduce because it is just as cost effective for them to produce 1,000 elegant party dresses as it is to produce 950 dresses. The factory will then sell their excess goods to discounters and exporters. You can contact factories and clothing manufacturers directly and inquire as to the availability of surplus production.
Salvage Merchandise: This category consists of merchandise which has been damaged and is being sold to reclaim an insurance payout resulting from a flood, fire, or transportation accident such as a train derailment. If you consider buying this type of merchandise you need to be very careful in inspecting its condition.
Department store overstock: This is usually brand name clothing, shoes, handbags, and other general merchandise which the department store did not sell. Department stores need to constantly bring in new merchandise such women’s office suits, social dresses, and designer handbags to keep their shoppers coming back. If an item is sits in their store too long it will lose that new look, and will discourage customers from coming back since they will keep seeing the same items again and again. To solve this dilemma the department stores will constantly run clearance sales and then sell their remaining inventory to liquidators and closeout dealers.