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Wholesale Salvage Merchandise: A Definition

Wholesale salvage merchandise is a product category used in the wholesale and closeout business to refer to merchandise that has either been damaged, or has been exposed to a situation in which the potential for damage is high. Salvage is a term that was first used to refer to products that were transported on trains that derailed. For instance, if a train was transporting a container of electronics, and a derailment took place, the insurance company would pay the owner of the load for the damaged electronics. The insurance company would then take possession of the damaged merchandise and dispose of it through wholesale channels. A salvage buyer primarily purchases inventory that could have become distressed due to an accident, fire, or flood. While the salvage buyer can purchase this type of inventory for literally pennies of the original wholesale cost, he must sort the products out and try to repair any damaged merchandise.

The salvage category is appropriate for a retailer that has access to consumers that can tolerate slightly damaged merchandise in exchange for the implicit savings. A salvage reseller should consider purchasing items where the potential for damages is diminished. For example, a television has a much greater change of being damaged if a truck transporting it crashes, than a pair of jeans would. And because it is much easier to sew clothing than it is to repair general merchandise, most experienced salvage buyers will prefer to focus on apparel, and soft goods for that matter. Because of the nature of this wholesale category, it is imperative that buyers inspect the goods in person, so that they can ascertain what percentage of the inventory can be sold as is, and the cost involved in repairing any damaged items. If an inspection is not possible, the buyer would want to obtain a low enough price that will mitigate his risk in making a purchase sight unseen.



Source by Donny Lowy

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