Maximizing Revenue: The Financial Upside of Selling Returned Orders In-House

When companies choose to sell returned products through their own channels, they are not just preserving their brand’s image—they are also tapping into a profitable additional revenue stream. This approach can yield substantial financial benefits, as brands can secure higher prices for their products and avoid the pitfalls associated with resellers. Here’s how:

1. Maximizes Value

Resellers often operate with a focus on quick turnover rather than maximizing the value of returned products. This can result in lower resale prices, typically around 50% of the Manufacturer’s Suggested Retail Price (MSRP). The percentage of MSRP can vary with the type and brand of product, but when brands handle returned products themselves, they can achieve significantly higher resale values. By having a partner to clean and re-prepare their returned products for sale, brands can often recover over 75% of the MSRP on these items.

2. Complete Control Over Pricing

When managing returned products internally, brands retain full control over pricing strategies. They can set prices that reflect the product’s condition while also taking into account brand positioning and market demand. This strategic approach to pricing helps ensure that the products are sold at a premium compared to if the item was resold. This contrasts sharply with the discounted prices often seen with third-party resellers who might not be concerned with the long-term vision of the company and commonly seek to .

3. Preserves The Brand Value

Resellers may not prioritize maintaining the brand’s image when selling returned products. Poor presentation, insufficient product care, or misrepresentations can harm the brand’s reputation, leading to diminished customer trust and lower perceived value. Brands that manage returns in-house can ensure that products are presented in a manner consistent with their standards, thereby preserving the brand’s integrity and securing higher resale values.

4. Builds Customer Loyalty

When customers purchase returned products directly from the brand, they benefit from the reassurance of buying from a trusted source. This direct engagement fosters stronger customer loyalty and encourages repeat business. Brands that sell returned products through their own channels can offer special promotions, loyalty rewards, or exclusive access to these items, further enhancing customer satisfaction and driving additional revenue.

5. Reduces Costs and Increases Margins

Handling returns in-house allows brands to streamline their operations and reduce reliance on third-party resellers. By managing the refurbishment and resale processes internally, brands can minimize costs associated with fees paid to store the returns and increase the margins they get in the sale of the returned goods.

Example: The Impact Of Selling Directly Pre-Owned Shoes

Let’s consider an example. A brand sells a new pair of shoes at an MSRP of $150. A rule of thumb towards the price of pre-owned shoes on popular marketplaces such as eBay and Poshmark would be that the pre-owned model would go for 50% of MSRP. This means that the reseller would price the pre-owned return at around $75 or less to sell the shoe.

However, if the brand decides to handle the returns selling internally, they can have the shoes cleaned to meet their quality standards and sell them directly to consumers. By leveraging their established customer base and ensuring proper presentation, the brand could sell these shoes for much more than the $75 that the reseller could. This approach not only recovers a greater portion of the original MSRP but also maintains the brand’s high standards and customer trust. It also brings all the profit that the reseller would make selling the resale inventory directly to the company as an additional bonus.

In Short:

Selling returned products in-house presents a compelling financial opportunity for brands. By taking control of the return sale process, companies can secure higher prices, maintain brand integrity, and enhance customer loyalty. This strategic approach not only maximizes revenue but also reinforces the brand’s commitment to quality and customer satisfaction.