What to Do With Costco Return Salvage

You will need to familiarize yourself with a couple of more terms if you still have an interest in an exclusive contract for customer returns with Costco.  In Part 1, I discussed the matter of securing a contract, who you’ll need to contact, and the expectations when picking up Costco customer returns when it comes to wholesale liquidation.  

Real liquidation goes further than just an early pickup time. Because you are a liquidator, the responsibility to protect your supplier from fraud on a return with label sanitation lies with you.  Original suppliers, Costco in this case, expect to never have to deal with a good once it’s fully liquidated.  This is the way you make certain this happens.  

Return Fraud on Liquidated Products

Having a salvaged item returned to the front end of their return desks is the last thing that any Costco wants to happen.  As shady as this sounds, it’s fairly easy to do and does happen often.  You might ask yourself “How does something like this happen?”.

1. Salvage groups are sold to a contracted liquidator by Costco. That wholesale liquidator then vends those customer returned products.  The customer returns get resold in case lots, to a retail store, or sometimes on eBay or flea markets.  The customer who bought the liquidated customer return then pays a visit to their local Costco so that they can get a full reimbursement.  They can do this even if they don’t have the store receipt, because of the very forgiving refund policy which honors them with store credit or an exchange for a newer item.  

For example, a customer-returned camera can end up in the hands of someone deceitful for as low as $60.00.  Then they will take it to a Costco for a refund, and the full retail amount for that camera can be as high as $199 and above.  Although they may not get a full compensation, in-store credit obtained by false means is still stealing from Costco, and any other outlet.   

Prevent  

It is the task of a liquidator to stop fraud returns.  Because, why would Costco want to sell returns just to have them re-returned? Any straightforward label sanitation method will conclusively stop any return fraud thieves.

*Remove anything that may lead back to the original source. Store stickers and sale tacks may often be affixed to the items themselves.  There are a few Costco exclusive brands, like Kirkland. Be aware of brands are clearly from Costco and make sure to handle them with care.  This is where you need to be precise– draw the black line using a permanent marker on the bar code so that customer return agents cannot scan an item back in.  Don’t damage or remove the serial or model number.  That is a signal the property is stolen, not liquidated.  

Tricks and Tips for Label Sanitation  

It is a lot of work to perform label sanitation.  Assure that the contract with Costco, or whatever retail outlet your contact is with, clearly lists your tasks of label sanitation. Make differentiations between high-risk and low-risk customer returns.  Liquidated items like paper goods, household staples, and food have a low monetary gain if returned so it is not likely they will be returned.  There are numerous red flag products on customer return fraud, like:

*Clothing

*Electronics

*Appliances

*Watches/Jewelry

All labels must be sanitized especially high risk categories like clothing, electronics, jewelry, and appliances.  Disabling a bar code can be done fairy easily and quickly with a black permanent marker.  To denote that they are of liquidated status the clothing tags should be marked with a black slash on the brand name.  When the clothing tag is dark, you can use silver or gold permanent ink instead so it stands out.  

Designating electronics and other large appliances with the word “SALVAGED” is another strategy you can try. You might see this done in grease pencil and other colored marking.  Be discrete when you submit to this practice.  First, make sure you are able to place this term near the model number in a discrete manner or somewhere else that customer return agents might search for information. The reason being is that you still need to resell these things, whether to a discount retail market or another wholesale distributor. Wholesale buyers and customers are cautious when buying products and liquidated electronics when they are labeled “SALVAGED.”

The actualization of effective strategies that stop customer return fraud is a valued service that you offer as a liquidator.  Large retail stores, such as Costco, will bring this up without a problem because it saves them from fraudulent returns.  It will take negotiation when you handle label sanitation, but you will need to make sure you retain your ability to resell an item.  Lastly, you will show your supplier how valuable you are as a professional player of the industry because of your knowledge in label sanitation.

See More In This Informational Video about Costco Wholesale Corp.