A sale or return, also known as a “commission,” is basically a loan of inventory to wholesale customers. No funds change hands when the shares are surrendered, but a formal agreement is usually signed at this point.
Retailers list inventory for sale and pay suppliers only for items sold and return the rest at the end of an agreed-upon period.
How is it different from buying wholesale
Unlike traditional wholesale shopping, where stores may be left with excess inventory, they can simply return unwanted items to their suppliers. Therefore, from a retailer’s perspective, selling or returning is a very low risk option. They can expand their product range without investing, but often find it beneficial to adjust costs to compensate for this benefit—usually a 50/50 or 60/40 ratio.
However, from the supplier’s side, sale or return is high risk. You are handing over your precious stock for free, trusting that the retailer will look after it, promote it properly, and return what’s rightfully yours at the end of the period.
How sale or return might work for you
If your item sells for a very high price and the investment is too high for the retailer, you may decide that selling or returning it is the best way to sell your product.
If you’re brand new and/or have identified a “must have” retailer that needs to advance your product, you can strike a deal while “testing” your brand’s suitability in their store for a limited time. At the end of the term, you can switch to wholesale terms or separate from the company.
How to Make sale or return less risky
Be very selective about who you work with, as sales or returns must be based on trust. When in doubt about a retailer, use your intuition and stick to standard wholesale terms.
If you offer an online store, take the time to evaluate it and make sure it’s a professional site for your products. If you offer a brick-and-mortar store and your location allows, shop around to make sure your inventory is well maintained and marketed.
Make the most of a sale or return
You can usually negotiate some additional fees with your customers – consider asking for a storefront or email promotion. You may even need to issue a press release if you’re renting a statement piece or a very expensive item. Give your B2B customers everything they need to sell products effectively. This can include point-of-sale materials, demos, or just a piece of paper with full product descriptions and details.