What To Do With Costco Store Returns Surplus

Deception is a huge problem for many businesses and in particular Costco returns fraud was rife with deception for a while, so much so that the company decided that they needed to do something about it.

To understand how the Costco returns scams occurred, you need to know a little background information about the process. Many big retail businesses, especially department stores and discounters, have contacts with wholesale liquidation sources to take excess products and returned stock off their hands. They end up with excess merchandise for a variety of reasons, from lack of demand by customers, to overpricing and geographical factors. It’s part and parcel of their business, and something which is counter factored into their pricing strategy.

Returns are a slightly different situation. Costco has a fairly lenient returns policy which means that they will take back unwanted or damaged products even without a receipt and this is where Costco returns fraud can occur.

Overstocks and returns are sold in volume at greatly discounted prices to wholesale liquidators, the problem is that if the liquidator simply sells these products, there is nothing to stop the buyer simply going to Costco and returning the product again for a full store credit. It’s a bit of a catch-22 situation, Costco doesn’t want to change their returns policy, but they also don’t want to fall victim to this Costco returns fraud which can cost them millions.

In actual fact, when your wholesale supplier gets a contract to deal in Costco store returns overstock, they have an obligation to remove all Costco labels from the packaging so that this fraud can’t occur. This is also known as label sanitation.

For you as a buyer, this process can make it difficult for you to ascertain where the liquidated products have come from, as your wholesale supplier will not be allowed to tell you directly that they are Costco store returns surplus items.

Of course, this can create a lot of extra work for the wholesale supplier, as removing all labels and debadging brand names which are Costco-specific can take a lot of time, but it is part and parcel of why they are able to buy the items so cheaply in the first place.

For you as a retailer, you can get some great discounted goods to sell if you use this process to purchase your items. Additionally, even when markings are removed, you can often still identifymerchandise as being from Costco, which means that your customers will know that they are buying a good, authentic good from a reputable business.

If your wholesale supplier has a contract for Costco store returns surplus and deals in items such as electronics, you may find that there are small markings on the labeling stating that they are salvage items. This doesn’t affect the quality of the product, but simply stops Costco returns fraud from occurring. In this day and age when people are trying to get the best value for money possible, this will be seen as a minor point and will not stop them from making a purchase if they find that they are getting a really great savings.