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Retail overstocks and customer returns can be an excellent product source*as long as you understand what to expect when purchasing this kind of merchandise.

A Mixed Bag of Goods

Typically, returns are sold as pallets of assorted, dissimilar items*you'll find everything from snow boots to toy cars to staplers. Most likely, you'll also find some damaged goods among a pallet's wares. A portion of these items were returned because the customer damaged them, or they didn*t work in the first place. In spite of the damages, many sellers feel they can make a profit. According to Jacques Stambouli of http://ViaTrading.com, a retail-return wholesaler, *The rationale is that, even with disposing of a high percentage of them, you*re buying them cheaply enough that you can make a lot of money.*

Weigh Your Options

Retail stores normally sort their unwanted goods into two categories*customer returns and overstocks. Both have positive and negative points to consider:

1. Customer returns are items that were purchased, taken home, and brought back. Once opened, they can*t be re-shelved.

* The downside of returns is some of them were defaced by the customer or just don*t work. A higher percentage of them are dented, have cosmetic damage, or are missing parts.

* The upside of returns is they*re usually more current, in-demand products*they were purchased for a reason. Many of them are still in perfect condition*they were only returned because the color, size, or model was wrong.

2. Overstocks are items that sat on a retailer's shelf too long. In spite of discounts, they simply didn*t sell.

* The downside of overstocks is that the retailer couldn*t move them, regardless of multiple price cuts*the demand wasn*t there. Moving them may be a challenge for you as well.

* The upside of overstocks is that they*re mostly clean, new, and probably still in their original packaging. You'll find comparably less damaged goods.

Mix Your Channels

When purchasing returns and overstocked merchandise, it's a good idea to have more than one outlet for reselling. Don*t limit yourself to only eBay or only the flea market*not everything you buy will lend itself to a particular market. Some people even throw *pallet parties**they*re like Tupperware parties, only they*re selling the contents of their pallets. Stambouli says, *We find that our most successful customers are the ones that know how to combine different channels.*