Salvage - A very broad term that encompasses many product situations. A good definition for our application is goods that cannot be sold in the normal course of business due to defects, damages, irregularities, or store policies (like stores not re-selling customer returns even if they are fully functional.) We hope for lots of the latter in our returns loads. Salvage is deemed to have some value. It can also include insurance salvage and other items that have lost some of their value.

Surplus - Excess goods due to overproduction or overstock. There is typically quite a bit of apparel and footwear surplus and that is one reason we like the area.

Customer Returns - Items that were purchased by customers and subsequently returned. There are many reasons products are returned besides product damage or defects. Returns can involve general lack of satisfaction with the product, the wrong size or color, the customer could not figure out how to use the product, or changed their mind and wanted their money back are among some of the many reasons products are returned. Damage rates are generally higher with returns lots than with overstock lots. We generally try to avoid clothing returns in favor of overstocks but find some products like general merchandise to be more profitable with returns lots due to a better product mix.

Overstocks and Shelf Pulls - Items that were pulled from warehouse inventory or off of the shelves. Expect minimal damage in the 3% to 5% range on many items.

Stock Lots - A run of the same type of item like women's tops or the same brand and style of and item. You want to get original paperwork on these to verify authenticity and proper legal distribution.

Manufacturer Overruns - Supposedly excess production of a product that is sold as such. You want to be very careful here. A significant portion of branded apparel, footwear, and accessories offered are not authentic or have not been authorized by the licensor for distribution. Many of these items are represented as overruns. Manufacturer tags mean nothing as they are easier to reproduce than the products themselves. We feel there is much greater risk with overruns than with department store or catalog overstock with respect to authenticity and quality.

Jobber Goods - Products that are processed under contract by independent contractors that subsequently sell or distribute them. Many companies require a level of defacing and/or delabeling that can substantially reduce the value of the goods.

Irregulars and Seconds - Products that were removed from normal distribution because of a flaw. This could involve variations from standards with respect to color, construction, size, and many other criteria. We are not big fans of these as the variance can be extreme.

Broker - Someone who resells the inventory of others. Many are small home based business with no tangible inventory and no financial substance. You want to avoid dealing with brokers on items like clothing by the piece or shoes by the pair as they may not be completely familiar with the products they are selling you and they put a markup on the products. When you purchase these types of items direct from the distributor you avoid the broker's markup. Many distributors will help you out if there are problems with an order while a broker might not since they never had the products to start with. Many large retail companies use liquidation companies to distribute their products. These are usually truckload offerings of items like general merchandise. A good broker can be very helpful in these situations if they know the market and put you in good products at a good price. 

Distributor - A business that buys and sells products. Substantial distributors generally own most of the merchandise they sell that is less than a truckload. Many own truckloads as well. You generally get better pricing and service through a distributor rather than a broker on many items. 

FOB - Free on board. Where the product is located and ships from.

Direct Ship - When products are shipped directly from their source like a retailers distribution center. We feel this is the best way to receive general merchandise and many other non apparel items.

Warehoused Goods - Products that pass through a distributors warehouse before delivery to the customer. This can be a good thing with apparel and footwear as the distributor can give the customer some idea of the seasonality and styles of the items before the sale. We feel general merchandise and most other products are best to have direct shipped.

Cherry Picking - The widespread practice of removing premium items from pallets once they are in a distributors warehouse. This is why we recommend direct shipments on many products which is the best insurance against cherry picking.

Grey Market Goods - Licensed goods where the origin, authenticity, or method of distribution is in question. This has become a major problem with apparel and footwear. The worse we have ever seen it. Unauthorized factory overruns, back door deals, knock offs, and more. Buying and selling them can result in civil and criminal penalties. It doesn't matter if they are authentic or not. If they did not come from an authorized factory distributor or a department store which is usually an authorized distributor you have exposure. Be extremely cautious when purchasing straight brand lots especially from small distributors. Many claim authenticity but that means nothing. Look for goods with complete paperwork from the manufacturer or licensor or at least department store overstock which is generally assumed authentic and marketable subject to the restrictions of the department store.

Counterfeit Goods - Knock offs, fakes, whatever you want to call them. You can get in all kinds of trouble if you deal in these.

Authentic Goods - This one gets a lot of play. Forums, chat rooms, web sites, experts, all kinds of checks to run products through to see if they are authentic or not. In the long run it doesn't really matter because if licensed products are obtained from an unauthorized distributor you are still can be exposed to civil and criminal liability. It's not how they look it's who you got them from. Many manufacturer's post their authorized distributors on their web sites. If you are in doubt why not call the manufacturer and ask if the distributor trying to sell you licensed goods is an authorized distributor of their products.

Department Store Products - Probably the safest form of products we know of that do not come with original manufacturers paperwork. Many department stores sell their salvage/surplus products with some restriction on their resale that can involve delabeling or defacing logos and price tags especially on private label goods. The non private label goods are generally more valuable that the private label goods. You are generally granted the right to re-sell the products subject to the restrictions of the department store. Most department stores are assumed to deal in authentic products. The retail tags on the products help prove their good source.

Original Paperwork - The best form. Paperwork that comes from the manufacturer / licensor of the goods. A copy of this from an authorized distributor would be good too.

Sanitized Invoice - A document showing the legal trademark of the licensor of the product with the proprietary paperwork (price, date, contact information) whited out. A description and breakdown of the products is disclosed on the sanitized invoice. A broker or re-seller would try to prove authenticity with this. You could have problems with this since it is not original paperwork.

Authorization to Sell - A document issued by the licensor of a product granting the receiver the right to sell the product. A distributor or broker could also issue this but it would not necessarily have the same effect if it does not come from the licensor.

Statement of Authenticity - Not too powerful if it doesn't come from the licensor of the product. Some distributors claim authentic goods in their invoices or claim to have statements of authenticity to provide their customers if they have problems. The distributors and their suppliers are not really in a position to guarantee authenticity unless they are the original manufacturer or an authorized distributor. We don't place much stock in a Statement of Authenticity. Ask for original paperwork.

VERO - eBay's Verification of Owners Rights Organization. This is a group of companies that provide information when they feel their intellectual property rights have been violated. Many of these companies do not like to see their products sold on eBay which undercuts their normal retail distribution channels. Some have employees and computer programs that search for their products daily looking for violations. The apparel, footwear, and accessories companies are especially active. If one of these companies sees one of your listings and they believe there is a violation, they contact eBay and your listing can be pulled. You will be asked for documentation that your products are not violating intellectual property owners rights. If you can't produce the documentation, you are probably out of luck. This is why we are not big fans of grey market goods.
 

You can get in just as much civil and criminal trouble for selling licensed goods distributed outside authorized channels as you can for selling knock offs. It's not worth the risk. Stay with department store products or products with original paperwork to hold the risk factor to a minimum. We have provided these definitions to help you understand certain aspects of our industry. Some of the content includes opinions. The definitions should not be considered an absolute statement of fact. You should consult with legal council or the appropriate governmental or trade authorities for complete facts.