A Glossary of Common Product Sourcing Terms
by Carrie Hinkel on February 15th, 2008
If you are considering buying products wholesale, it’s a good idea to familiarize yourself with common industry terms. That way you won’t find yourself in a situation where you’re agreeing to something that you thought meant something else! Here is a list of some of the most common terms you’ll come across when trying to source products:
Backorder – A product that is unable to ship because of a lack of inventory.
Bulk – Items that are sold in large quantities. Typically, bulk merchandise is sold at a significant discount.
Case lot – Products packaged and sold by the boxful.
Closeouts – merchandise that is being sold below the original wholesale cost. The condition of the merchandise can vary from new (overstocks ) to junk (salvage).
Dropshipping – A method of selling where the retailer does not stock goods, but instead takes customer orders and sends them to a wholesaler, who in turn ships out the orders.
Factory authorized wholesaler – A supplier that has been chosen by a manufacturer to sell their products.
Factory overruns – A production run that went over the scheduled amount, resulting in excess inventory.
Factory overstocks – Stock that was left over after a particular selling season.
Factory direct – Buying products directly from the manufacturer, without having to go through any middlemen.
Light bulk – Bulk quantities with a total price that is less than $500.
Liquidation products – Products that were sold at a discount (many times less than the production cost) in order to turn the slow-moving inventory into cash.
Minimum order – The minimum purchase that is required in order to place an order.
Pallet lots – Products packaged and sold by the pallet. A standard wooden pallet is 40″ by 48″ and cartons of goods are packed as high as can be safely moved by a forklift into a cargo truck.
Prepack – Assorted merchandise with pre-determined colors, styles and/or sizes.
Prepay – A payment that is due before the merchandise is shipped to the buyer.
Refurbished products – Products that have been used (and possibly previously defective), but have been restored to full working condition. However, they may or may not come in original packaging or include instructions and accessories.
Replica products – Products that look similar to a name brand but do not use the name-brand logo or name. Replica products are different from “knockoffs” or counterfeit merchandise which intentionally use name branding and logos to represent the product as the actual brand name.
Customer Returns – These are products that were bought by customers and then returned to a retailer. They may be new and unopened, used, defective or have missing parts.
Salvage and Surplus – Discounted products that vary in functionality, appearance or both. Typically, salvage products are junk and only good for parts, while surplus products may be new (though rare), used or defective.
Shelf Pulls – Products that were previously on the shelf in a retail store but were never sold. They may have multiple price tags/stickers on the packaging or they may have been display models showing use and missing parts.
Truckload – The largest of wholesale lots. A truckload can vary from 5,000 pounds to 50,000 pounds worth of products, enough to fill a good portion of a delivery truck’s trailer.
As you can see, wholesale merchandise can vary from new and unopened to junk good only for parts. Before making a wholesale purchase, always ask the condition of the merchandise and, if possible, take a look at the merchandise in person. In the wholesale industry, it’s important to always check the reputation of a company you are considering making a purchase from.