What happens to home improvement products that shoppers return or ship back to stores or Amazon?
Retailers won't risk that a cordless drill, circular saw or dorm fridge could have been abused or be missing a part. Instead, they sell them to people like Jimmy Vosika at 15 to 35 cents on the dollar.
Vosika founded the TV parts and accessories site ShopJimmy.com. After friends in the corporate returns division at a national retailer persuaded him to buy some of their returned goods, he opened MN Home Outlet three years ago in Burnsville. From a start in a 1,500-square-foot space, it's now the size of a Cub Foods.
"We're Home Depot without the lumber," Vosika said. Contractors, remodelers, flippers, DIYers and cheapskates are frequent customers for products that were sold and returned to firms like Amazon, Home Depot, Target and Walmart.
Vosika is one of the recent successes in the reverse logistics or liquidated returns business. The amount of goods that U.S. consumers are returning has become so large that entrepreneurs are buying them up to resell them at a profit.
In the Twin Cities, five liquidation stores have opened in the last several years, including Dock 1 in Hopkins, Brand Name Deals in Brooklyn Park, KX Real Deals and Mid Metro Discount Warehouse, both in St. Paul. Vosika plans to open a second MN Home store in Coon Rapids in December.
In its first year of business, MN Home sold $870,000 in merchandise. This year, it's on track for $11 million in revenue. In some months, sales at the outlet store exceed those at Shopjimmy.com, which has about $20 million in annual sales.
Amazon alone feeds the need by accumulating hundreds of trailer loads of returns each week, said Irwin Jacobs, founder of Jacobs Trading in Hopkins, which specializes in opportunistic buying. He just opened Dock 1 Bargains with a large assortment of furniture, hardware, TVs, patio sets and appliances. An assembled, 19-inch two-burner Member's Mark gas grill was $140 last month, compared to $200 new and unassembled from Samsclub.com.