The "HOBO" clearance section of Jackson Lumber, Lawrence, Mass.
Jackson Lumber, Lawrence, Mass., has a "HOBO" clearance section.

A problem that plagues our industry is what to do with special order returns, damaged goods, or merchandise that is simply refused by a customer. While I would love to have a magic bullet fix for this, I don’t. We just sent a nearly full box truck of product to Habitat for Humanity. While the write-off is nice, other options are more desirable, especially when we deal in products that are almost exclusively special order. Avoiding the return of these items is the most desirable option, but sometimes you can’t avoid accepting returned merchandise.

How did we become citizens of the land of broken and misfit toys? First we need to define the type of products we deal with.

1) Special order returns. Probably the most common type of item, most S.O. returns can be directly tied to two primary sources: Salespeople ordering the wrong item, or customers changing specs on a design after the order has been placed. I’ve heard all the arguments about not wanting to upset a customer: “He threatened to buy cabinets from ABC if we don’t take these back,” “His customer is upset with the final color,” and many more.

2) Warranty replacement pieces. Whether we are talking about windows, doors, or cabinets, why do we hold onto items returned from a jobsite that were replaced under warranty by a vendor? Do we believe that the fix-it fairy will show up at night and miraculously repair that window or cabinet so we can re-sell it? Probably won’t happen—so send it to the dumpster. There is no reason to hold it, receive into inventory, and pay taxes on it.

In the world of cabinets, we quite often find hidden damage that does not become apparent until the unit is removed from its packaging. Often the damage is so severe you know someone at the manufacturer’s location was aware of it, yet the product shipped anyway.

3) Items that were fine when shipped from our store, but were excess on the jobsite. In many cases we are looking at dimensional lumber, sheet goods, and interior trim. At best the lumber hasn’t been exposed to weather and is re-sellable. On the flip side, lumber is full of nail holes (How did that happen? “It was that way when your guy delivered it.”) and sheet goods have been used as walkways over muddy ground—and you know how happy these examples make your yard foreman.

So what to do? In many instances an auction works, if you can live with 25 cents on the dollar, and that is before you factor in handling, yard cost, logistics, etc.

How about incorporating these items into future designs for customers? Doors, windows, in some cases cabinets—all can be designed into a future house if your people are aware they exist. That’s where we often fail. At our store, we have a notebook at each designer’s desk, along with one at the receptionist and in the flooring office, that has a photo of the item, manufacturer, description, application, dimensions, color, etc., and our cost and suggested retail. It’s surprising how many of these orphaned items find their way into a future customer’s home.

We’ve been successful with online selling sites and social media. We also maintain a clearance center in the store with some one-off items that have been severely marked down. The upside is the customer has to walk through the entire facility to find the bargains. Chances are that we’ll have an opportunity to engage in conversation and perhaps turn the shopper into a good customer.