This article is a guide to understanding some of the terminology that is regularly used in wholesale trading but even more particularly when dealing with liquidation makeup and wholesale products. A lot of these terms will be regularly used when working with us so we figured we would create this to help provide some clarity for anyone not familiar with the terms.
Overstock - Overstock inventory simply refers to having more supply than demand. Companies end up with overstock inventory from ordering more than they needed, receiving more than expected, having produced more than needed and many other examples.
Shelf-pulls - This term is directly indicative of the way in which the product was liquidated. A shelf-pull means just that, the item was for sale on the shelf of a retailer and because it did not sell, it had to be pulled off the shelf. The fact that the item did not sell does not have anything to do with the item in particular, for example, it could be that seasons are about to change or a special promotion did not go as planned. Often times the real reason is because retailers do not want to affect the image of their store by having to run deep discounts on a regular basis. Shelf-pull liquidation inventory often has some signs of wear from the handling, they also often times have retail stickers.
Retail stickers - Stickers placed on products during the merchandising process to prepare them for sale in stores. Some examples are price tags, discount stickers and even security stickers.
Liquidation - Liquidation is simply the conversion of an asset into cash, meaning, selling a product regardless of the impact on profitability because the need for cash is greater than the need for the product or the profit. Liquidation inventory can be overstock from a distributor and everything be in perfect condition or liquidation can also refer to end of season shelf-pulls from major retailers. This term is not indicative of condition although shelf-pulls are the most common style items that you will find in liquidation.
Short-dated - Although the exact amount of time will vary by industry, short-dated simply means an item that is close to expiration. Generally speaking this can be anywhere from 2 to 6 months from the date of expiration. We consider a product short-dated once it is within 3 months of expiration.
Master Case - Part of the manufacturing process is the final packaging of the products for delivery to their distribution networks. Manufacturers use master cases as the largest carton size they will use. For example, most L'Oreal and Maybelline products have a master case of 72 units.
Inner pack - A master case contains smaller boxes that hold a certain quantity of the product. These smaller boxes within the master case are the "inner packs." For example, Maybelline Volum' Express The Colossal Mascara comes in inner packs of 6 units. Each master case contains 12 inner packs that make up the master case of 72 units. Inner packs serve the function of keeping the product safe during shipping.
Factory-cased - This term directly indicates the condition of a product. Factory-cased refers to items that have gone through the liquidation process but have remained in their original cases just as they were when they left the factory. Factory-cased inventory is typically in perfect condition.
Case pack - Refers to the quantity in a case. This can either refer to the Master Case, Inner Pack, or any other multiple in which the product is held. For example, the L'Oreal Revitalift Skin Care lines comes in case packs of 24 units while our Mixed Makeup Lots have a 100 unit case pack.
Incoterms - an international standard accepted and used worldwide. Their purpose is to very explicitly define the responsibilities of the seller and buyer in a transaction. They are very useful for quickly determining what tasks must be done for each transaction.
F.O.B. - stands for Free On Board, which indicates which of the two parties (buyer or seller) is liable for goods that are damaged while the cargo is in transit. USA Wholesale strictly operates under FOB Origin terms, which mean the buyer is officially takes ownership and is liable for the goods from the moment they leave our facility.
Ex Works (EXW) - a term used in international trade which indicates that once the seller makes the goods available for the buyer at a specified location, the buyer is entirely responsible for the costs associated with getting the product from the pickup location to the destination. The buyer is also responsible for loading the goods, transferring them to a ship or plane if necessary and most importantly, meeting customs regulations. USA Wholesale strictly operates under the Incoterm Ex Works (EXW).
Batch code - Typically an alpha-numerical unique code created by the manufacturer to identify the "batch" in which the item was manufactured or the location and time in which it was produced. Batch codes do not indicate expiration.
MSRP - Manufacturer Suggested Retail Price, when manufacturers bring products to market and partner with Distributors and Retailers, they must provide a suggested retail value. This value is helpful for consumers in comparing prices between retailers as well as in other scenarios.
MAP - Minimum Advertised Pricing, another value provided by manufacturers and distributors to retailers. This value maintains market pricing and prevents retailers from strictly competing based on sales price, which in the end helps maintain a brand's equity.
UPC - Universal Product Code, a barcode system widely used in many countries in the world as unique identifiers for products.
SKU - Stock Keeping Unit, a unique number created for the internal tracking and management of products or services