I was in a store that sells Amazon returns for five euros. This is what I found

Crazy Day Factory has become a place of pilgrimage for everyone looking for bargains

It’s 10am and a few people are milling around the entrance to an old warehouse on the outskirts of Madrid. “Day after day we break prices” reads a sign on the front of the building, which opens late while employees ask patrons to make room. Once the blinds are fully up, the lights are on and everything is ready, a staff member greets customers. Although people don’t care much about this, most of them have already mercilessly headed inland with one goal: to find electronics at a low price.

Buying Amazon returns has become a viral phenomenon and a business for many people. These are items that customers have returned due to delivery errors or minor defects, but which can be used normally. Why can people buy something that someone else returned for a lower price? To answer this question, you need to understand how Amazon returns work.

The first thing you need to know is what is being returned It’s a money hole for the platforms e-commerce, especially for Amazon. We pick up the goods, transport them back to the warehouse, inspect them and prepare the order again if it goes on sale again. entails very high costs. Reverse logistics without consumer surcharge is estimated to account for up to 25% of orders in our country, according to NTT DATA. It could be even worse in China due to the distance. So much so that sometimes it is even more profitable for businesses to give the order to the customer or destroy it before the entire process is completed.

What’s the best solution? Turn this leakage into a source of profit by simply selling the proceeds to third parties, who in turn sell them to individuals in their stores or at auction lots.

Crazy Day Factory, where we are located, is one of those stores that buys batches of Amazon returns and then operates like a regular store. He has recently gained fame on social media where some accounts have posted viral content where they talk about “bargains” at minimum prices. This establishment religiously opens at this time every day for the purpose of selling everything it has previously acquired at auction. And hundreds of people come for what else might be useful.

Although the local strategy has its own trick. As stated on the sign and website, this store’s products have a weekly life cycle. On Friday all shelves are replenished and the price of the products is 15 euros per unit. This is the perfect time to grab a bargain if you have one. After this, the price gradually decreases until the following Thursday, when everything costs 1 euro. It’s worth so little because all that’s left is what no one needs.

Another thing to take into account (in addition to the dependence between days and prices) is that on Fridays there are usually very long queues early in the morning. No one knows the origin and reason for the return of the goods, although if this is due to a technical failure, it will soon be discovered. What secret and low prices are exactly what has led to the success of this company, created by two Chinese businessmen in 2022 and already has several offices on the outskirts of Madrid.

In the jungle of “bargains”

In Hatak, we also agreed to the mission and headed out on Tuesday to see what we could find and whether there really were as many great deals as advertised in the TikTok videos. The price today is 5 euros per unit. At first glance, the shelves are in disarray. There’s almost no product organization, and you have to wade through mountains of items that people have returned to Amazon, some of which are still being returned. they come packaged in their own boxes. We find everything from headphones, cell phone cases and lamps to batteries, board games and various Kindles.

Salvador is a regular customer. We met him at a stand for testing electronic products, he, plugging in a mini-speaker, smiles and exclaims: “The light is on, this is a good sign.” He tells us that he has been coming for several weeks and that sometimes he gets lucky: “I bought a Blu-Ray, headphones and a fan. It’s best to come on the Friday before.” replenish supplies. People come at night and even camp at the door to line up and take the good stuff. My brother bought a 40-inch Xiaomi TV for 15 euros. Inside the store there is an area with plugs and chargers of different formats for connecting electronic products and checking the functionality of the device.

Two young men of about 18 are rummaging under mountains of boxes: “A colleague stole an iPad and we came to see if it was still there.”. Disappointed, they see that there are only a few mobile phone chargers, cases and gym products left on the shelf, which they look at: “It’s not worth 5 euros.”

Javier Matas, however, proudly takes the stage with an impressive briefcase. When asked, he says he’s “hunting for a drill” that works: “I should have come, but I thought I wouldn’t find anything.” Lorena, another 43-year-old Bolivian, tells us that she buys all her children’s toys here: “My son likes board toys, but most of them are in Polish or in languages ​​we don’t understand, I’ve already made several mistakes.”

Meanwhile, other interviewees such as Samuel, Yusleimi, Estefania and Santos leave empty-handed. “This is a real scam and almost everything is unusable,” some of them tell Xataka. This is what we checked ourselves. In the following video you can see how some boxes arrive empty and without any products inside. This is a jungle where you may or may not be lucky.

How the system works

As we said, the Amazon return phenomenon has gone viral to the point where many influencers These are promotional methods of reselling consignments of returned goods and advertising them as a way to make quick money. There are even private groups on Instagram and Telegram where they give advice to their subscribers. but in this world more smoke than bills In most cases. And this is what we wanted to analyze at Xataka by talking to several people and experts who have tried to do business with it.

Amazon’s return structure is complex. When products arrive at the platform’s warehouses, they are inspected to determine their condition. If they are classified as “new” and meet quality standards, the item is put up for sale again. If it can’t be sold as “new”, it is donated to charity or resold as a “used item” through Amazon’s warehouse.

But sometimes these products end up in auctions of pallets full of boxes that are bought on Amazon Returns, Direct Liquidation or other resale platforms. They are grouped into closed lots that Amazon sells to third parties and come in different sizes and prices.

Those who bid on them do not know what they contain, but only general information about what they can find inside: electronics, sports, clothing, shoes, beauty, home, etc. At these auctions, companies or private The highest bidders receive the lot of the house, and neither the company selling nor the original seller is responsible for the condition of the products. In most cases, this is a blind buy: sometimes it can be profitable, and sometimes not.

Can you do business?

Carlos Bravo, entrepreneur in e-commercepopularizer and book author How to Sell on Amazon from Scratch, Hatake explains that “Amazon can feed you, but you have to be very careful because it also has its own interests.” Bravo tried his luck with buying return pallets and tells us about his experience. “A lot of newcomers come because people sell them on TikTok as a way to make money, but the reality is that most products arrive in poor condition,” he says.

“The information they give you is brief: from “defective” to “almost new.” Although, of course, sometimes people mark it that way to save free returns, and since Amazon doesn’t check it, it may not be damaged. But people are usually optimistic and believe that they will be beneficial. It’s possible, but it will be an investment job like any other,” explains Bravo. He says almost a year has passed since then. bought a batch of returned toys on Amazon on the auction. The purchase looked good at the time, but 12 months later the final result wasn’t so good.

“It cost 2,000 euros. Four euros per item, 500 items in total. We saw a lot of famous brands in the advertisements and most of them seemed to be in good condition. Then we realized that they were practically unusable and that rehabilitating them would again cost more. The bottom line is: it wasn’t cost-effective and we won’t do it again,” he says.

At Xataka, we also contacted another used equipment sales specialist, Tony Parra. This Catalan merchant was selling goods from Amazon that he bought on pallets with a price tag. from 500 to 1000 euros to a Chinese seller about whom he cannot provide more details. “I have a second-hand store, and since I had a lot of space in my warehouse, one way was to buy items on Amazon and sell them to other buyers there.” One way to get dividends was to try to repair products that didn’t work but could be “saved” somehow. According to him, 70% could be used, and they tried to fix the rest.

Although he notes that “it took too long,” and he did it because a colleague helped him. “If you consider that there are products for 5 or 10 euros, then by the time you spend an hour repairing it, it will already cost you more,” he comments. And he adds: “To make money, you need to focus on this type of business 100% and have a very large premises dedicated exclusively to it. I didn’t win or lose, it’s all luck in the end, but at least I made money.” content for networks and thanks to this I was recognized, I don’t regret it because I learned a lot.

Xataka also didn’t do as well as we thought. It’s already 12:00 and we leave the Crazy Day Factory store empty-handed. Perhaps coming on Tuesday wasn’t the best idea. There may not have been enough cool tech product returns this week. Or maybe the “price drop” wasn’t as great as we thought. We’ll have to come back another day to check it out. Or just give up the belief that you can get a TV for 5 euros.

Images | Hataka

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*A previous version of this article was published June 2023.

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