Grading Returns by Condition: How to Recover More Revenue from Your Pile
By Maurice Greenberg, Managing Partner, SJM ReCommerce
Selling returns as ungraded mixed lots means pricing your whole pile at the value of its worst unit. Liquidation auctions often recover only single digits on the dollar, while properly graded resale recovers 60 to 80 percent of value. Sort returns by condition before they ship and you recover roughly 30 percent more from the exact same inventory.
I have been in this business long enough to watch the same mistake repeat itself across brands of every size. A pallet of returns comes in, nobody sorts it, and nobody grades it. Working units sit next to broken ones, and like-new product gets lumped in with stuff that needs real work. Eventually the whole pile either collects dust in a warehouse or goes to a liquidator for pennies on the dollar. The brand writes it off and assumes that is just what returns cost. It does not have to work that way.
At SJM we process returns for consumer brands across outdoor power equipment, tools, e-bikes, and more. That experience has allowed us to build a clear, straightforward solution: grade every unit by condition before any of it goes back out the door. Done properly, that grading helps brands recover about 30% more than they would selling the same product through liquidation.
Why do mixed lots kill your recovery value?
When you sell a mixed lot, a batch of returns with no grading or separation, you are actually pricing the whole thing based on the worst unit in the pile. A liquidator or secondary-market buyer has no idea what they are getting, so they price for risk, assuming some share of the units are broken, some need work, and some are unsellable. That uncertainty gets baked into a low offer, and you accept it because you do not have a better option in front of you.
The catch is that mixed lots almost always contain a real percentage of Grade A units. These are products that work perfectly, look fine, and could sell through certified refurbished channels or secondary marketplaces at close to full price. When those units get buried in with broken inventory and sold at bulk liquidation prices, you have handed away your highest-value product for almost nothing.
The data backs up both ends of that gap. On the liquidation side, an Amplio analysis of online liquidation auctions found that even lots of branded goods often recover only single-digit to low-double-digit percentages of retail, because bulk buyers price for risk and their own resale margin. On the other end, the recommerce platform Treet reports that brands running proper, graded resale recover 60 to 80 percent of MSRP on the same kind of inventory that liquidation would move for cents on the dollar. The entire spread between those two numbers is what grading unlocks, and it comes out of product you already own.
What does condition grading actually involve?
The process is not complicated, but it takes discipline and the right setup. When a return arrives at our facility, every unit gets received, photographed, and inspected. We note the cosmetic condition, whether it functions, and anything missing from the box. Then we assign a grade, and each grade goes down a different path.
- Grade A: Fully functional and cosmetically acceptable for resale. If a unit needs light refurbishing it gets handled first, then routed to the right marketplace. This could be the brand's own certified refurbished program, Amazon, Walmart, eBay, or another secondary channel.
- Grade B: Works fine but shows cosmetic issues like scratches, scuffs, or minor damage that doesn't affect function. These units have real resale value, but they need to be priced and positioned correctly for the secondary market.
- Non-resalable: Damaged, incomplete, or non-functional units that can't be restored to sellable condition. These are evaluated for parts value first, then either harvested for parts, liquidated, or responsibly disposed of.
The point is that every tier goes down its own disposition path with its own pricing strategy. You are not guessing anymore. You know exactly what you have and exactly what it is worth.
The math is simple
The revenue difference is easy to quantify. Say you move 1,000 returned units a month and sell them as mixed lots at an average of $40 a unit. That is $40,000 a month in recovery, or $480,000 a year. Now suppose just 30 percent of those units, 300 of them, are actually Grade A or B product. Sorted and routed to the right refurbished or secondary channels, those units could sell for around $90 instead of the $40 they'd bring in the pile. That is an extra $50 on 300 units: $15,000 more every month, or $180,000 a year, from the exact same inventory. The only thing that changed is that someone sorted it before it went out the door.
The exact split depends on your category and your return profile, but the pattern holds across every brand we work with. There is almost always a layer of resalable product hiding in the pile, and the only thing standing between you and that revenue is the discipline to find it before it ships.
How we do it at SJM
That discipline is the hard part, and it is where having everything under one roof pays off. The moment a return hits our dock in Lenoir, it is logged, photographed, and tracked by RFID, so you see exactly what came back in your client portal in real time. From there, the grading, refurbishing, and routing all happen in-house: no shipping units out to a third party and waiting for them to come back. That mix of live visibility and full on-site production is what most operations cannot match, and it is why brands recover more with us than they do selling the pile off themselves. You can see the tiered grading framework in action in our Snow Joe / Sun Joe case study.
What to do next
If you are selling returns in mixed lots right now, the first step is understanding what you actually have. Start with a basic grading audit. Send us a sample of your recent returns and we will run them through a condition assessment. You will know quickly how much you are leaving on the table and what it would take to recover it.
If you want to talk through what that looks like for your operation, contact us. Most of our client engagements start with exactly that kind of call.
Maybe grading feels out of reach right now because your returns never even make it that far. They come back, pile up, and sit for weeks before anyone touches them. If that's the situation, processing speed is the first thing to fix, and we get into why it matters so much here: Returns Management: The Hidden Cost of Letting Returns Sit