Goods on Approval

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Definition: Goods on Approval

Goods on approval is an arrangement in which products of durable nature like books, equipment, etc. are given to potential customers for a pre purchase trial. These goods are to be returned after a specific period of time in a re-saleable condition if not purchased by the customer. If in case the individual is satisfied with the product during trial, then his purchasing decision is inclined in favour of the company and the product.


Proper records of such goods are kept in the company record book- details of to whom the good has been given, the serial no of the good, date on which goods were given for trial, status of good i.e. whether approved or returned, etc.


Goods are sold on trial basis for three main reasons –

a) To introduce a new product in the market

b) To boost the sales

c) To increase market share

 

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