Did you know that you could make money by reselling the stuff people return on Amazon?
People are building online stores with inventory sourced from Amazon customer returns. The Amazon liquidation business model works!
But you probably have a lot of questions buzzing about how to make money buying liquidation stock pallets.
Here are the answers you're seeking. (But you might want to watch this video first.)
Amazon Liquidation Pallets: What You Need to Know
Can You Make Money Selling Liquidation Pallets?
The most pressing question looming on your mind: Can you make money buying liquidation pallets?
Yes! Ever wonder what happens to the items you return to Amazon?
Not all of them get re-listed, especially if that user sells only new items. Instead, the warehouses pack returned items into pallets. They sell these return pallets to liquidation distributors, like BULQ and Liquidation.com.
Now, you might be thinking that these pallets consist of nothing but junk, but that isn't the case!
Here's a video where one person shares what he received after paying $175 for $998 in Amazon liquidation merchandise from SmallerLots.com.
In his Amazon liquidation box, he found:
- Hair trimmer
- Electronic hearing protection equipment
- Water flosser
- Postage printer
- VHF wireless system
- LED headlight kit
Most of these items were still in excellent condition.
When returning an item, Amazon's return policy will require you to cover shipping costs depending on the reason for return.
For this reason, most people say an Amazon return item is defective or damaged to receive a prepaid shipping label — even for unused items!
A pallet you purchase can be chock-full of new items that could potentially sell for a nice profit.
Is It Ethical to Sell Liquidation Products?
"Brands themselves often don't take kindly to these independent liquidators," says Kiri Masters, Forbes contributor. "If a liquidator claims that a product is in new condition, but the end customer receives a clearly used product, that reflects poorly on the brand. Shoppers may leave negative product reviews. Amazon may even suspend that product if there are enough quality concerns."
Without liquidation businesses, though, pallets of unused items would stack up. If you think about it, eBay has been around for decades now. And their roots started as an "online garage sale" of sorts where people resold their own stuff.
How Do I Start a Liquidation Business?
To start a liquidation business, there are three broad steps you must take:
- Secure inventory by purchasing liquidation pallets.
- Sort and catalog the items.
- Sell your items online and market your store.
We'll be diving into each step in the following sections.
How Do I Get Pallets of Returned Merchandise on Amazon?
There are pallets sourced from different vendors and marketplaces. However, the liquidation Amazon business model is gaining popularity.
One common way to get your hands on a pallet of returned Amazon merchandise is to browse an online liquidation marketplace. Websites like Bulq and Direct Liquidation offer wholesale pallets that you can browse and purchase.
Depending on your area, you might also have a nearby warehouse location that you can visit and inquire about Amazon pallets for sale.
Look First! (If you can)
A benefit of visiting a physical location is you can inspect the pallet before purchasing. You can better judge each pallet and negotiate the best price. Moreover, you'll save money on shipping if you take a truck.
After browsing the available pallets, you can make an offer on a pallet that piques your interest.
When negotiating the price, be mindful of the shipping costs. Depending on who you're ordering from, the pallet may be shipping from across the country. The shipping freight alone can seriously eat into any potential profit from reselling the merchandise.
Also, remember to read the fine print in any contracts you sign. All sales are final, and you want to ensure you know what you're buying before you make payment.
Another thing to note when buying pallets is that you have space to store your pallet. Make sure you have a large enough area to sort and catalog that truckload of merchandise.
How Do I Sell Liquidation Stock?
Sort and Catalog
After you receive your pallet, it's time to inspect and catalog the merchandise.
Prepare a clear surface for storing and sorting items. Part of selling liquidation pallets is efficiency. Identifying and organizing the items is critical to running your online liquidation business.
While inspecting each item, you'll want to ask the following questions:
- Is the packaging in good condition?
- Are the products in good condition?
- Is the product discontinued?
- Is the product authentic (Is it a brand name or a knock-off)?
- Does the manufacturer offer a warranty?
As you go through the pallet, it may be helpful to have a junk pile. These are the items that are too damaged or defective. Be mindful of electronics — some of its parts and components may be worth separating for resale.
Set Up Your Online Store
After you've finished sorting the items of value from the junk, it's time to move into the next phase: selling your items.
Similar to the various liquidation pallet marketplaces, there are so many marketplaces to set up your online store — Amazon and eBay are the most popular.
Each marketplace has its own culture and guidelines. eBay has always been a favorite place for the "garage sale" entrepreneurs. If you're serious about cultivating an income flow from reselling Amazon liquidation pallets, then you'll find a home at eBay.
You can still resell the items on Amazon. Amazon, compared to other marketplaces, though, tends to carry stricter seller guidelines.
When reselling on Amazon, keep in mind that you may run into trouble if reselling any of the following items:
- Beauty products
- Baby items
- Health items (e.g., supplements)
And getting your online store up and running is a simple process.
Be sure to check out our guide on how to sell products online to learn more about setting up and marketing your store.
Is the Liquidation Business Profitable?
It can be profitable. Just like any business venture, there are certain risks involved.
Let's look at a real-life example.
TV station KENS decided to try selling a liquidation pallet themselves. They purchased a pallet for $570 ($300 went to shipping).
The pallet included several electronic items:
- LED monitor
- Bluetooth keyboard
- Rockwell saw
- Sony AV receiver
- Pool pump
- Electrical panel
- Espresso machine
To help determine the value of the items, they consulted with a local pawn shop. After selling only the pool pump, electrical panel, and LED monitor, they made $370. Depending on whether the other items sold, it's uncertain if they would have made any profit. They did pay, after all, $570, to obtain the pallet.
So what's the takeaway here?
Selling liquidation pallets is a gamble, but…
There are ways you can increase your chances for profit. One is to purchase manifest pallets over unmanifested or mystery pallets.
Mystery Pallets vs. Manifested Pallets
Mystery pallets, as the name suggests, are a mystery. At best, you know the category the pallet falls under (beauty, electronics, tools, etc.).
Manifest pallets, on the other hand, offer more information.
With these pallets, the description of the contents usually includes:
- Item names
- Product descriptions
- Suggested retail value
There are pros and cons to buying each. Mystery pallets often sell at a lower price than manifested pallets. Similar to a storage unit auction, you don't know what you're getting until you buy it. There's an opportunity to gain a pallet full of treasure or a stack of damaged and defective items.
With manifested pallets, you know more about what you're buying. This extra information can help you deduce the potential resale value of the manifested pallet's contents.
What Are the Best Liquidation Auction Sites?
To find liquidation pallets, your best bet is to search online. Many online marketplaces sell pallets, but you must do your research.
Many sites and deals look profitable, but you must understand the entire scope of the transaction, including:
- Is the pallet manifested or unmanifested?
- How much are the shipping costs?
With that said, the following liquidation sites tend to be the most widely used, especially when buying Amazon liquidation pallets:
- Direct Liquidation
Can I Sell Liquidation on Amazon?
Yes, selling liquidation items on Amazon is possible.
As we mentioned before, Amazon sells pallets of returned items to liquidation buyers. Liquidation buyers can then take these items and resell them on Amazon.
There are specific guidelines, however, that you should follow if you decide to resell on Amazon.
First, you should not be listing the items' conditions as "New." Even if the product has no damage and functions, it was likely returned to Amazon under one of those issues.
If you list the item as new, Amazon can penalize your account. Worst case scenario, the original branded company might pursue legal action against you.
Also, be mindful that you are not reselling any of the items listed earlier, such as clothes and beauty products.
How Does Liquidation.com Make Money?
Like other liquidation marketplaces, Liquidation.com is where professional buyers can purchase liquidation pallets. The pallets range across many product categories, including electronics, housewares, and beauty products. Liquidation.com makes money when buyers purchase these pallets, usually for a fixed price.
Can you make money on liquidation pallets?
The potential for profit is there. But, as you learned, there are risks to buying Amazon liquidation pallets. You may purchase a pallet that's full of items prime for reselling. You may also get stuck with a pallet that's full of broken and defective items.
Still, reselling liquidation items is a business venture that can be an exciting challenge for the right entrepreneur. If this is you, you're now equipped with the knowledge to get started. Of course, this isn't the only way to leverage arbitrage (buy low, sell high) to generate cash. Check out how you could make money on Poshmark, selling on eBay, buying storage unit auction lots, flipping flea market finds, or even by using arbitrage for investing.
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