How To Make Money From Amazon Liquidation Pallets

Many entrepreneurs make money by reselling the merchandise people return on Amazon. When people return goods, some of it goes back on the shelf to be resold rather than sit around at retailers’ premises taking up precious storage space.

The Amazon liquidation business model is thriving because more entrepreneurs are launching online stores with inventory that is derived from Amazon inventory (customer returns). Considering that about $420 billion worth of goods was returned in 2020 (10% of the Retail market), you begin understand why this is happening.

If you have questions regarding how this works and how you can start making money by buying and selling liquidation stock pallets, this article will help clear things up.

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What is Amazon Liquidation?

Retailers often find themselves stuck with inventory that they have no idea how to handle if it is returned by customers for reasons like wrong-sized items, buyer’s remorse, or unmet customer expectations.

amazon liquidation pallet

This can be costly to the retailers because the lost retail space could be used for goods that they actually sell. In addition to that, the investment that goes into advertising goes to waste when products are returned by customers.

Such goods as well as stock that is recovered from liquidated businesses is usually collectively called liquidation stock. Thanks to the Amazon liquidation business model, business owners can buy this inventory and resell it to customers.

It also helpsĀ Amazon sellersĀ recover value from obsolete or excess inventory items.

What happens to the items customers return to Amazon?

If a seller only deals with new items, not all of them get re-listed because they fall under the category of used items.

These warehouses pack the returned items into pallets, which they can then sell to liquidation distributors. There are a few of those distributors around, including BULQ and Liquidation.com.

The liquidation process is usually tough for retailers as they have to find a way to turn overstock and outdated goods into cash. That’s without mentioning that in most cases, the cost of this merchandise goes higher if it depreciates with age and occupies much needed space in warehouses. This often results in a majority of these companies selling these items on marketplaces like eBay or Amazon. This way, they generate more revenue and minimize the costs associated with having those goods taking up room.

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What is a Liquidation Pallet?

The merchandise that is returned by the customers and sold as whole pallets is often referred to as a liquidation pallet. A liquidation pallet is a wholesale unit that is sold by a liquidator or a big retailer.

How To Make Money From Amazon Liquidation Pallets 20A typical liquidation pallet has an assortment of products in the same category. For example, you will find a liquidation pallet holding shoes, clothing, and electronics, which are classified as being of the same category.

Before the current business model came into effect, liquidation measures required a lot of logistical effort. Then a few online B2B auction market places were created. These marketplaces together with brick and mortar liquidation stores made it easier to buy returned inventory.

Buying merchandise online means that that the shipping costs can be high because the weight of the pallets of goods tends to be high. However, it can be worth it if the pallets wind up being heavily discounted (the goods in the pallets end up being worth more than what the pallet was sold at).

Liquidation pallets normally come with a manifest that shows exactly what is in the pallets and boxes.

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What is a manifest?

A manifest is a document that has all the information regarding the goods that are inside a pallet. The standard pallet will often be referred to as a manifested pallet. Note that sometimes the pallet comes without a manifest.

Differences between Mystery Pallets and Manifested Pallets

As we’ve mentioned above, there are two kinds of pallets: those that have a manifest and those that don’t.

What is a Mystery Pallet?

A mystery pallet is one that does not come with a manifest. A manifest comes with information like: the quantity of the items, names of the items, product descriptions, and even possible retail value.

When the details of a pallet are unknown, it is a bit of a mystery hence the name “mystery pallet.” They can also be referred to as unmanifested pallets.

How To Make Money From Amazon Liquidation Pallets 21The problem with this lack of information is that you don’t know what you’re getting. Are you getting a pallet full of treasure or a stack of damaged or defective goods?

Due to this uncertainty, mystery pallets are often sold at a lower price than manifested pallets.

When dealing with a mystery pallet, the most you know about it is the category it falls under, be it tools, electronics, or beauty products.

Manifest Pallets

Manifested pallets (or just manifest pallets) come with more information about what’s inside. This way, you know what you are buying.

This is quite helpful because you can use this information to calculate the potential resale value of the contents of the pallet.

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Is Selling Liquidation Pallets Profitable?

You can make money selling Amazon liquidation pallets. The perception most people have about these pallets is that they have nothing but junk. But sometimes, that is not the case.

There are many examples of people who’ve bought massively undervalued pallets. This can be the case when you buy an Amazon liquidation box and inside it, you find items that are in excellent condition.

How does this happen?

When customers return goods, Amazon’s return policy requires them to cover shipping costs depending on the reason they are returning them.

To avoid paying this cost, most people who return items to Amazon often indicate that the items are defective or damaged to receive a prepaid shipping label. This even applies to unused items.

Therefore, you may purchase a pallet that is full of new items that can be sold for a nice profit.

But there is a caveat. Like any other business out there, there are risks involved in this. For example, you may buy a liquidation pallet that, at first glance, looks like a bargain only to find out that even if you sold all the items inside, they do not have enough money to break even.

This can be compounded by high shipping costs that eat into your profit (a good reason why you should pay attention to the shipping fee you are being charged).

Although selling liquidation pallets is a risky business, one way to improve your chances of earning a profit is to purchase manifested pallets instead of mystery or unmanifested pallets. Why? Because you will know the details of the items that you are receiving and can decide whether they are worth the risk.

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How a Liquidation Business works

To run a liquidation business, you need to secure the inventory by buying liquidation pallets.

After that, you sort and record the products in your catalog, and then you set up your store and market the products.

Where can you find pallets of returned merchandise on Amazon?

Luckily, you can source FBA inventory from various liquidation marketplaces. There are a couple of them because the liquidation amazon business model has been getting more popular.

The easiest way to buy a pallet of returned Amazon merchandise is to find an online liquidation marketplace that sells these pallets. There are a number of vendors you can find online.

Some of them, like Direct Liquidation and Bulq, offer great deals on wholesale pallets. You can also look around in your area because you may be living near a warehouse location that has Amazon pallets for sale. Below, we are going to cover some of the popular sites:

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Examples of Liquidation Auction Sites

When you are looking to buy pallets, there are plenty of places you can find them. The bottom line is that buying liquidation pallets is easier these days because there are plenty of vendors in the B2B marketplace; all you have to do is search for them.

How To Make Money From Amazon Liquidation Pallets 22You can also shop around physical stores in your local area. If you can’t find any, there are numerous online stores where you’ll find a wider variety. Online vendors are better overall but if you can find a physical store, you’ll have the benefit of inspecting the pallets and you can slash the shipping costs by using your own transportation.

When you are shopping around for a vendor, two important details you should consider are:

  • Whether the pallet is manifested (or not)
  • How much are they charging you for shipping costs if using different means is not an option.

Here are some reputable liquidation companies for Amazon liquidation pallets:

  • BStock. It is an online marketplace cum auction site. It has a network of online liquidation auction markets for major retailers and manufacturers like Wayfair, Walmart, Target, Amazon, and Best Buy, just to mention a few.
  • BULQ. Launched in 2004, it has grown from a small garage seller to a full-fledged online marketplace.
  • Liquidation.com. Based in Texas, this company purchases and consigns returned merchandise from major and small businesses and then sells it on its online marketplace. The company makes money when buyers purchase the pallets at a fixed price. You can check the current bid on any item online.
  • Quick Lotz. It handles liquidation products in both large and small quantities. The company specializes in name-brand merchandise as well as returns from companies like Amazon, Costco, Home Depot, and Lowe’s.
  • BlueLots. It links small businesses, entrepreneurs, and individuals looking to make extra money with wholesale liquidation inventory that can be resold for a profit.

There are other vendors to consider, including Direct Liquidation, 888 Lots, and WiBargain.

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Why you should inspect the pallet if possible

This is applicable if you visit a physical location. When you arrive at the warehouse, you can inspect the pallet before purchasing. You can judge each pallet and negotiate the perfect price. Sometimes, you can save money on shipping costs if you have your means of transporting the pallet out of there yourself.

As you negotiate a price, take into consideration the shipping costs because if the pallet is to be shipped over a long distance, these overhead costs can eat into your profit.

Another important part to remember is to read the contracts before you sign them. This, again, shows the importance of inspecting the pallet because you will be aware of what you are buying before you deliver the payment.

How to sort and catalog liquidation stock

When you receive your pallet ensure that you have enough room first before you inspect and catalog the products in it. You should then come up with an efficient process of identifying and organizing the items.

The next step is to check whether the packaging is in good condition. Also check whether the merchandise is in good condition.

If you are dealing with fashion-driven items, check whether the product (like designer sunglasses) is authentic (it can either be authentic or a cheap knock-off). Also determine if the product is still in circulation or has already been discontinued.

Another helpful step is to check whether the manufacturer offers warranty because this can come in handy.

Separate the items that are too broken to mend by putting them in a junk pile. You should handle electronics that land in the junk pile differently because they may have parts that can be taken out and sold separately.

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How to Set Up An Online Store

With your items sorted, the next step is setting up your online store. This step is crucial to any success you will have selling your items.

Fortunately, there are many marketplaces for reselling Amazon liquidation pallets where you can set up an online store. The two most popular ones are eBay and Amazon.

How To Make Money From Amazon Liquidation Pallets 23Every platform has its rules and guidelines but eBay has been found to be the most appealing to most people selling these items. It probably has to do with it being a popular platform for people who were holding online garage sales many years ago when it started. It is a great alternative if you choose to opt out of using Amazon.

Selling Liquidation Items on Amazon

If you don’t want to use eBay, you can resell your products on Amazon. When the company sells pallets of return items to liquidation buyers, these buyers can take the same items and resell them on Amazon.

The caveat is that you cannot list the item’s condition as “new” even if it is unused or has little damage. The main reason they do this is because the product was probably returned to Amazon because it was defective even when it wasn’t.

If you flaunt the rules, Amazon will penalize you. Alternatively, the brand whose product you are selling can take you to court.

It is no surprise that Amazon has not been the number one choice for most entrepreneurs because it usually has stricter rules for sellers.

For example, you will run into trouble reselling on Amazon, if you are handling things like Luggage, Jewelry, Handbags, Health items like supplements, Clothes, Beauty products and Baby items.

Before you leave

Before I start…

If you’re tired of scams and want a real solution for making money online check out my no.1 recommendation.

It’s helped me earn over $300,000 in the last 12 months alone:

Go here to see my no.1 recommendation for making money online

(This is a 100% free training)

How To Make Money From Amazon Liquidation Pallets 19