How To Make Money Buying Liquidation
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Updated on September 5, 2021
Last fall, my husband and I tried out a new side hustle opportunity by purchasing a liquidation pallet and selling off items from the pallet.
This side hustle appeals to us because it's based solely on what kind of time and monetary investment you'd like to make with it. You can buy a small, low investment pallet and you can slowly sell items when you have time or you can be more aggressive with a larger, more expensive pallet that you want to sell quickly. Or anything in between.
What is a Liquidation Pallet?
A liquidation pallet is a group of products that a retailer will sell at a steep discount because they cannot sell the product anymore. The types of products in a pallet can include:
- Products that were purchased by a customer and then returned for one reason or another
- Products that just weren't selling
- Products that were damaged in their warehouse or during shipping to the point that they can't sell it to a customer
They'll package these items together into a pallet and sell that pallet at a steep discount to get the product off their hands.
What is Pallet Flipping?
Pallet flipping is when you purchase a pallet and then turn around to sell the individual products for a profit. It's not uncommon to find a pallet that has hundreds of dollars of products for a fraction of the cost.
However, when you purchase a pallet, it's very uncommon that you get to see everything in the pallet. In fact, they are usually shrink-wrapped tight where you can only see 30% of what is included.
As you can imagine, there is definitely some risk in purchasing a pallet. You might get an entire pallet of returns that don't work when you test them. But you might also get a pallet of shelf pull products that just couldn't sell in a certain market, but are in perfect working condition.
Since it requires an investment up front, you have to be wise about what you choose to purchase. I'll talk about best practices later on how to find a pallet that you can actually return a profit.
For our first pallet, we bought a small Home Depot pallet for $300, but you can find multiple pallets or even truckloads for much more money.
How to Find a Pallet
You can find pallets all over. You just have to look in the right places. Below are a few of the places I've found quality pallets successfully.
Liquidation Warehouses
The BEST place to find high-quality pallets is through a liquidation warehouse. A liquidation warehouse is a legitimate company that acts as the middleman between the retailer and pallet flippers. If you have a warehouse local, this is a great way to see the product in person before purchasing.
These warehouses will often buy truckloads (think semi-truck) of product and sell the pallets individually. They have established relationships with retailers so you don't have to. You or I couldn't just go to a Target store and ask if they have any liquidation to sell, so the next best thing is one of these liquidation warehouses.
To find one near you, just Google "Liquidation Warehouse in [state]" or "Liquidation Warehouses near me." I live in Iowa and I have a few very large warehouses within a 90-minute drive of me.
Liquidation Sites
If you don't have a warehouse near you or would rather not shop in person, there are many reputable sites that sell liquidation pallets. Here are a few of the frontrunner sites:
- Liquidation.com
- bulq.com
You may also find that some companies will sell their pallets directly, like Walmart.
Keep in mind that these are all auction sites, which can result in a bidding war for a great pallet. You also usually have to factor in shipping costs, so make sure you do your research to see if it's a good all-in investment before you purchase.
The advantage of these sites is that you can get your hands on products that might not be offered at your local warehouses.
Facebook Marketplace
I put this on here as the third recommendation simply because this is the riskiest option. There are scammers everywhere, so it's important to be very careful with finding a pallet on Marketplace.
More often than not, the pallets on Facebook Marketplace will be listed by people who purchased a large pallet or even a truckload, then broke it down to a smaller pallet. Keep in mind that if someone purchases a truckload and sells off smaller pallets, they likely are selling the high ticket items before you ever see the pallet.
I personally used Marketplace for my first pallet but I might have gotten lucky. For every legitimate posting out there, you can find dozens more that aren't what they seem. Do your research on the seller prior to purchasing and make sure to meet in a public location if you go the Facebook Marketplace route.
How to Make Money Flipping Pallets
There is money to be made flipping pallets, especially if you're willing to take a little risk. There are a few things you can do to set yourself up for success when flipping pallets:
- Purchase pallets wisely
- Do your research
- Stay organized
- Utilize several platforms for reselling products
- Be willing to do a little work
Purchase Pallets Wisely
When you are looking for a pallet to purchase, there are so many factors to consider. To help you find the best pallet for your situation, here are a few things to consider:
Pick a pallet with products that you're familiar with. My husband is well versed in power and hand tools, so we look for those types of pallets. You might be more well-versed in children's toys or small appliances. Make sure you're picking items you know a lot about because those are much easier for you to resell.
Understand that some products are seasonal. One of our pallets had mailbox posts and a leaf blower, but we purchased it in the winter, so we knew those products would probably sit longer than year-round types of products. Consider what seasons people might purchase certain products and prepare for that.
Consider products that will sell well in your area. If you live in a warmer climate, pallets with snowblowers and heavy winter jackets probably won't sell well. If you plan to resell your items on eBay or another reselling site, then this won't apply.
Consider products that are easy to ship. To the point above, if you plan to ship the products you sell, then find products that are easy to ship. These are smaller, lighter products, that won't easily break.
Research, Research, Research
Before purchasing a pallet, make sure to do your research on the products. I mentioned earlier that many times you can't see all of the products in the pallet, but you can see some of them.
Before I ever consider purchasing a product, I look up the retail value of every item I can see. Sometimes the wholesaler will have an item list that shows all of the products and their retail value, which is great. I always double-check their work, though.
My rule of thumb is that the products I actually can see need to at least retail the amount of money I'm buying the pallet for. I might buy a pallet for $500, so if I see a $400 saw and $100 worth of pliers, it's probably a good purchase. Even though I can't sell the items for actual retail price, I assume the products I can't see will make my money back.
Make sure you research what the items that you can see might sell for. I'll go into the platforms that are best for selling items later but do a quick search for what the items might sell for if you can.
Stay Organized
The #1 thing that will make or break your pallet flipping business is organization. You have to be able to keep track of every single item in excruciating detail. We use this spreadsheet to keep track of everything because we track many aspects.
Here's what you need to keep track of:
- Item SKU (unique number/letter combo you assign each item, such as AB123)
- Item title, including the brand (i.e. Little Tikes slide, green)
- Item description (How you might describe it in your listing)
- Item condition (Is the box slightly damaged? Used?)
- Retail price
- Listing price
- Whether it's listed yet or not (and where it's listed)
- Whether it's sold yet or not
- Revenue from that product
This is beneficial to help track the effectiveness of your sales, but it's also to help you determine when you have finally hit a positive ROI.
Find Adequate Storage Space
If you want to get serious about pallet flipping, it's important to find enough space to store the items. This is where you have to decide how much you want to invest in flipping pallets. If you purchase one pallet at a time, a spot in an unused room might suffice. Eventually, you might start acquiring larger pallets where you might need more space. That's where it might make sense to get a separate storage space somewhere else.
Whatever space you decide to use, it's important that you make it a separate space. What I mean by that is you need to block off parts of the room/basement/whatever away from your actual stuff. This also goes back to the organization piece I mentioned earlier. I suggest a shelf or two that is solely for your pallet items.
We personally have a large storage room in our basement that accommodates our pallet flipping. We set aside a corner of the room solely for these items and have them organized by pallet.
Use Several Platforms for Selling
The only way to make pallet flipping a successful side hustle is if you actually sell the items for profit. If you can't sell the items, then you're left with things that you probably don't want.
It's important to make your potential buyer pool as large as possible to increase your chances of selling the items, especially if you want them off your hands sooner rather than later.
The three places I suggest listing your items are:
Ebay
One of the largest seller and buyer marketplaces in the world is eBay. The benefit of eBay is that anyone can open a shop and sell anything, as long as you're honest about the condition of the product. If you have items that are easy to ship, small, and lightweight, then eBay might be a great place to list some of your items.
Facebook Marketplace
Marketplace is great for local listings, especially if you have larger items that are tough to ship. The catch is that you usually need to live in a larger metro area to get any traction on your listings.
You may have seen that Facebook Marketplace now offers shipping. Many sellers prefer other platforms, like eBay, to ship their items because there is more buyer and seller protection. However, shipping through Facebook is an option if that is the route you want to take.
Mercari
Although I have no personal experience with Mercari, I've heard many people that have had success with selling items on Mercari. It's a marketplace app, similar to eBay, that you can sell and ship your items. This marketplace seems to work better in the clothing and textiles niche, so if you get a pallet of those items, this could be a good primary sales channel for you.
Set Goals
Pallet flipping is not a get-rich-quick scheme. I firmly believe you can make good money doing it on your own time, but you are actually working. It's not passive income by any stretch of the imagination.
But, as long as you set goals, you truly can be successful. Here are a few goals you should try to strive for with each pallet:
- Try to make back your initial investment within 2 weeks. If you paid $300 for your pallet, you want to try to make back $300 within 2 weeks of purchasing the pallet.
- Try to double your investment in 1 month. If you paid $300 for your pallet, set a goal to make $600 within 1 month.
- The best pallets will make you 100% – 250% profit. To calculate profit, you'd start with your initial investment. Let's say you paid $300 for your first pallet. You might be aiming to make at least $900 total, which is about 200% profit. ($900-$300=$600 total money made, $600/$300 = 200%).
Yes, You Can Make Money Pallet Flipping
In summary, with proper research, planning, and organization, you can make money pallet flipping.
It's not going to be passive income, but you can work on your own time with products you choose.
The easiest way to learn if pallet flipping is for you is to get started. Start with a small pallet so that it's not too much work and not too much investment. From there, you will learn if pallet flipping is the right side hustle for you.
Kaila is a working mom, blogger, and Learning & Development professional. In her free time, you will find her reading a book or playing board games with friends. She loves spending time with her hubby, Matt; son, Cooper; and daughter, Sawyer.
How To Make Money Buying Liquidation
Source: https://www.frugaltwins.com/side-hustle/make-money-pallet-flipping/
Posted by: lawsonlegreasing.blogspot.com
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