How to Buy Amazon Return Pallets: A Beginner‘s Guide

The rapid growth of ecommerce and rise of Amazon has created a unique opportunity for entrepreneurs interested in buying and reselling liquidated inventory. Amazon return pallets provide access to discounted merchandise sourced directly from Amazon warehouses. With the right knowledge and preparation, selling Amazon customer return pallets can become a highly profitable business model. This comprehensive guide covers everything a new entrepreneur needs to know to get started.

A Primer on Buying Amazon Customer Returns

Amazon customer return pallets refer to bulk lots of items returned by Amazon customers. When returns exceed inventory needs, Amazon liquidates these assets through B2B auctions and wholesale markets.

The Emergence of Amazon Pallet Reselling

Third-party reselling of Amazon returns has grown exponentially over the past decade. In 2010, Amazon sold $5 million worth of returns. By 2018, liquidation sales had reached over $150 million. As Amazon‘s share of ecommerce grows, so too does the supply of customer returns available for resale.

In the US alone, the secondary market for liquidated ecommerce inventory is estimated at $5 billion in 2024. Some experts predict global sales of returned merchandise may reach $15 billion by 2023 as online retail continues expanding. This presents a massive opportunity for entrepreneurial resellers.

Benefits of Reselling Amazon Returns

Buying and reselling Amazon return pallets offers several advantages for ecommerce entrepreneurs:

  • High-profit margins – Returns can be acquired at a fraction of original value, leaving room for big profits when resold. Profit margins can range from 50-80%.
  • Established marketplaces– Popular resale platforms like eBay and Amazon marketplace simplify listing return pallet inventory.
  • Low barriers to entry – Amazon pallet resale has relatively low startup costs and overhead requirements compared to other ecommerce models.
  • Less need for customer service – Products are sold as-is, reducing demands for returns and technical support.

However, Amazon pallet arbitrage also comes with unique challenges discussed later in this guide. While profits can be substantial, success requires an organized, data-driven approach.

Step 1: Sourcing Amazon Return Pallets

The first step to launching your Amazon return pallet resale operation is finding a reliable supplier. There are several options:

Buy Directly from Amazon

  • Amazon Warehouse – Purchase used, open-box, and refurbished goods directly from Amazon‘s resale site. Items discounted based on condition.
  • Amazon Liquidations – Sells returned items wholesale to approved business buyers through auctions and fixed-price listings. Requires business ID and tax documents.

Third-Party Wholesalers

  • Liquidation.com – Largest wholesale marketplace. Features live and online auctions for B2B buyers.
  • Bulq – Leading B2B ecommerce liquidator focused exclusively on Amazon returns. Offers bulk buying options.
  • Direct Liquidation – Specializes in Amazon wholesale pallets sold through online auction marketplace. Provides shipment and logistics.
  • Liquidation.com – Large marketplace featuring live and online auctions on customer returns, overstock items and more.

When evaluating suppliers, ask about their sourcing relationship with Amazon to verify product authenticity and avoid counterfeits. Reputable wholesalers can offer better prices, terms and selection.

Step 2: Evaluating and Purchasing Pallets

Once you‘ve found a supplier, it‘s time to assess and purchase available pallet inventory. Follow these best practices when acquiring your first pallets:

Inspecting the Pallet Manifest

Carefully review the item manifest provided for each pallet listing. Check for:

  • Number of units – Look for pallets with at least 150-200 units for wider selection.
  • Categories – Seek a diverse mix of products like electronics, home goods, apparel, toys etc.
  • Brand names – Known brands like Apple or Samsung can command higher prices.
  • MSRP value – Higher original MSRP indicates greater discount potential.
  • Condition – "Like new" condition enables highest resale value.

Analyzing Pallet Photos

Look through all posted photos of the actual pallet contents. Photos that clearly show products and packaging are ideal. Watch for:

  • Appearance – Items should look new and undamaged for profitable resale.
  • Branding – Branded packaging builds buyer confidence in authenticity.
  • Preparedness – Pallets that are pre-sorted, labeled and boxed require less handling.

Estimating Potential Profit

Calculate potential profit by researching current resale rates for the pallet‘s products on eBay, Amazon and other venues. Estimate conservatively.

A good rule of thumb is purchasing pallets with a minimum 3X profit potential after fees and shipping. Carefully factor in all costs before bidding.

Start Small

When first starting out, begin with smaller pallet purchases in the $500 to $1500 range. This allows you to test suppliers, assess workload and learn the ins and outs of reselling returns without overextending.

Step 3: Receiving and Processing Pallets

Once your pallets ship, proper processing is crucial before listing products for resale. Follow these tips:

Thoroughly Inspect All Items

Upon taking delivery, unpack the entire pallet and inspect every item for damage, defects or missing parts. This saves issues down the line. Be prepared to set aside damaged inventory.

Test Electronics and Appliances

Fully power on all electronics to ensure functionality. Note any items needing repairs. Consult technicians if possible to evaluate repair costs.

Look Up Recalled Items

Cross reference any appliance or product serial numbers against recall lists published by the CPSC. Pull recalled inventory immediately.

Organize and Categorize

Sort items by type, brand, condition, value and other factors. Organization is key for efficient processing. Assign unique SKUs to each product.

Clean, Repackage and Photograph

Wipe down items, repackage if needed and take high quality photos. Clean presentation boosts perceived condition.

Proper processing removes uncertainty and prepares your inventory for profitable sales.

Step 4: Listing Your Products

With processed inventory in hand, it‘s time to begin selling. Choose from several effective sales channels:

eBay

eBay‘s massive buyer base creates opportunity for single-unit sales. List competitively with detailed titles, descriptions and pictures. eBay store subscriptions offer discounts.

Amazon (FBA)

Send new and "like new" items to Amazon fulfillment centers for sale through Fulfilled By Amazon (FBA). Amazon handles shipping and returns for easy hands-off selling.

Facebook Marketplace

Facebook‘s hyperlocal Marketplace feature is ideal for selling large items locally, like furniture. Meet buyers in-person for cash payments.

Other Channels

Consider Craigslist, OfferUp, Nextdoor and niche sites to connect with buyers. Attend flea markets or rent mall kiosk space for in-person selling.

Step 5: Shipping and Accounting

As orders come in, execution matters. Follow best practices for shipping, returns and accounting:

  • Pack items securely and ship promptly. Communicate tracking info.
  • Weigh returns policies carefully – be willing to accept some level of returns.
  • Create a simple inventory management system to track costs, sales, and profits.
  • Use accounting software to manage tax obligations, bookkeeping and generate reports.

Proper shipping, return handling and organization processes are vital for sustaining this high-volume business model.

Mastering Amazon Pallet Arbitrage

Succeeding in this business takes an entrepreneurial drive, strategic thinking and organization. Here are some top tips for maximizing results:

  • Start small to learn the ropes before scaling. Perfect your processes.
  • Build supplier relationships to gain better pallet access and terms.
  • Focus on faster-selling segments like electronics and trending categories. Pass on obsolete inventory.
  • Minimize risks by avoiding recall items and sticking to new/open box condition.
  • Reinvest profits to acquire higher-value pallets that boost margins over time.
  • Consider specialization – some sellers focus exclusively on electronics, for example.
  • Maximize tax deductions by deducting mileage, storage fees, supplies, and other qualifying expenses.

With the right strategic approach, reselling Amazon customer return pallets can become a highly scalable business with revenues exceeding seven figures. Many entrepreneurs have already built thriving companies successfully following the blueprint outlined above.

So for ecommerce newcomers with an appetite for opportunity, look no further than the billions in returns flowing back into Amazon‘s warehouses each year. The potential profits from acquiring and reselling this merchandise are too big to ignore.