As an entrepreneurship consultant who has spent over a decade assisting small ecommerce businesses, I‘ve seen firsthand how reselling liquidation inventory can unlock major profits – when approached correctly.
In this comprehensive guide designed specifically for new resellers, I‘ll share expert insights on navigating the entire pallet purchasing process to help you land the most valuable merchandise and maximize returns.
Overview of The Liquidation Industry
The liquidation industry has exploded in recent years, with the total secondary market valued at over $700 billion as of 2022 according to industry research firm Mercari.
Driving this growth is both increased consumer returns as ecommerce sales boom and excess inventory as retailers rapidly accelerate supply chain speeds. It‘s created a perfect storm providing huge opportunities for resellers.
My small business clients have found liquidation pallet buying to be vastly more profitable than even retail arbitrage. Securing a single truckload of new merchandise for pennies on the dollar from major retailers delivers incredible ROI.
But as with any endeavor, do thorough research beforehand, start slowly, and stick to best practices to find success.
Step 1 – Choosing The Best Liquidator Marketplace
You‘ll first want to select a reputable liquidator with sufficient inventory volumes across major consumer product categories. I recommend comparing purchasing options across metrics including:
Pricing
- Auction vs fixed price model
- Final closing auction prices
- Range of pricing tiers
Product Variety
- Number of merchandise categories
- Mix of shelves pulls, returns and overstock
Inspection Process
- Manifest transparency showing exact pallet contents
- Return policy around unacceptable goods
- Ability to refuse shipment
Delivery Logistics
- Shipping rates and delivery times
- Warehouse locations and pickup options
Seller Reviews
- Feedback ratings from fellow resellers
- Complaint volume and resolution satisfaction
With consistent inspection processes and competitive buy-it-now pricing, Liquidation.com, Bulq.com and DirectLiquidation.com rank at the top of annual reseller preference surveys.
Just be wary of newer entrants – vet all platforms thoroughly and start small before placing large bulk orders.
Step 2 – Understanding Liquidation Pallet Types
While you can find diamonds in the rough within any pallet, knowing the backstory behind inventory sources is key to setting proper expectations.
| Pallet Type | Overview | Potential Opportunity |
|---|---|---|
| Customer Returns | Items sent back by retailer‘s customers, often due to damage or buyer‘s remorse | Moderate – test thoroughly for defects |
| Shelf Pulls | Unsold stock removed from shelves | High – brand new untouched goods |
| Excess Overstock | Extra inventory exceeding retailer demand | High – brand new surplus |
| Salvage | Fire, flood or other damage stock | Low – inspect carefully before reselling |
| Refurbished | Used/open box items repaired to sell again | Moderate – test functionality before listing |
Study the manifests to determine what type of goods you’ll be receiving. Client Robert focuses exclusively on shelf pulls and overstock for consistently mint condition inventory, while Tanya mixes in 20% customer returns to balance margin and risk.
Step 3 – Evaluating The Manifest
I cannot stress enough the importance of combing through every line of the pallet manifest before placing a bid or purchase. This packing list details exactly what’s inside those boxes, serving as your content guide.
Carefully validate:
- Brand Names – Higher value brands signal stronger pricing power
- MSRP Values – Good baseline for eventual resale offering
- Exact Product Counts – Match what you physically receive, raising any discrepancies
- Listed Item Conditions – New, Used, Open Box – set expectations accordingly
Calling out issues early preserves all reimbursement rights against fraudulent or erroneous listings. Thorough manifest inspection is the #1 predictor of reseller satisfaction I see among new entrepreneurs.
Step 4 – Budgeting For All Costs
A pallet‘s purchase price is just one element within the complete profitability equation. When running the numbers around potential ROIs, tally the full spectrum of hard and soft costs, including:
- Pallet List Price
- Platform Membership Fees
- Shipping / Delivery
- Storage Unit Rental
- Inventory Management Software
- Accounting Services
- Local Reselling Permit Fees
Sarah, who resells $8K of inventory each month, budgets $3K for overhead expenses beyond her pallet wins, tightening overall margins. Size outlays appropriately as you scale.
Step 5 – Placing Your Order
Auction sites like Liquidation.com allow you to submit max bids across desired lots, entering the highest amount you’re willing to pay. Pallets sell to the top bidder once the timer expires.
For fixed pricing marketplaces, snatch up listings instantly before another reseller beats you to it! Bulq and DirectLiquidation refresh inventory daily, so persistent checking yields the best finds.
Whichever model, ensure your payment method is preloaded for fastest checkout completion. Popular options include business credit cards, PayPal, bank transfers and lines of credit.
Step 6 – Managing Shipping & Delivery
Liquidators primarily organize transport directly from their warehouses through major carriers like FedEx and UPS. Compare rates across pallet count tiers and delivery speed options.
For example, Liquidation.com offers ground shipping a 2700 lbs / 38 box pallet from Atlanta to San Francisco for $920 with 5-day transit.
You could potentially arrange your own pickup to save costs, but hiring box trucks, driving hours and gas adds complexity fast. Leverage existing logistics networks as you get started.
Step 7 – Inspecting Your Inventory Upon Arrival
The day your pallets show up is exciting…and also crunch time! Before signing any delivery paperwork, physically validate:
- Box count matches stated manifests
- No visible external damage or water seepage
- Select random boxes across pallets, inspecting contents for broken or used goods
Document any issues with photographs and connect immediately with customer support. Reimbursements require raising complaints quickly around faulty merchandising or deliberately obscured defects.
Step 8 – Selling Through The Most Profitable Channels
The final step involves researching listings to determine optimal sales channels based on fees, audience reach and competition levels.
I generally recommend small resellers focus on the following progression:
1. eBay – Global consumer marketplace perfect for niche products with highly engaged enthusiasts willing to pay premium local pick-up prices. Can move unique inventory quickly.
2. Amazon – Larger general marketplace but requires more stringent processes around shipping and content guidelines. Rewards at scale players.
3. Facebook Marketplace – Leverage existing social graphs to sell household items locally. Meet in safe public spaces and cash payment only.
4. Flea markets / Garage Sales – Personally showcase select specialty merchandise each weekend at fixed booth locations and limited hours. Build relationships with repeat bargain shoppers over time.
Avoid sitting on inventory for too long given the operational overhead of storage costs. Ruthlessly research pricing trends to stay competitive and liquidate stagnant merchandise through job lots as needed.
To conclude the guide, I wanted to share my top recommended marketplace options for sourcing liquidation pallets across major retail categories:
| Company | Key Notes |
|---|---|
| Liquidation.com | 20+ years experience. Centralized purchasing model yields best pricing from Big Box stores. Recommended. |
| BULQ | Owned by Amazon. Specializes in high-margin customer returns. |
| Direct Liquidation | Primary focus on Walmart overstock pallets. Large B2B selection with daily inventory refreshes. |
| Liquidation Station | Comparison shopping engine indexing goods from 150+ liquidators in one spot. Helpful for deal discovery. |
Evaluate multiple sourcing channels to determine what works best for your niche customer segment. With the right liquidation partner, data-driven inventory selections, closely managed overhead, and targeted sales execution – handsome profits await.
Hope this complete guide better prepares you to tap into the exploding liquidation pallet market and take your new ecommerce venture to the next level! Wishing everyone enduring success.
Sincerely,
Patrick Richardson
Founder, Small Biz Consulting
