Do NOT Purchase Liquidation Pallets Unless You Do This... - The Family Flips (2024)

When it comes to purchasing liquidation pallets, it can be difficult to know where to start. Most think that the steps are simple: find a pallet, purchase it, sell the items, and repeat. But let’s be honest… most things are not as simple as they seem. Buying liquidation pallets and reselling them is no different.

If you are an established reseller, then this process will be a lot easier for you. For those who are not, the process of buying and reselling pallets can quickly become overwhelming and seemingly impossible.

But it’s not. It’s not impossible at all! If there are a plethora of people who are doing it successfully, then you can, too. The challenge is knowing what you need know to have before you make that kind of investment.

Start here:

5 Things You Need to Think About Before Purchasing Your First Liquidation Pallet:

1. Start by Sourcing Small-Scale

Where liquidation pallets are useful is that they allow you get bulk quantities of items to resell. The downside is that it is limited in scope of choice. Even if you get pallets of specifics, such as clothing, you’re pretty much stuck with whatever comes out of the pallet. This poses a problem for beginner resellers. There’s no guarantee on the quality of the item or even if the item works. This a common source of panic for new pallet resellers.

Start by selling smaller scale. Sourcing items for free from your own home, family, and friends. You can even offer to consign for them to earn a little extra money. Then use the money you earn from those sales to invest in purchasing products from places like thrift stores, garage sales, and estate sales.

As you do this, you’ll learn more about reselling that will be useful to you when it comes to purchasing liquidation pallets. You’ll learn more about how well certain items sell, what kind of profit you can expect, and more.

2. Develop Your Plan B

When it comes to reselling, your first plan doesn’t always work the way you intend it. The buyer’s market is a fickle thing that changes as easily as the wind does. In some seasons, the sales are good. Then they’re not. You might find that some items that you could sell online are no longer profitable that way. There will be problems that you do not foresee. As with any business, there is no way to know ahead of time all the possible complications that might come with reselling.

This is why it is important to take time to learn your platforms, join communities, and try to keep up with any changes. Learn how to keep an eye on the market and what is selling well and what isn’t, and figure out how to adjust your business strategies to keep up with those trends.

And above all else– always have a plan B. Find a way to sell online and locally. Maybe you want to focus on selling online, because it works well for you. But always know what your local reselling options are. When you start buying liquidation pallets, there will inevitably come products that you cannot sell in your Plan A platform. This is where you have to utilize your own creativity and find ways to move these items efficiently.

3. Understand Your Overhead Cost

Remember that purchasing a pallet is not simply about the cost of the pallet itself. Pallets cannot fit on a mail truck, and very rarely will UPS or FedEX be a cost-effective way to move a pallet. There are fees you’re going to want to think about before you purchase a pallet, because these all need to be configured into how much money you need to make off the inventory to break even, or hopefully, profit.

How much does it cost to ship a pallet? Are there freight companies that you can hire to do this? Does the liquidator offer shipping? If you live in a residential area, can a large truck maneuver in your neighborhood? How do you plan on getting the pallet off of the truck? Do you have a forklift? Or can you pay extra to get a truck with a lift gate?

The overhead costs can get really high. If you have a trailer, or you’re willing to rent one (which, regrettably, is not always a cost effective long term solution) it might be more efficient to pick them up yourself. In which case, how much time are you spending getting these pallets yourself? Remember, any time you spend doing this is time you’re NOT spending listing. How much gas or car maintenance will you need to keep up with the demands of picking those pallets up yourself?

4. Know Your Liquidator’s Pallet Listings and Programs

It’s not enough to say, “I would like to buy a pallet of Amazon goods”. What kind of Amazon program are you looking for? Are you looking for a bunch of small items that wouldn’t sell online, but could sell in a store? Are you wanting larger items like furniture? Something in the middle?

You also have to consider the condition of the items on that pallet. Many of them will be mixed between customer returns and shelf pulls. But you can also find pallets of salvage items (usually lower cost, but much higher risk that the items are not working), or you can find high dollar items of completely overstock and/or shelf pulls. Less risk, for sure, but you’ll pay for it in the price of the pallet.

The same goes for any major big box company’s liquidation pallets. Most companies will have different pallet programs, and not all liquidators are going to have all of them. You would need to spend time learning about all the various programs available to you, and determine if you even have the means to sell those items in your chosen business model. And honestly, sometimes you may just need to try a couple to really get a feel for what kind of items you can expect.

You can also review pallet unboxing videos on YouTube, but be wary. As a YouTuber, I would always recommend that you watch unboxing from multiple YouTubers, from the popular YouTubers to the lower sub count content creators, to get a feel for the consistency of those loads.

5. Think About Establishing a Reselling Business First

By “having an established reselling business”, I don’t mean regularly selling things on Facebook Marketplace or having regular garage sales. These skills can help you, but when it comes to buying liquidation, you’re going to need more than that.

When you source your inventory in other ways (retail arbitrage or thrifting) the main problem to solve is “Where do I find new inventory?”. You make the decision in store, deciding and hand picking what you want to resell. In the liquidation world, the question is entirely different– “how do I sell my new inventory?”. You don’t get to hand pick things that will sell well on your platform. You get what you get and you won’t know until you’re processing that pallet. You’ll need to solve the problem of being able to get the most profit and getting that item in front of the people who are likely to buy it.

Any experienced reseller will tell you that there is a learning curve to any platform that you use to resell. There are terms of service, fees, and listing techniques that vary from platform to platform. If you’ve never utilized ANY of these platforms before, you’re putting the pressure of figuring out the unique platforms that you’re wanting to sell on, as well as learning how to move a pallet of inventory. It’s a recipe for overwhelm.

Start by establishing an online platform that you like. Learn the tips and tricks for selling there. Get some customer feedback build up that will boost your listings and help your sales, too. This step is not necessary, of course, however keep in mind that your learning curve will be a lot longer if you decide not to. Be prepared!

Let’s Re-Cap:

Reselling liquidation is a lucrative way to make money, but it’s also a process.

Make sure you do your research and take your time getting acclimated to reselling liquidation pallets. Take the time to:

• Increase your knowledge of what kinds of items are your “niche”– find something that sells well and that is rather enjoyable to work with. If you don’t like dealing with tools, don’t sell them. Find something that you can sit down and list for a few hours without hating it,
• Develop alternate plans for moving items, in case your original plan doesn’t work out. Don’t put all your eggs in one basket. Prepare yourself for the unexpected issues that will inevitably come,
• Understand the overhead costs– nothing will hurt more than paying way more than you intended for a pallet, with no hopes of even breaking even (ask me how I know).
• Take the time to learn the different types of pallets and programs that are available to you and determine if they fit in your business model before you buy them. And finally,
• Consider establishing a reselling business if you haven’t already, so you can learn the ins and outs of reselling before you’re overloaded with an excess of product to sell!

It’s your business and you can do it however you want! That’s the beauty of it. But, in order to increase your chances of succeeding, I will say this one thing:

Celebrate each and every step. No matter how little you make at first, it’s one step closer to your dream. This is just as much about the journey towards your goal as the goal itself.

Be patient, learn your trade, and conquer.

Best of luck!

Additional Resources on this Topic:

Check out my e-book! The Secret to Flipping Liquidation Pallets with Little to No Investment!