Amazon promises customers a 30-day no-questions-asked returns policy, and while this is good for consumers, it has led to massive costs in returns for the e-commerce giant. The National Retail Federation estimated that during the 2022 holiday season, the merchandise returns cost $171 billion, a whopping 17% of total online holiday sales in the US. Meanwhile, US retailers account for as much as $816 billion in lost sales from total returns in merchandise.
With Amazon being the largest online retailer in the US, it shares a huge chunk of this staggering volume. It’s no wonder they’re selling Amazon returns pallets to enterprising individuals who want quick profits. This is also their answer to rising criticism over their disposal methods of product returns.
In this guide, we’ll take a deep dive into how you can buy and sell Amazon return pallets and turn this process into a thriving business.
Are Amazon Return Pallets Profitable?
Also called liquidation pallets, Amazon return pallets are large crates containing various returned items like clothes, books, electronics, furniture, and more. These items are usually damaged, defective, or used, but there are also many items in good condition that were simply unwanted.
There’s no guarantee what you’d find in a box or how much money you’d make, but because you get these boxes for really low prices, it’s possible to make a decent profit. Pallets are usually sold at online auctions where you bid for them or buy them at a flat rate. Most boxes start as low as $200 to $800, while some reach as high as $8,000 to $13,000.
Benefits and Drawbacks of Selling Amazon Return Pallets
There are several reasons why this is a good business:
- Minimal initial investments – It’s much cheaper to purchase liquidation pallets than to buy directly from retailers or wholesalers. With a few hundred dollars, you can kickstart your business and start earning.
- High-profit margins – Because you’re getting items for a fraction of their usual cost, you can turn an impressive profit if you know how to price items well.
- Unlimited product inventory – As long as you find credible suppliers, you’ll have access to an unlimited inventory of various items. There will always be returns and overstocks you cancontinuously procure and sell.
- Easy reselling opportunities – There are multiple platforms where you can resell your pallet finds. You can go to various e-commerce sites, sell physically via garage sales, post on your social media accounts, and more.
Despite these advantages, you should also be aware of the challenges involved in selling liquidation pallets.
- Uncertain quality – Because these are returned goods, their quality and condition aren’t guaranteed. You’d suffer a loss if you purchased a pallet with more unsellable items than good ones.
- Lack of transparency – Some liquidation companies don’t list information about the contents of the pallets. If you’re not careful, you might purchase pallets with empty boxes or damaged items.
- Labor-intensive – You might find the process of sorting through pallets and looking for saleable items time-consuming and labor-intensive. You’ll also still have to list and resell each item.
Despite these challenges, you can still gain massive success from flipping liquidation pallets. You just need strategic planning, market research, and some luck.
Buying Amazon Return Pallets
It’s easy to buy liquidation pallets. To get started:
- Register on a liquidation website.
- Browse available return pallets.
- Place a bid or purchase for a flat fee.
- Arrange shipping or pick up at a designated location.
Amazon also holds a liquidation sale for its sellers, which typically takes place after the holidays. This is their way of helping third-party sellers liquidate any returns or overstocked items.
What to expect when buying liquidation pallets
Buying Amazon Return Pallets is a gamble, but understanding what each pallet can contain will help maximize your chances of getting high-ticket items. There are four types of Amazon return truckloads:
- Large products, called “Bigs”
- Small products, called “Smalls”
- High retail
- Clothing
“Bigs” are ideal for larger retail stores because they contain 26 tall pallets. These are mostly filled with large items but with a lower piece count. Think of televisions, refrigerators, furniture, and huge garden goods. You’d need ample storage space if you purchase these items. This is also ideal if you’re selling for local sale, so you won’t have to worry about shipping them to your customer.
“Smalls” contain a huge assortment of smaller merchandise like sunglasses, watches, electronics, and accessories. It takes time to sort through these products, especially if you want to list them online. However, there can be very valuable and profitable items in the lot—just be ready to invest time sorting through them.
High retail contains the best-selling stocks from Amazon. You’d expect a lower item count but be guaranteed that you’re getting highly sought-after items, which can result in a faster turnover. The drawback is there’s greater competition, potentially resulting in smaller margins.
Clothing pallets may contain up to 1,200 items, which can be a mix of men's, women's, children's, and baby's clothes. There could also be designer and branded clothes, along with accessories like belts, scarves, and handbags. Most of these items are ready-packed and in prime condition, making them ideal for resale in flea markets or thrift shops.
Things to consider before purchasing
Before buying your first Amazon Return Pallet, carefully consider the following:
- Condition: While there’s no guarantee on the condition of the products that’d arrive, you can still check the listings to see if what you’re purchasing is new, refurbished, or damaged. The condition will affect the resale value.
- Manifest: Most listings will contain an inventory list (called manifest) of what’s inside the pallet. There can be varying information in the manifest, with some being simple lists while others having comprehensive information like conditions, reviews, etc.
- Profit margins: You can estimate your potential returns by looking at how similar items are sold. Check the original price and used price and determine if this leaves enough room for your other costs.
- Shipping costs: Most platforms will charge shipping fees, either as flat fees or weighted fees. Take this into account when considering your options.
- Storage space: If you buy bulky items, ensure you have enough space to store these huge pallets. If you’re purchasing smaller pallets, make sure you have enough space to sort them out.
- Return policy: Even if you’re purchasing returned items, you’re still covered by a returns and refunds policy that states what happens in case the items are damaged in transit or not shipped by the marketplace.
- Time investment: Selling liquidated items requires time and effort to sort, clean, and list them all. The time investment doing these things is different depending on the kind of pallets you buy. Big pallets will be easier to sort but maybe harder to clean, while small pallets may take hours to sort and categorize.
Where to buy Amazon Return Pallets
Here’s a list of reputable liquidation companies where you can purchase returned stocks.
Amazon Bulk Liquidations
Amazon introduced its own bulk liquidations platform where you can find overstock items in new and unopened conditions. Products here are from Amazon themselves or its numerous third-party sellers. Since these are unopened items, you’d be receiving them in mint condition and can sell them for higher prices.
Purchasing a pallet is also straightforward because it’s just like buying from Amazon. You select the item you want, check out the listing page, and checkout. Each listing page contains details about the item, quantity, and price.
Amazon will also ship the items to you within 14 days, although they can’t guarantee that all of your orders will arrive simultaneously. To start shopping, you have to contact Amazon directly if you want to start shopping from their inventory.
The program is still in beta and there may be limited lots available. You’re also only allowed to purchase one lot per order. All purchases are considered final and not eligible for refunds.
888Lots
888Lots is one of the longest-running liquidation companies offering low prices for individual or bulk items. They allow you to customize your lots and choose the exact items you need. Alternatively, you can purchase one of their existing lots, which has a detailed list of the items contained, including their conditions. You can even read the reviews and sales rank of these items to further help you evaluate if they’re profitable.
There are a lot of brand-new products across over 30 categories on the platform, so you won’t run out of things to sell. There are also fixed-priced pallets, but you can always negotiate their prices. Despite these detailed descriptions, there’s no guarantee of the product condition you’d get.
To buy from the platform, you need a valid resale certificate permitting you to sell to US customers.
Direct Liquidations
Direct Liquidation partners with Amazon, Target, and Walmart to auction liquidation pallets. They’re a well-known and reputable platform that gives you the option to narrow down your search by store and brand. This allows you to select the exact items you want and also helps make the search process easier.
While they don’t guarantee product condition, Direct Liquidation only works with reputable selling platforms, so you’re guaranteed the authenticity of what you receive. Unfortunately, there are categories with minimum quantity requirements which can be restrictive for small-scale buyers.
What sets them apart from other similar liquidation sites is their exclusive partnership with prominent retailers and manufacturers in North America. This allows them to keep costs really low because there are no intermediaries, giving more customers access to high-quality items.
BStock
BStock supports small and large businesses and has categories specific to each. Whether you’re a small business owner or a large business, you can find pallets or truckloads of inventory at low prices.
Like other platforms, you have to place a bid to purchase the lots. You also need a resale license to create an account, and once you’re approved, you can start bidding and winning on various listings.
They’ve partnered with a lot of big online platforms like Amazon and several small ones to give you lots of options to choose from. However, not all of these marketplaces have active auctions. Once you’ve won an Amazon auction bid, Amazon has 14 days to prepare your shipment. Otherwise, the order is canceled, and you’ll get a full refund. They also charge a minimum $135 shipment fee, which is adjusted based on the weight of your pallets.
Liquidation.com
Just like Direct Liquidation, Liquidation.com offers the same convenience of being able to filter what you want to buy using Categories, Lot Size, Brands, and Locations. This enables you to be efficient and granular in your search for those winning items.
There is also a wide range of products from every imaginable category, including niche Collectors and novelty items. You can bid on lots for as low as $100 with no reserve fees. You can also take advantage of “Buy Now” buttons where you can purchase a lot for a fixed price without bidding.
Liquidation.com accepts items from various sellers, including manufacturers, public sector agencies, financial institutions, service companies, and logistics providers. You can find items in multiple conditions, such as new (overstock items), refurbished, returns, shelf pulls, used, and salvage. Be sure to check the condition of the lot you’re bidding on before finalizing a sale.
Bulq
If you hate auctions, try out Bulq. They are one of the largest sellers of liquidation merchandise and partner with many retailers, including Amazon. When you find something you like, just add it to your cart and checkout.
They also frequently update their lists with new pallets and provide shipping services for a fee. You can easily sort through their categories to find several big-box store retailers. Since the platform is designed for retailers, you can enjoy perks like bulk purchasing options, discounted pricing, and a supportive reseller community.
Listings also provide ample information about the contents of each pallet so you’d know exactly what you’re getting. However, while this information is available, you can’t customize what a pallet contains. Likewise, the condition of the products is unknown, and some may arrive defective, incomplete, or broken.
Selling Amazon Return Pallets
After purchasing your first lot, it’s time to sell. Here are some options:
- Sort and bundle
Sort through your pallet to see what you got. Some items are clean and can be sold right away, but others may require extra attention. You can also check which items can be sold as a bundle since that will allow you to create unique offers.
- Repair and refurbish
In case the items you got are faulty, you can try to repair and refurbish them. You can either use a third party or repair it yourself. You’d be surprised that many faults can be easily fixed and won’t cost a dime. Some items might let you salvage parts to repair another item from the same model.
- Repackage
If you get items with damaged packaging, repackage them into better packaging. If you can make it look as close to the original one, do so. Packaging elevates the product’s value, and you’ll be able to command a better price if with good quality original packaging or pristine plain packaging.
- Re-accessorize
If you can find the extra accessories needed to complete a set, do so. Selling an item with its complete accessories will command a higher price. You can also build a set to support a main item. For example, if you’re selling a camera, you can complete a set by including straps, stands, lenses, covers, etc.
Where to sell returned items
There are multiple online and offline channels where you can sell these items depending on your target customers, the products you’re selling, and your time investment.
When selling online, consider the weight of your items and the cost of shipping them. You’d also want to look at your competition so you know how to price and position your products properly. Use tools like SmartRepricer to price items competitively.
Some popular online platforms include eBay, Craigslist, and even Amazon. However, be careful to check out the exact requirements, fees, and policies involved before listing on these sites. Another option is to build your own website. However, you must have a marketing plan to drive traffic to your site. You can use online ads and harness the power of social media.
If you decide to sell offline, you can start a thrift store business, sell right out of your garage, or rent a stall at a flea market and target bargain hunters. You may also list your items in local communities and promote them so that locals learn about your offers. This is a good option if you’re selling big, bulky items that will be too costly to ship.
When starting an offline business, factor in overhead costs like rent and utilities. This option is advisable for profitable enterprises who can afford the costs. For those starting, selling online with less overhead costs can be a more viable option.
Tips and Tricks for Buying and Selling Amazon Return Pallets
To further ensure your success in this business, follow these tips:
- Compare products from different marketplaces. Different platforms will list almost the same pallets (or at least the same contents). Compare their listings and take note of the prices and product conditions. Factor in shipping costs and other fees before making a decision.
- Avoid risky categories. Some products are too risky to buy and resell. This includes electronics, cooking products, and any products with multiple parts and accessories. These items have higher chances of being defective, and if you don’t know how to fix them, you’re left with dead inventory.
- Start small. Don’t be tempted to buy several pallets right away, even if they are cheap. Start with one or two first and get a grip on the buying, sorting, and selling process.
- Look for manifests. Mystery boxes may be cheaper, but there’s also a bigger chance that they’ll contain unwanted products. Stick with lots that have detailed manifests so you know what you’re getting.
- Evaluate liquidation platforms. Don’t just randomly sign up and purchase from one platform. While all of the listed ones above are reputable, exercise your own judgment and read customer reviews before choosing a platform to start with.
- Record your sales. To maximize your profits, record how much customers pay for which items. This will reveal the perceived value of the items so you can improve your pricing, marketing, and packaging efforts.
- Don’t pay more than 20% of the MSRP. When joining auctions, it’s essential to understand the manufacturer’s suggested retail price (MSRP). This is the total of the selling price of all the items on the pallet. Don’t bid more than 20% of the MSRP. You may lose a few auctions, but it’ll guarantee you’ll always turn a profit on the pallets you’ve won.
Final Thoughts
Selling returned items accomplishes two things: you earn huge profits, and you help solve Amazon’s massive returns challenge. Not to mention, you help save the planet by preventing unwanted items from ending up in a landfill.
If you’ve always wanted to try out this lucrative business, get started with the guidelines listed above. Who knows, your side gig may turn out to be a highly successful enterprise.
Additional FAQs about Amazon Returns
How does Amazon's return policy impact consumer behavior and market trends?
Amazon's return policy allows customers to return items within 30 days without any questions, making shopping a low-risk activity. This policy not only builds trust and loyalty among customers, potentially boosting sales but also influences shopping habits, encouraging people to make more purchases they might otherwise consider risky.
However, this approach also has a broader impact on the retail market. It leads to more returns, increasing operational costs for Amazon and pushing other retailers to adopt similar policies to stay competitive. This creates a need for continuous innovation in how businesses manage their stock and handle returns, possibly driving them toward more sustainable practices or new technological developments in supply chain management.
What measures does Amazon take to mitigate the financial impact of such a high volume of returns?
To handle the financial strain caused by frequent returns, Amazon has developed several strategies. One key approach is selling returned items in bulk at a discount to third parties, which helps recover some of its losses. Amazon also uses sophisticated predictive analytics to forecast what and how much they should stock, reducing the chances of excess that needs to be liquidated later. They employ advanced technology to streamline their restocking and returns, cutting down on logistical costs.
While Amazon could discourage unnecessary returns by charging restocking fees or tightening return policies on certain items, they have generally avoided such measures to keep customer satisfaction high.
What are the long-term effects of Amazon's approach to handling returns on the e-commerce and retail industry?
Over the long term, Amazon's handling of returns, especially its strategy of selling off returned items and maintaining a generous return policy, sets a standard in customer service that other retailers aim to replicate. This shapes the future of e-commerce and the wider retail industry, encouraging businesses to enhance customer satisfaction and loyalty with similar policies.
However, it also complicates logistics and return management, spurring innovation in how these challenges are tackled. These practices could lead to more environmentally friendly approaches in the industry, like better product lifecycle management and recycling efforts. Furthermore, as these policies often require significant logistical support, they could lead to a market where only the biggest players can compete, potentially reducing competition.
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