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How to Make Money Pallet Flipping [2023 Updates]

Updated: 4 days ago

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Americans across the country have embraced side hustles as a way to supplement and ultimately replace their incomes. Led by millennials and other generations of younger Americans trying to pay down debt, side hustles have exploded in popularity.


One of my favorite ways to get started in the side hustle space is through pallet flipping liquidation and other sets of goods from your favorite retailers. Flipping pallets will require you to shop and make money by selling those same products for more than you bought them for.


Here is how you can get started and make money pallet flipping in 2023.


More: Check out these creative side hustle ideas this year!




What is pallet flipping?


Pallet flipping is the process of purchasing a liquidation pallet of goods and then selling those products individually or in groups in order to make a profit. These pallets are bundles of goods typically sold by retailers and other companies for a variety of reasons, including clearance, outdated goods, and other reasons.


Pallets come in all different types of products. For example, you may find pallets of electronics, home tools, small appliances, clothing, or really any other type of product.


Oftentimes, items in pallets are sold together because a company or retailer is having trouble selling the individual components. So, in order to clear inventory, companies will bundle products together and sell them at a deep discount.


This allows companies to recoup some money for the products that haven't sold and clear out old inventory at the same time. It's a win/win for retailers, and a profit opportunity for you.




What are liquidation pallets?


Pallets are groups or bundles of goods packaged collectively for sale. Oftentimes, when you purchase a pallet, you never fully know what you’re going to get. Typically they’re packaged in a way where it is impossible to see everything in the pallet.


In all of your searching, you may even encounter something known as mystery pallets, which are just pallets that have undisclosed products within them.


Buying a discounted pallet does not guarantee that you will turn a profit. And while this is true with any flipping business, you'll want to be aware of the risks. The key is to start small. Since you have to part with some money before you have the chance to make any profit, you'll likely want to start with a small investment until you gain a little bit of experience.



Start a pallet flipping business


Starting a pallet flipping business can be a great way to make some extra money - if you know what you're doing. To get your business started, you'll need to solve for the following:


  1. Finding pallets to buy

  2. Purchasing them

  3. Reselling the items



1. Buy liquidation pallets


One of the keys to making good money by flipping pallets is understanding where to buy them. Pallets can be purchased in three main ways:


  • Buying direct from a retailer (this is the Target or Amazon option)

  • Liquidation websites

  • Liquidation warehouses in your area


I get asked by readers all the time which of these three approaches that I think is the best, and it really depends on a couple of variables.


First is the economic climate at the time. In the Summer of 2022, economic conditions led to huge inventories of liquidation items, meaning that there were real deals in warehouses for those that were willing to look.


Second is your geographic location. In more rural or remote areas, online could be a better bet, since it is unlikely that retailers would send large inventories into these areas.


Where you buy your pallets, and how much you pay, are really important, as the profit that you ultimately earn from buying and selling pallets depends on how much you pay to begin with.



Buying pallets from a retailer


Like I mentioned, you may opt to buy your pallets right from a retailer.


Walmart is probably the best example of a retailer that sells liquidated products directly to consumers. We've also heard of liquidation options being offered by Amazon, Home Depot, and other retailers too.


This carries both a pro and a con. Aquiring pallets from a retailer is probably the easiest way to get started, but it is unlikely that you will get the best deals this way.



Liquidation websites


You may also opt to browse retailer liquidated pallets online through sites such as B-Stock, Liquidation.com, and Direct Liquidation.


Companies and retailers that you've heard of can register company profiles on these sites in order to sell their pallets to Americans across the country. One word of caution, however - these sites oftentimes operate via auction, which means that you may face competition for pallets that are deemed to be in demand.


Therefore, it is really important to make sure that you don't overpay, which could remove any possibility of turning a profit. You'll also want to remember to budget for shipping costs.


Here are a couple of tips about bidding on pallets:


  • Monitor the status of auctions regularly. For those items that you are really interested in, you may consider setting alarms for a few minutes before an auction expires so that you have the opportunity to get your best and final bid in, if necessary.


  • Set a purchase limit. It is important to stay financially disclipined. Therefore, do any research you can on a pallet before you buy, and set a maximum price limit. If an auction goes above that price, walk away and look for your next deal.



Visit liquidation warehouses


Another great way to find deals on liquidated pallets is to find warehouses in your area. And while this may seem like a foreign or uncomfortable idea on the surface, stepping outside your comfort zone may help you boost your profits beyond your dreams.


To find a liquidation warehouse near you, simply Google "liquidation warehouses + [your location]." So many opportunities!


It is totally up to you, but I always feel more comfortable proceeding with companies with reputable websites and reviews, but newer or less trafficked locations may present you with deals that are simply too good to pass up.



2. Purchase your pallets


Purchasing your pallets may sound basic, and while it may be simple in reality, it is a slightly different experience with each retailer or business that you buy from.


What does remain consistent, however, is the strategy that you should use to identify what pallets can generate profit, as opposed to those that you should avoid. To maximize your chances of success, follow these tips:


  • Do your homework

  • Stay organized

  • Gauge product fit

  • Consider buying on credit



Complete your due diligence


Try to understand exactly what products are within one. Asking for an itemized list can help you understand your potential profit, but many times, you won't be able to get a full list of the products within.


If you can't, your next best option is to take notes as to what products you can see and understand your profit potential that way.



Remain organized


Remember the importance of staying organized. Keeping track of inventory is not easy to do, so I recommend that you use an Excel or Google Sheets spreadsheet to help you stay organized.


Track all the important things, like:


  • The items you own/have sold

  • Sale prices

  • Shipping information

  • A product's location (garage, basement, etc.)


Your future self will definitely thank you.


It is also a good idea to keep record of all your purchases and sales, as you will need this information come tax reporting time.



Understand product fit


Make sure that the products you are going to sell from a pallet fit your selling strategy. For example, if you buy seasonal products in an off-season, you'll need to be prepared to hold on to these items until they are in demand once again.


A great example would be buying a set of landscaping tools in the dead of winter.


While you may be able to secure a good deal by purchasing them off-season, are you willing to wait months to turn a profit? You'll want to build this into your model.



Consider buying on credit


Let me be very clear here. I am not suggesting that you charge a pallet to your credit card without any idea on how to pay it off. Rather, responsible credit card users have a leg up on the competition, since any cash-back rewards you earn gives you more room to turn a profit.


Acquiring a pallet for $200 and paying with a 2% cash-back credit card is like getting it for $196. And while these $4 won't change your life, it sure can add up in the long run.



3. Flip the goods in your pallets


Consider an array of options when it comes to selling items you’ve acquired. For example, you may consider selling items on eBay, Amazon, or potentially through Facebook Marketplace or another channel altogether.



eBay


eBay is the oldest method on this list. Though the site has been around for years, they still offer a great marketplace with lots of features and many potential buyers. eBay offers tons of customizable options too. For instance, you can customize who pays for shipping and what delivery method will be used.


Plus, not covering 100% of an item's shipping cost can be a great way to protect your margins.



Amazon


Likewise, you may consider selling items on Amazon. The Amazon Seller site is quick to mention that over half of the items sold on Amazon each month are actually from independent sellers.


The benefits of selling on Amazon are very similar to eBay. It definitely does not hurt that Amazon has a national network with millions of potential buyers. So if your goal is to get your product in front of as many people as possible, Amazon is likely the easiest way to start.


In time, you'll learn the basics about how to make your Amazon listing stand out. Include all the details about the goods you're trying to move, including an item's:


  1. Brand

  2. Condition

  3. Color

  4. SKU, if applicable

  5. Price

  6. Quantity

  7. Any other helpful information



Facebook Marketplace


Some items, such as heavier appliances or products, may be easier to sell locally. By selling items locally, you will likely be able to save on shipping costs and complete transactions more quickly.


In this event, Facebook Marketplace allows you to sell items to people in your area. Facebook Marketplace is often used as a second-hand selling website, so you’ll likely want to denote that any new items from your listings that have never been used.



Is pallet flipping profitable?


Buying and reselling pallets can absolutely be profitable when done the correct way. Don't get discouraged if you struggle to make money from the onset - your key when starting out is to learn and avoid costly mistakes.


It will take a well-orchestrated combination of pallet selection, vetting, marketing, and selling to make real money, but there are tens of thousands of Americans doing this every week.


Over the past couple of years, I've found a 30-60% rate of return to be very good, while the best pallets may provide you the potential to earn a 100% or greater return.


Remember - keep your costs as low as possible, and you've got a great chance at making money.



My final thoughts


Flipping can be fun, entrepreneurial, and a great way to make some extra money on the side. You'll likely want to start low and slow until you get your feet under you, or else a large loss on your first try could end up discouraging you from continuing onward.



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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and worked for one of the world's largest asset management firms before starting his own consulting practice.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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