How To Start a Pallet Flipping Business 2024

Pallet flipping is a popular side hustle in the US and UK, and it’s an excellent way to earn extra cash. This business doesn’t require much time or money to get started. However, you need the know-how to start a pallet flipping business that runs successfully and is profitable.

Beginners can kick off with less costly, small-scale pallets before progressing to larger, pricier ones based on how lucrative it proves.

Now, the pallets we are referring to aren’t those wooden structures, but rather bundles of items from retailers. Retailers sell these bundles because, for various reasons, they can’t sell the products inside anymore. These reasons include customer returns, items not selling well, or goods damaged during shipping.

What is Pallet Flipping?

Pallet flipping means purchasing a batch of unused or returned merchandise from a retailer and reselling it for a profit. These pallets often hold products worth thousands of dollars that you can buy at a fraction of the cost.

However, it comes with its risks, as the exact contents of a pallet are often unknown, so it’s wise to buy from reliable sources. While you might get a pallet with damaged returns, you could also score one filled with pristine products that just didn’t sell well.

It’s not uncommon for retailers to use this approach to recoup losses. For example, in the UK, returns cost retailers about £60bn per year, according to industry experts. So, selling pallets to consumers is a logical move. These pallets can hold a mix of items or be specific to categories like clothing, stationery, or electronics.

How To Start a Pallet Flipping Business

If you’re looking to start a pallet flipping business and earn some money, you need to be prepared to put in some effort and have patience. Here are some straightforward steps to get you started:

1. Be Smart About Buying Pallets

Buying pallets isn’t just about quick buying and selling – it is generally risky. Stick to what you know. For example, if you’re a gardening enthusiast, buy a pallet full of gardening items. This way, you’ll already have an idea of the items’ rough prices, saving you some research time.

All the items in your pallet may not sell immediately. Some items might be seasonal. For instance, no one will buy grass seeds in winter, but they might be interested in the leaf blower from the same pallet.

2. Research Thoroughly

Research is crucial in the pallet flipping business. If possible, get a list of items in the pallet before purchasing. Otherwise, research the items yourself, find out their retail price, and what they’re being sold for on other platforms. This will give you an idea of the potential profit and help you decide whether buying the pallet is worthwhile.

3. Track Your Products

Pallets contain a variety of items. Keeping track of what you have and where it is can be very useful. Some details to note include:

Keeping these details can help you stay organized, and it will make it easier to calculate your return on investment.

4. Get familiar with your sales platforms

Selling items you’ve got from a pallet can be quite beneficial when you make good use of platforms like eBay and Facebook Marketplace.

a. eBay

eBay is probably the biggest online auction platform and can give you an excellent stage to sell your goods. You can reach a global customer base while staying at home. All you need to do is provide a good description of your item and be sincere about its condition, then watch it sell fast.

b. Facebook Marketplace

If you’re more interested in local sales, Facebook Marketplace is your best bet. You can list your items for sale within your vicinity and buyers can come pick them up. This is especially helpful if you have large items to sell. As with eBay, a well-detailed description is all you need for your items to get buyers.

c. Kijiji and Craigslist

• These are free-to-use online classifieds platforms, primarily serving local areas.
• Users can list items to sell to others nearby.
• Compared to VarageSale, you can complete transactions online and have items mailed.
• Note: We’ve observed a higher occurrence of scams on Kijiji compared to other platforms, but this may only pertain to our specific area.

d. Mercari

• This is a free-to-use selling app, similar to eBay, available on Google Play and the App Store.
• You can list items for sale quickly and shipping labels are provided by the platform.
• It applies a 10% selling fee on listings but offers shipping discounts and a consistent fee across all 50 states.
• The seller can decide whether to pay for shipping or charge the buyer.

e. Poshmark

• This is a free-to-use platform, great for buying or selling clothing items in bulk.
• Poshmark takes a commission fee: $2.95 for sales under $15 and 20% for sales above that.
• It provides the shipping label and buyers cover shipping costs.
• From our experience, shipping fees do not deter buyers from Poshmark.

f. VarageSale

• This is a free-to-use selling platform, focusing on local transactions.
• It’s ideal for selling items from liquidation pallets as buyers can find items easily and sellers can avoid shipping costs.
• VarageSale emphasizes community building with face-to-face transactions.
• Its app and integrated messaging system simplifies communication between buyers and sellers.
• We found it particularly useful for selling clothing and household items.

5. Prepare for some groundwork

After securing your pallet and listing your items for sale, the next step is looking into delivery if you offer it. Research thoroughly on your cheapest and best delivery options. You have several shipping choices.

i. The Post Office

Let’s come in from the UK perspective. Small parcel prices at the post office begin from £4.29 for 2nd class postage with online confirmation of delivery. For medium-sized parcels, prices start from £7.10 for 2nd class.

They can weigh and measure your items to determine the accurate shipping fee.

ii. UPS

UPS is a great choice if you’re shipping items abroad, enabling you to ship from your doorstep directly to theirs.  However, it can be quite pricey, so it’s advisable to have your customers pay for shipping.

iii. Hermes

Next day delivery for a small package starts from £4.75 at Hermes if the item is dropped off at a ParcelShop or locker drop-off. This is a good option for next day shipping but ensure there’s a convenient drop-off location close to you.

Where to Find Pallet to Flip

1. Online Liquidation Auctions

Online platforms like Liquidation.com or BStock.com are popular spots for sourcing pallets. Major retailers and businesses frequently use these websites to auction off their surplus inventory.

You can bid on and purchase these pallets without leaving your home, making it convenient. However, research thoroughly, understand the auction terms, and factor in the shipping costs before placing a bid. If you reside in the UK, below are your auction options:

Marthill International

This company sells excess items from catalogs and high-street shops, along with customer returns.

The products are grouped into pallets based on categories like bathroom, stationery, and electronics, but there are also mixed pallets. A notable feature of Marthill is that they provide a list of items contained in each pallet and the original retail price of the product.

b. Merkandi

Like Marthill, Merkandi sells excess stock and returns. They also deal with undelivered packages from various sources, including eBay and UPS. The contents of these undelivered packages are not listed, so purchasing them is a bit like a surprise or luck dip. This platform could be exciting for those who don’t mind surprises and aren’t aiming to sell a specific type of product.

c. UK Stock Supplies LTD

This site is a bit different. Instead of selling pallets of goods, they list individual items for sale. The offerings range from universal bath legs to mixed doors. This site could be particularly useful for people who need to stock a shop because you can purchase items that are more specific to your needs.

2. Local Auctions

Keep an eye out for local auctions in your vicinity that sell pallets. The advantage of local auctions is the ability to physically inspect the pallets before purchase, offering a clearer picture of what you’re investing in.

Engaging with the auction community might also lead to valuable insights and connections in the pallet flipping business.

3. Retailer Direct

Some larger retailers like Walmart offer programs selling surplus inventory directly to consumers. These Direct Liquidation Programs can provide a steady and reliable source of pallets. But understand the terms and conditions thoroughly, as they can vary significantly between different retailers.

4. Wholesale Directories

You can try wholesale directors when you start a pallet flipping business – online wholesale directories such as Worldwide Brands or SaleHoo can connect you to numerous reliable pallet suppliers. They offer a wide range of suppliers with different specialties, giving you the flexibility to choose based on your business model. Make sure you scrutinize supplier ratings and reviews to ensure you’re dealing with a reputable source.

5. Liquidation and Closeout Companies

Companies like Bulq or Quicklotz specialize in purchasing large lots of surplus or returned merchandise from retailers and selling it to smaller businesses or individual consumers.

Such companies are a reliable source for pallets, as they handle the sourcing, sorting, and grading, providing you with a clear understanding of what you’re buying.

6. Social Media

Platforms like Facebook Marketplace and Craigslist often host listings for pallet sales. Sellers range from individuals looking to unload a single pallet to businesses offering pallets regularly.

Normally, you just interact with sellers, ask questions about the pallet contents, and if possible, inspect the pallets before purchasing to ensure the quality of your investment.

7. Network with Other Flippers

You want to cultivate relationships with others in the pallet flipping business can be invaluable. Other flippers might share their experiences, giving you insights into reliable pallet sources, best practices, and pitfalls to avoid. Networking can happen online in forums and offline at local auctions or industry events.

Is Pallet Flipping Profitable?

The answer is, “It can be”. But the profitability depends on several factors.

Now, the type of goods you’re dealing with plays a significant role. Electronics, for instance, can be highly profitable if they’re in good condition and demand.

On the other hand, clothing can be hit or miss, depending on the styles and sizes available.

Also, your source of pallets matters. If you buy directly from retailers or manufacturers, that can yield high-quality goods, but the cost per pallet may be higher. Liquidation auctions or wholesalers can offer lower prices, but the condition and value of the items can be more unpredictable.

As experts, we can state also that your ability to sell the items is very important. We factor this into:

• Your selling platform (e.g., eBay, Amazon, a physical storefront)
• Your marketing skills, and
• Your ability to price items competitively

Let’s illustrate a bit by looking at some hypothetical data. The following bar chart shows the profit from pallet flipping over a year:

As you can see, the profit varies from month to month, but overall, it shows an upward trend. This suggests that with careful sourcing, effective selling, and perhaps a bit of luck, pallet flipping can indeed be profitable.

How Much Money Can You Make Reselling Pallets?

How much? Well, the amount of money you can make largely depends on several factors, including what goods you’re selling, where, how much you invest, and your pallet reselling strategy.

Regarding the type of goods, different types of products yield different return rates. For instance, electronic goods or branded clothing could yield a higher return due to their demand and perceived value.  If you buy a pallet of electronics for $200 and resell each item for $20, and there are 30 items in the pallet, you could potentially make $600, a $400 profit.

Also, where you sell the items affects your income. eBay, Amazon, and Mercari could provide wider reach and demand. On the other hand, local platforms such as Craigslist, Kijiji, or VarageSale can save shipping costs and may allow for higher profit margins.

Note that the amount of money you initially invest to start a pallet flipping business matters. When you buy pallets at lower costs, that can increase your profit margin.

And then we have your reselling strategy – it has to be solid to help maximize your returns. Make sure your pricing is efficient, advertise, and offer bundles or discounts on multiple items.

Now, let’s consider an example:

In this scenario, you make a net profit of $400 from one pallet. If you manage to flip one pallet per week, that’s a monthly income of $1,600.

This doesn’t account for possible expenses such as shipping costs, platform fees, or any refurbishing costs if the items are not in sellable condition.

What Pallets Pay the Most?

When it comes to reselling items from liquidation pallets, it’s essential to know which types of pallets are the most profitable. The amount you can earn often depends on what’s contained within the pallets, as well as their quality and condition. Here’s a breakdown of some high-profit pallet categories:

1. Electronics
   • Electronics are typically high-value items. Pallets containing TVs, computers, smartphones, tablets, and other electronics often fetch higher prices compared to other goods.
   • Just verify their condition and working status, as damaged electronics might result in losses.
2. Designer Clothing and Accessories
   • Brand-name or designer clothes and accessories are a hit in the resale market. While they might require a higher initial investment, the potential profits are also significant.
   • You’ll want to ensure the items are in good condition and verify their authenticity.
3. Home Appliances
   • Major and small home appliances like refrigerators, washing machines, microwave ovens, blenders, and coffee makers, are always in demand.
   • They typically yield good profits, especially when they are new or lightly used.
4. Furniture
   • Furniture pallets can be quite profitable, especially if they contain high-quality or brand-name items.
   • They might require more storage space and pose a higher shipping cost.
5. Cosmetics
   • High-end, unused cosmetics can fetch a good price on the resale market.
   • Be mindful of expiration dates and check the condition of the packaging to ensure a good sell-through rate.

Make sure to factor in your overhead costs, including storage, shipping, and listing fees, when calculating your potential profits.

Here is a simple comparison table for clarity:

What Pallets to Avoid?

1. Broken or Damaged Pallets

In terms of physical condition, steer clear from pallets that are visibly damaged or broken. These can be unsafe for storage and transportation, leading to potential losses in product quality and safety.

2. Uninspected or Unsorted Pallets

Pallets that haven’t been inspected or sorted often pose a risk because you don’t know what you’re getting. These “mystery pallets” can contain items of little to no value or damaged goods, which would be hard to resell.

3. Oversaturated Product Pallets

Avoid pallets containing items that are already oversaturated in the market. These could include fad items that are no longer in demand, or generic goods that are difficult to sell due to heavy competition.

4. Seasonal Product Pallets (Off-Season)

Seasonal items can be a risky investment, particularly if you’re buying them out of season. For example, purchasing a pallet of Christmas decorations in January may leave you storing inventory for almost a year before there’s demand for it again.

5. High-Value, High-Risk Item Pallets

While the allure of high-value items can be tempting, they often come with increased risk. For example, electronics or designer goods may seem like a sure win, but they also have a higher chance of being returned.

Is Pallet Flipping Tax Free?

Pallet flipping, like any other business venture, is not entirely tax-free. This, however, depends on your location and the local tax laws, in most cases, you are required to report your earnings from pallet flipping as taxable income.

Pallet flipping involves purchasing merchandise in bulk, usually on pallets, at significantly lower prices than the retail price. Thus, the merchandise is often from overstock, returned items, or goods that have been written off by big stores. As a pallet flipper, your goal is to resell these items individually for a profit.

So, when you start making profits from your pallet flipping business, those profits are considered income. In many countries, including the United States, all income must be reported to the tax authorities, and taxes must be paid accordingly. As per the IRS (Internal Revenue Service), if your net earnings from self-employment were $400 or more, you have to file an income tax return.

Let’s use a simplified example to illustrate this:

In this case, you made a profit of $600 from flipping the pallet. This profit is considered taxable income.

In addition to income tax, there could be sales tax implications. If you’re selling items to consumers in a state that charges sales tax, you might need to collect sales tax on those transactions.

Tax laws can be complex, so it’s advisable to consult with a tax professional or accountant to understand the potential tax liabilities and ensure you comply with the law.

Top Pallet Resell Success Stories

Rob and Melissa Stephenson

A couple from Michigan who “flipped” their way to a 6-figure income. They started by selling items they no longer needed around the house. Upon realizing the potential, they began buying goods at auctions and estate sales and reselling them online. They soon discovered the profitability of buying customer return pallets and flipping them.

Walter Blake Knoblock

He started with a £5 investment buying books from a thrift store and reselling them on Amazon. Gradually scaled his business to buy entire truckloads of customer return pallets from major retailers from reselling. Even made $25k flipping liquidation pallets.

Sophie Howard

based in New Zealand, has also found success in the business. She started by buying pallets of items in bulk from China and selling them on Amazon. After mastering the ins and outs of selling on Amazon, she sold one of her businesses for over a million dollars. She now runs a course called “Amazon Navigator,” guiding people on how to build a successful Amazon business.

Frequently Asked Questions

In the course of setting up this guide to help you start a pallet flipping business, we have identified the following FAQs (frequently asked questions):

Are liquidation pallets worth it?

Liquidation pallets are useful for obtaining bulk quantities of items to resell, but the downside is the limited choice as you’re stuck with whatever comes in the pallet, even if it’s specific items like clothing.

Are Amazon return pallets profitable?

Purchasing Amazon Return Pallets can be profitable, but there’s no guarantee on the contents. Items may be brand new, broken, spare parts, or even empty-boxed.

How much do Amazon pallets cost?

Prices per pallet can range from $100 to $20,000, depending on item quality and value.

Conclusion

After conducting all the research, planning, and selling, the next thing is to wait and see if your investment was profitable.

The goal in pallet flipping should be to earn back the amount spent on the pallet and make an extra 100-200% profit. For example, if your pallet cost you $134, you want to earn that back plus another $134 to make a 100% profit.

Pallet flipping requires effort, but if you’re willing to put in the time, it could yield a substantial return on investment.