How To Make Money Buying Liquidation

In these uncertain, chaotic, and challenging times more people are going to struggle financially. Maybe in ways we have never seen before.

This unemployment chart kind of says it all:

The latest jobs report shows almost a 15% unemployment rate in the U.S. which is the highest rate since the Great Depression.

With this in mind I recently ran an experiment to come up with some quick cash.

Find Inventory in Bulk with Liquidation Pallets

What I tried was reselling liquidation hardware & tools from my local liquidation depot.

I went with the hardware niche as unlike the clothing niche, home furnishings, or silly gadgets — tools are required for those doing construction. I assumed I could move most of these items quickly as this is more of a vital need right now.

I started with a $425 investment at my local liquidation depot.

How to find a liquidation store near you?

I have found that most of the liquidators around me are active on Facebook. They have Facebook groups and share about upcoming sales there.

My local liquidation business puts out videos of pallets in advance of sales of new inventory on Facebook regularly.

Liquidation pallet videos on Facebook Marketplace.

This is helpful as you can see if there is anything that fits your goals and niche ahead of time.

What I am looking for are lots where I can see one or two high ticket items that should return my investment back by immediately.

The idea here is to make money and if you guarantee at least a break even on just a few items — you should expect that palette to be profitable.

If you are careful about palette selection the odds are good you can double or triple your initial investment.

Note if you do not have $425 to invest, consider that there are less expensive pallets or niches.

The first palette I ever purchased was for supplies to finish a restoration of an old house I had purchased.

That pallet was only $125, and I netted "free" supplies for the house, made at least $300 in sales from the rest, got a nice $200 socket set with toolbox out of it, and still have tons of new in box blinds in the garage left to sell. Anyone need some blinds?

If you have no money to invest to get started try selling items from your home to raise funds (any vintage Nike's in your closet, clothes you no longer wear, video games you no longer play, old laptops that still work, etc.)

You may be surprised about the value of some old items that are lying around your home gathering dust.

My Home Depot Liquidation Pallet Adventure Begins

This was the palette I choose as I saw two of the DeWalt toolbox radios on top. I knew I could expect about a $350 return from just those two items.

I also could see many pressure washer surface pads and knew they could bring about $60 each.

This was a palette of customer returns. With pallets of returned merchandise you can expect that many of the items are new and untouched, some have slight flaws, some are broken, some are missing parts, and some are used.

Where to Sell?

Selling branded merchandise can be a challenge on Amazon unless you are approved already or can prove you have purchased large lots from a wholesaler.

Buying from liquidation does not typically qualify to get you approved to sell a brand like DeWalt on Amazon.

While I could have tried to get some sort of approval there, it was simpler to stick to eBay for these sales.

I sold a few more items on Facebook Marketplace but did not push that channel much due to Covid lockdowns, etc.

Here are some rules I stuck by that all did me good with all of my recent eBay success.

1) Don't Be Greedy

These liquidation items are open box returns. Don't price them at full retail or people will just buy these new items on HomeDepot.com. You have to give your buyers a bit of a deal here.

You can easily look at current pricing for open box items and investigate recent sales. Stick to these proven prices and your items should move quickly.

2) Use Promoted Listings (at 1%)

These extra fees will not kill you and I have found that most of my sales come through Promoted Listings. To double or more the volume of your sales is well worth it.

In the past 30 days I have sold 53 items via Promoted Listings and only paid $15.34 extra in fees to do so.

3) Aggressively Send eBay Offers

This great eBay feature makes it a breeze to reach out to interested watchers to move slow moving items. If I had an item that had not moved quickly, I would send an offer through eBay for a few dollars off. This helped further fuel quick sales volume.

4) List Honestly

When you buy lots from liquidation you end up with a mixed bag. For example in my load I had a ton of surface pads for DeWalt pressure washers. Most of these looked new but had beat up boxes. That is how I described them. But a few were definitely used, so I sold them as such for less money.

If you try to be sneaky with people, they may ask for a refund or give you a negative rating on eBay which will show on your account for the next year!

5) Take Good Photos

You already have the item out for testing so go ahead and take plenty of photos. Take a few of every angle, show every flaw, show anything of interest. This will help set you apart from the others that just show one clip art photo.

6) Have Good Description Copy

For higher value items go to the product page on the manufacturer's site and get detailed product information. Cut and paste that in your listing. This is good for SEO, makes you look more like a pro, and helps the buyer know what they are getting.

7) Ship ASAP, Always

Ship immediately. Never delay on that. If you need to set a strict rule to do this every day after work or on your lunch breaks — do that. Especially if your account is new you need to hustle to look good to eBay and your customers.

8) Be Careful with Shipping Rates

Be careful about your shipping rates. I was lazy on one listing and just copied someone else and did a $69.95 with free shipping listing.

Wow I quickly sold two items. Yay! Well hold on…those were both sales to Puerto Rico and the shipping of the pads where going to be over $20 instead of the regular $10 or so!

My stupidity just cost me about $20 in profits.

9) Avoid Using Free Shipping

You will be better off to advertise at a lower price so the eBay sales fees are lower. I have not found any evidence that selling with free shipping helps move items quicker either.

Note if you are doing free shipping it may be helpful for you to edit your free shipping business profile on eBay to exclude locations such as Puerto Rico.

10) Don't Use Best Offers

I am not a fan of Best Offers except for super niche items (meaning stuff hardly anyone wants). For most items this is a psychological clue that you are not firm on your price.

I found that items with Best Offer sold slower in most cases. Just price your items fairly and be secure about that.

So How Did I Do?

Ok let's review my sales and see if I was able to generate profit.

Hardware Sales Spreadsheet

After shipping and estimated eBay fees I have $928.97 of revenue minus my initial cost of $425 resulting in a profit of $503.97. That is a 118% return on my initial investment.

Wait…There is More

I still have four wet tile saws in the garage I have yet to list that should generate $40 each. These are probably better for Facebook Marketplace considering their size.

Speaking of Facebook Marketplace — I could have easily sold more there were it not for Covid lockdowns and such.

I also have about $50 left of items that have yet to sell on eBay.

So the profit here when done should be closer to $700. That would bring a return of 164%.

Conclusions

eCommerce is great for people in need as it does not matter if you live in the middle of nowhere or are busy tending to children during the day.

Anyone can sell online.

Knowing how to sell online is a great skill to have during periods of financial stress like we are experiencing now with this pandemic.

While you can certainly generate higher profit margins with successful trips to thrift stores, being able to buy a whole pickup truck full of items at one time is more efficient and scalable.

This is why liquidation pallets can be an effective tool in your reselling business.

Reselling liquidation inventory is a great for some emergency cash, as a side hustle business, or as a full-time business if you can find multiple pallets every week.

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