Amazon Return Pallets: How and Where to Buy Them

Last Updated: Jan 4, 2024.
Added: Step by step guide to purchasing Amazon return pallets.

Amazon is the leading online retailer with millions of daily product sales. Some items are returned for various reasons and these are sorted into pallets and sold to third-party buyers at a discounted price, known as Amazon return pallets.

Buying these pallets can be profitable but also challenging without proper knowledge. Our guide provides a comprehensive overview of the benefits, challenges, where to buy, what to look for, and tips for successful buying. Whether you’re a seasoned reseller or a beginner, this guide will help you make informed decisions.

Making online purchases is the new normal nowadays and sellers keep competing for a market share in every segment. Online platforms such as eBay or Amazon are the best place to look for a product and more and more retailers open online stores on these platforms, in addition to their own websites, to gain access to a wider, global audience.

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Amazon by the Numbers:

• More than 9.6 million sellers are using the Amazon platform as of 2023.
• More than 353 million products are available on Amazon as of 2023.
• Amazon.com received 5.6 billion visits from direct searches in 2022.
• With $356B in net sales, the United States was Amazon’s biggest market in 2022.
• Top Amazon Product Categories in 2023:
  • Home & Kitchen 35%
  • Beauty & Personal Car 26%
  • Clothing, Shoes & Jewelry 20%
  • Toys & games 18%
  • Health, Household & Baby Care 17%
  • Baby 16%
  • Electronics 16%
  • Sports & outdoors 16%
  • Pet Supplies 13%
  • Office Supplies 13%

With a global reach come global issues. Online purchases are convenient, quick and easy. However, the other side of that coin can turn into a logistical nightmare for the seller: customer returns.The reasons for product returns are plenty and in fact, 30 percent of all online purchases get returned, whereas just 8.9% of goods are returned to brick-and-mortar stores. Around 49% of retailers in the United States now offer a free returns shipping policy and customers – especially younger online customers – now expect this.

This has led to an explosion in the amount of products being returned across the whole retail sector, with 62% of customers now saying they would be more likely to shop with a particular retailer if it has a free returns policy. This in turn generates more and more returns, and those returns have to go somewhere. 

Retailers and Amazon sellers do not put a large portion of these returned products back on sale as new, even though many of these products return unopened. Instead, they look for other ways to sell that merchandise: they liquidate it.

So if you are in the market for Amazon Return Pallets packed with either random merchandise or sorted in specific categories, you should continue reading and check for yourself how you can buy Amazon Customer Returns and extract the maximum gains out of these Amazon Returns pallets.

Source: Statista, 2020.

What Does Amazon Do With Returns?

Amazon has been criticized for destroying millions of items, and now has the stated intention to work “toward a goal of zero product disposal.” There are now programs in place to allow sellers to resell customer returned items, or to allow them to be sent to the liquidation market.

Amazon third-party sellers told CNBC they end up throwing away about a third of their returned items.

Amazon now gives sellers four options (subject to a fee) for dealing with items that they can’t sell as new: Return to Seller, Disposal, Liquidation, and Fulfillment by Amazon Grade and Resell (at the moment by invitation only).

There is also liquidation, which Amazon now offers sellers as an option instead of disposal.

Amazon partners with liquidation marketplaces, which auction off unwanted inventory to resellers by the pallet or even truckload. Sellers can recover around 5% of the sale price if the product is liquidated.

With the ‘Return to Seller’ option, the return leaves the Amazon warehouse and gets back to the seller for their processing. For non-electronic items, you will find that many items are simply relisted if they have never been opened. If the items have been opened, what happens to them will depend on the seller (whether Amazon itself, or a 3rd party seller on Amazon), and the value of the item. If the resale value is worth the cost of repairing, cleaning, testing, or repackaging, many sellers will choose to do so, as long as the margins are there to make this worth their while.

Electronics are a different case. A large number of electronic items returned to Amazon are subject to an inspection, and then repaired if necessary. After this process, they are listed on Amazon Renewed. This is the place where customers can purchase Amazon returns that are guaranteed to be working as new while spending a lot less than they would when buying a brand-new item.

However, it is not that easy to be included in Amazon Renewed. Unlike new items, the strict rules set up by Amazon make it harder for third-party Amazon sellers to sell refurbished items through Amazon. Sellers are required to follow a list of stringent rules.

And what about the returned items that don’t get resold through Amazon? A portion of that merchandise is put in pallets and liquidated.

When sellers use ‘Fulfilled By Amazon’ (FBA), the categorization of customer returns is done by the Amazon fulfillment center. The merchandise is labeled as either sellable, damaged, customer damaged, defective, carrier damaged, or expired. If damage is incurred by the courier or Amazon staff the merchandise is transferred to Amazon ownership, and the seller is compensated. Amazon sells this type of returned merchandise by the truckload.

Why Buy Amazon Return Pallets?

Lower Cost

One of the most significant benefits of buying Amazon return pallets is the lower cost compared to buying new products.

If you’re looking to save money on inventory costs and are willing to take on the risk of potentially receiving items in less-than-perfect condition, buying Amazon return pallets can be a smart business decision.

Buying Amazon return pallets means you can source a lot more merchandise for the same cash outlay, compared to buying all new items wholesale. As with any business there are risks but you can make your money go further if you are willing to put in some work to improve the salability of the merchandise once you receive your inventory.

Variety of Products

Buying Amazon return pallets comes with the benefit of having a wide variety of products available. These pallets can contain a range of products, from electronics and household appliances to clothing and accessories. This variety allows buyers to select the pallets that best suit their need. In addition, the variety of products available in Amazon return pallets can also be an advantage for businesses that are looking to diversify their product offerings, since Amazon offers products in more than 25,000 sub-categories.

Sustainability

Buying Amazon return pallets is also a sustainable option. Rather than these items being thrown away, they are being given a second chance at finding a new home. This makes buying Amazon return pallets more environmentally sustainable.

Where to Look for Amazon Return Pallets?

The best way to buy Amazon return pallets is through liquidation companies. When searching for a merchandise source, you are advised to look for the most reputable seller. This is best reflected in customer experience. Therefore, you should look for the advice of other online resellers who have sourced their merchandise through those companies. The best way of getting this is by looking for online reviews, which tend to give a clear picture of a company’s services and product quality, which in turn reflects on a company’s reputation.

Direct Liquidation is a highly reputable company that strives to and succeeds in keeping customers satisfied while forging and developing partnerships with major retailers. This means that at Direct Liquidation’s online platform you will be able to buy not just Amazon returns, but merchandise sourced from other retail giants like Walmart, the largest retailer in the United States.

Source: Business 2 Community, 2016.

Step-by-Step Guide to Buying Amazon Return Pallets

Step 1: Conduct Market Research

• Understand the Market: Research the typical types of products available in Amazon return pallets. Focus on products in demand and familiarize yourself with market trends for your chosen product type.
• Identify Reputable Liquidation Companies: Look for well-known liquidation companies (like Direct Liquidation) that specialize in selling Amazon return pallets. Check reviews and ratings to gauge reliability. It should be mentioned that many liquidation companies get review bombed by newbie buyers that are unsuccessful so you will need to use discernment when reading through reviews.

Step 2: Register with a Liquidation Company

• Create an Account: Visit the liquidation company’s website and sign up for an account. This usually involves providing basic business information and agreeing to terms and conditions. Most liquidation websites will allow you to create an account for free. Make sure to register your business with your local government and acquire a resale certificate. This will allow you to avoid paying sales tax when you purchase inventory to resell.
• Understand the Auction Process: Most liquidation companies sell pallets through auctions. Familiarize yourself with the bidding process, payment methods, and terms of sale.

Step 3: Analyze Available Pallets

• Inspect Pallet Listings: Carefully review the descriptions and photos of pallets. Look for details about the condition of items (new, refurbished, used), product categories, and estimated retail value. This information is typically contained in a downloadable manifest.
• Evaluate Costs: Consider the total cost, including the bid price, shipping fees, and any additional handling charges or marketplace fees.

Step 4: Place Your Bids

• Set a Budget: Determine your budget based on potential resale value and expenses. Stick to your budget to avoid overspending. A good rule of thumb is to take 40% of the retail price quoted then 40% of that number as your max bid price. This is a good general rule of thumb to keep you from overpaying for a pallet.
• Bid Strategically: Place bids on pallets that align with your business model and have a high potential for profit. Avoid getting caught in bidding wars. That’s easier said than done, as more popular auctions are also an indicator of the desirability of the inventory.

Step 5: Arrange Shipping

• Shipping Arrangements: Once you win a pallet, coordinate with the liquidation company for freight shipping. Some companies offer shipping services, while others require you to handle it on your own. If you are shipping to a residential address you will have to ensure the carrier shipping the goods ships using a truck with a lift gate of you won’t be able to unload it. The lift gate is an additional cost to consider.
• Plan for Storage: Ensure you have adequate space to store and sort the items once they arrive. This could be in your garage to start or you can consider renting a small storage locker if you don’t have space at home.

Step 6: Sort and Process Items

• Inspect and Sort: Upon arrival, inspect each item. Sort them based on condition and category.
• Repair and Refurbish: If capable, repair or refurbish items to increase their value. This is particularly important for electronics and appliances.

Step 7: Resell the Products

• Choose Sales Channels: Decide where to sell the items – online platforms like eBay or Amazon, local marketplaces, or physical retail locations. Be aware, condition matters here. Some places will not allow you to sell raw customer returns. eBay, Facebook Marketplace, Offer Up and Craigslist are your best starting points.
• Price Items Competitively: Set prices based on item condition, market demand, and competition. Remember to account for your costs and desired profit margin. You need to make money or it’s not a business. Don’t get caught in the weeds. Treat this as a business every step of the way.

Step 8: Manage Inventory and Finances

• Track Inventory: Keep a detailed record of your inventory, including purchase costs and sales. You can start with a spreadsheet but you should quickly consider inventory management software and tools in order to scale.
• Monitor Finances: Regularly review your financials to understand your profit margins and adjust your strategy as needed.

Step 9: Scale and Diversify

• Expand Product Range: As you grow more comfortable with the process, consider diversifying the types of pallets you purchase.
• Scale Your Business: Reinvest profits to buy more pallets and expand your business operations.

Step 10: Stay Informed and Adapt

• Keep Learning: Stay updated with market trends and changes in the liquidation industry.
• Adapt Your Strategy: Be prepared to adapt your buying and selling strategies based on market changes and your business performance.

Looking to Scale? What Can You Expect Buying Amazon Truckloads

There are four main types of Amazon returns truckloads:

Large products, or ‘Bigs’

These truckloads contain 26 tall pallets, mostly consisting of large items, such as televisions, large appliances, display cases, furniture, and similar merchandise. These lots are ideal for larger retail stores with space to accommodate these items for sale locally.

Small products, or ‘Smalls’

Smalls truckloads contain small items of merchandise. As you can fit many smaller items into the Gaylord pallets, the average piece count is very high. Some of this smaller merchandise can be very valuable and may contain designer sunglasses or watches, electronics, and branded accessories. This type of merchandise is perfect for bin stores, and for online sales. Due to the huge piece counts of potentially very high-value items, these truckloads often contain the most profit potential on resale. The high number of different products you will receive in these lots may be very time-consuming to process, especially for listing online but should give you the best return on resale on your initial investment.

High Retail

These truckloads contain the most popular items for resale, but in lower quantities. They contain 26 pallets with lower item-counts than the smalls truckloads, but are more likely to contain the strongest retail items, that are particularly sought after by online sellers. These lots will contain some of the best-selling stock available from Amazon, meaning your turnover will be quicker, but with less profit potential overall.

Clothing

Clothing is a huge sector for Amazon, and the high rates of clothing returns means there is no shortage of clothing in very good condition, most of it poly-bagged and ready for resale. Many buyers of clothing truckloads will obtain the product to resell overseas, where demand for American clothing is popular. Each of the 26 pallets in these lots can contain up to 1200 items or more of clothing. Lucky buyers will also find a lot of designer clothing, and accessories such as handbags, scarves, belts and more. Clothing lots are generally mixed between items for clothing for men, women, and children, though some lots will also contain baby items.

Tips On Upscaling Amazon Return Pallets

Once you’ve purchased and received a pallet of Amazon returns, you’ll want to maximize your potential profits by upscaling as much of the pallet’s contents as you possibly can. As discussed, Amazon returns pallets are typically untested, meaning the merchandise each pallet contains will be in a variety of conditions. Some of the merchandise will be retail-ready, while some of it may need some repairs.

To increase your chances of squeezing as much profit from each Amazon return pallet purchase, there are several things you can do:

Sort and Bundle

First of all, you’ll need to sort through your pallet to see exactly what you have. You’ll need to separate out what can be sold straight out of the box, and what needs your attention. Some items are more attractive to customers if sold together as a bundle. So you need to check what items make sense together as a bundle.

Repair and Refurbish

Many items are returned to retailers because they are faulty (this particularly applies to electronics). Try to repair and refurbish as much of this type of merchandise as you can, either doing the work yourself or using a third party. Often, faults can be minor and easy to fix, and doing so brings products back up to factory specifications and adds considerable value.

In pallets containing several faulty items of the same model, components can be taken from one model and used in another to bring that model up to spec. It’s always a good idea to keep hold of broken products that cannot be repaired or refurbished as they can often be used for spares and repairs.

Re-Accessorizing

Sometimes, products are returned because they are missing accessories such as chargers or headphones. These are usually easily and cheaply replaceable, and selling a product with its full list of accessories adds value to the product.

Repackaging

If the packaging that a product comes in is damaged, try to get hold of replacement original packaging or repackage the product. Believe it or not, poor packaging can affect the value of the product, so make sure your products are always packaged in either good quality original packaging or pristine plain packaging.

Inspecting and Grading

Make sure to inspect all your products thoroughly. When you resell your items, make sure you sell them advertised at the correct grade. Most of the items you sell will fit into the following categories:

• New factory-sealed – These items are brand-new, still in their original boxes and are still sealed in their factory plastic wrapping. This merchandise has never been opened and is in pristine condition.
• New open-box – This merchandise is new, and in perfect condition, but the packaging has been opened.
• Refurbished – Refurbished items have been inspected, repaired if necessary, and accessorized and repackaged.
• Used – These items are functional, but have visible signs of wear and tear including scratches and/or dents.

Pros and Cons of Buying Amazon Return Pallets

Here is a list of the pros and cons of buying Amazon Returns Pallets:

Pros:

• Low purchase cost compared to the original retail prices of the items.
• Wide variety of products available.
• Inventory comes from a trusted retailer meaning you can expect the goods are from reputable brands.

Cons:

• Shipping costs can be expensive if you’re not located close to the warehouse they are being shipped from.
• Returns pallets contain some damaged or non functional items and you won’t know the percentage of items that are damaged when you buy.

Buying Amazon Return Pallets from Direct Liquidation

Research is crucial if you want to be successful in this business. Reputable liquidation companies offer certain benefits to their buyers. The story of only scrap being sold through liquidation companies comes from customers who jumped at the first opportunity to buy cheap merchandise, without doing any research on the seller, the merchandise or anything else beforehand. This is a cardinal sin in the liquidation business and should never be done. Always do your research.

Choosing to buy Amazon return pallets from a reputable seller like Direct Liquidation means half of your job is already done. Nonetheless, you should always look for the manifest of whatever lot you are interested in. For most lots, Direct Liquidation provides manifests, a list containing all the relevant information about the merchandise contained in a pallet, such as its condition.

Direct Liquidation generates all the manifests it provides on its online liquidation marketplace using proprietary software to ensure each manifest accurately describes what is contained within each pallet.

Where available, the manifests Direct Liquidation provides to its business customers contain valuable information that will help you choose the merchandise you need as well as plan how to sell it. Depending on your target market and your customer base, you will be able to determine what products you are getting, even in a pallet of returned merchandise. Whether you decide to buy unsorted customer returns, that are at the lowest price point, or closeouts and overstock merchandise that have the highest resale value, but also cost a bit more, depends only on your personal preference and business needs.

Buying Amazon return pallets from Direct Liquidation is a great way to purchase merchandise at prices well below typical retail values, setting yourself up for a chance to profit when you sell. Just make sure you do your research, find the right market and the right products to resell and don’t get into bidding wars and you’ll make out fine.

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