569: How We Made $25k Flipping Liquidation Pallets

0:0025 grand flipping liquidation pallets. What's up, what's up? Nick Loper here. Welcome to the Side Hustle Show. Now a proud member of the Entrepreneur Podcast Network. Your nine to five may make you a living, but your five to nine makes you alive. And today we're exploring a side hustle that I've heard about for years, but in 10 years of doing the show, we've never done a dedicated episode on this, and that's reselling return pallets. When you return stuff to Costco, Amazon, Target, Walmart, it doesn't always go back on the shelves. That was kind of surprising to me for one, But it often ends up in the hands of these local liquidators who in turn resell that to resellers and side hustlers like us who go through those and flip individual items for a profit.

0:45Today's guest has been doing just that for the last couple of years and has earned over 25 grand in the process. Jamie McCauley is here. He's one half of the dynamic duo behind the super popular Jamie and Sarah YouTube channel where they cover all things return pallets, real estate investing, furniture flipping, and lots more. Jamie, welcome to the Side Hustle Show. Hey, Nick, thanks for having me. You bet. You stick around in this one, you'll learn the ins and outs of the pallet flipping game, some common scams to avoid, and the best practices to make it worthwhile for you. Your listener-only bonus for this week is my big list of the best items to flip for a profit.

1:25These are the proven winners based on dozens of interviews with resellers. You can grab that for free at the show notes for this episode. Just follow the link in the episode description and you'll pop right over there. But Jamie, I want to start with, I guess, palette number one. Every expert was once a beginner. How did you get into this game? My wife and I were deep into furniture flipping, which was our previous side hustle we talked about on our YouTube channel. But so Sarah was on Facebook Marketplace all the time and she came across several different groups of their pallet liquidators on Facebook Marketplace.

1:57So she joined their Facebook groups and we kind of learned a little bit about the business and we said, hey, let's try one and see what it's like. So it was like a cold winter day and we drove up about an hour north of us to a pallet liquidator and he had some Walmart pallets and we had no idea what we were doing. So we just picked the one that looked like the most fun. So we saw on the outside, there was like some electric scooters. There was like an arcade game. So it just looked like a lot of fun. We didn't end up making a whole bunch of money on it. I think we profited maybe$350,$400 on the pallet, but we had a ton of fun and it kind of got us hooked.

2:34Okay. How much did the first one cost? I think we paid five or$600 for it. It was a little bit pricier, but we were drawn in by those more expensive items on the outside. Because you don't always get to see, it's like storage wars where you can get a glimpse and you're like, peek it around, try to see what you can find, but you can't unbox the whole thing there. It's a little bit of a treasure hunt kind of thing. Sometimes you can see boxes with pictures or labels on the outside, but you don't know what's inside the pallet. And there's all different types of liquidated merchandise and different ways they package things.

3:04So yeah, you can have one that's a complete mystery and then others that you can kind of tell what's on the outside based on the SKU numbers and stuff on the boxes. So. Oh, okay. and are you trying to discreetly look on eBay or Facebook marketplace? Like, what are these items likely to be worth? Assuming that they even work, I guess, that maybe there was a reason they got returned. A lot of people, when they hear about this initially, the side hustle, they think it's just garbage, like junk returns that no one wants anymore. They're completely broken. And that is the case a lot of times. I would say probably 20 to 25 % of the items are completely broken or not usable.

3:42But sometimes we get brand new product. it's kind of luck of the draw, which is the fun part. But with reselling, it's a pretty basic side hustle. You just the idea is you buy low and you sell high, the cheaper you can get your inventory, the better. So it's really just a great way to get cheap inventory. Yep. Yeah, I get a lot of inventory all at once. For a while I was doing retail arbitrage, going to the clearance aisles of Walmart and Home Depot and Babies R Us was a good spot for me before they went out of business. Like I had a newborn. And I was like, Oh, I'm here anyway. It's like, Okay, might as well scan some stuff.

4:14But it was very much that needle in the haystack where it's like onesie, twosie items. And it's like, okay, this was profitable, but now it's gone. And now I got to replenish that. So here's a way to get a bunch of inventory all at once. If you're spending 600 on the pallet to make$400 in profit, that's pretty good return on investment. Now there's obviously labor involved in oil. We had to drive an hour to get it. And that's maybe the next question is like finding a reputable supplier for me. So I just Googled like liquidation reseller, liquidation pallet near me. Or like, how do you go about finding somebody who's hasn't already gone through and scanned all the good stuff?

4:55That's kind of one of the more common comments we get on our YouTube videos is this is a scam. I tried it once. I ordered a pallet and never got it. All kinds of stories like that. I ordered a pallet and it was all macaroni and cheese, stuff like that, you know, so there really is a trick to it. And I guess the number one advice I give people is to never buy them online. There's a couple larger retailers. I think I'm trying to think of one of them. Bulk, B-U-L-Q is a more well-known one, but I don't like the idea of someone else deciding what pallet I get or buying things based on a picture. I like to be able to like see them, touch them and kind of see to inspect them a little bit before I pick them.

5:37So number one is just, yeah, don't buy online. You got to find them in person. So there's a few different ways you can do that. We've had the most success with searching Facebook marketplace. So we just search Pell Liquidation. And usually a lot of these guys just have Facebook groups. It seems to be the best way they can communicate with their customers. And so you can kind of watch those for a while and see what types of products they get in. That's the first way. And then the other way I've been using lately is suggesting to people is liquidationmap.com. It is a pretty awesome resource with a lot of reputable liquidators that have like a registry on there.

6:12So you can just search with a map. All right, I'm bringing that up. See if anybody is nearby here. That's typical in terms of startup costs, kind of this five, six, 700 bucks as far as initial investment, plus a way, I guess, to transport it. Or do you claim the one you want and they ship it to you? He's like, well, I'm not sitting in the back of the CRV. The problem with liquidation pallets is they're so large that shipping is not really cost effective. So that's how the guys who are buying them from the manufacturers are making all the monies they're buying by the truckload. It would not be cost effective to send a pallet, spend another$300,$500 to ship it.

6:50Then all your profit's gone at that point. So you have to really take it with you. So we have a pickup truck, but we've seen a lot of people will like even just rent a U-Haul for the day for 30 bucks and come pick it up. Okay. Depending on the type of pallet you get, you could fit it in a smaller SUV. I've seen people do that too. So it just really depends on the size and type of pallet you get. If you have smaller packages, you can kind of Tetris those in a little bit as well. So. Okay. There's a couple near me. One called a cheaper by the day. That's about an hour away. This one is like maybe 45 minutes to save by the day bin store.

7:28All right. I'll have to go check some of these out. Yeah. Bin stores are a little bit, maybe a fun way to get started as well, because we'll have like a$5 bin and anything in the bin is$5. So you can kind of handpick items more that way if you're a little too nervous to go for the big one. Oh, okay. I think I did see a video about this where it's like the mad rush when the thing opened and everybody's trying to get out. That sounds stressful. Yeah. There's some people who do that too. They wait out at like 6 a.m. and then go in the bins. Yeah, there's a lot of ways to sell liquidated merchandise.

8:00So Sarah and I's favorite way is on Facebook Marketplace. That way we don't have to deal with all the eBay fees and stuff like that with shipping. A lot of times if there is something wrong with the item, I think when people order on eBay, they expect something brand new, almost like an Amazon purchase. So with the liquidated merchandise, sometimes if it's open box or if there's a physical flaw, we'll get someone mad at us on eBay and have to do a return. And we prefer just using Facebook Marketplace for most of our pallet stuff. Do you see that rush when they get a new shipment in and everybody shows up on the same day trying to claim the best pallet or pallets for themselves?

8:39It can be competitive. The place we go, he sells probably 50 to 100 pallets a day. So he's getting in truckloads all the time though. So it's not really as much like quick run and find one, but it can get a little bit competitive. If you can see a couple, we've missed a couple of pallets before. There's like a Dyson vacuum on the outside and we, we missed out because we're too slow, but there's not typically a ton of competition. There's also quite a few liquidators in our area as well. So interesting. And then you're looking for any clues you can, if there's barcodes or SKUs on the outside of the box or what is visible from the top?

9:17Have you found any measurable difference in the value between a Target palette, an Amazon palette, a Costco palette? I met somebody years ago who was doing this with Costco and they were like, oh yeah, sometimes we get big screen TVs. It's great. There's definitely a lot of differences in the types of products you get. Our big strategy that we always do, it's a little bit of a safe strategy, but we try to pick a pallet that has one to two items on the outside that are higher dollar value that once we sell those, we'll pay for the pallet. And then everything else is profit. So we've gotten a couple where we've had a$300 dehumidifier on the outside.

9:53So if we pay 500 for the pallet, but we can sell that for$200, then sell a couple of those items. And then after two or three of those bigger items, the rest of it's just all your profit. So that's kind of our strategy, but there's all different ways to sell through this stuff too. So some people have their own store, like a bin store or like a discount store. And so they're okay with buying the pallets with like small items on them. Like they'll buy a pallet with$1 ,003 items on it and be okay with it because they can just put it in their store. We're kind of looking for those$50 to$100 items that we don't have to sell quite as many of them to break even, if that makes sense.

10:33Is it primarily local buyers in that case? Yep. It's called porch pickup where you just set the item on the porch and then they either pay you with Venmo or cash under the mat and then take the item. So. Gotcha. That's our favorite way of doing it. So. So the level of trust involved there. Yep. We've never got scammed. We've never gotten stolen from or anything like that. And we just, we prefer it that way. So, but some people will have like a storage unit that you can go meet them at or they want to drive to like a public place. But we just have them come to our house. Gotcha. That makes sense.

11:08Okay, so that was on the reselling side of things. As far as the prices that you're trying to get, you're like, well, if it's in brand new condition, but it's unbought, talk to me about how you're figuring out what to list the stuff at or what to ask for it. We usually ask between 40 and 50 % of retail value for the item, but there's a lot of different things that actually affect that. So if the item is in brand new or open box condition and it's like a name brand, items. So like a DeWalt chop saw, for example, we got on a pallet, we're going to ask maybe 75 to 80 % retail value on that. But then if there's kind of a random really niche item that doesn't seem like it's going to sell very quickly, or if there's like some cosmetic flaws that we might only sell for 30 % retail value.

11:56So it kind of averages out in the middle between 40 and 50 % of retail value. And that was always Rob, my friend from Flea Market Flipper. Their rule of thumb was generally start at 50 % or at least budget or ballpark for 50 % of retail value for their items, especially if it's in use condition. So I'm like, well, that's something to keep in mind. But a lot of this stuff isn't necessarily used. It's just, you know, customer return. Like I didn't like it. It didn't work for me. I didn't, whatever. I changed my mind. Exactly. So it might be new. might not like the color or yeah, some people return stuff for all kinds of different reasons.

12:34What's been the response to some of the YouTube content about this? Well, there's too much competition about this. It's saturated. So you've made pretty much any side hustle that we've covered over 10 years. Like that's the immediate response. Oh, I can't do that. It's too saturated. Curious what you have found over the course of the last couple of years of doing it. In our area, because there's quite a few liquidators, I would say the saturation of these items on Facebook Marketplace is pretty high. So that has caused profits to go down slightly from when we started because there's so many people doing it now.

13:10That maybe makes our list prices be a little bit less. For example, those like Power Wheels cars, you can find anywhere on there, even though they're like a$400 toy. Yeah, yeah, yeah. If you see one for$100, you can find them all day in our area for$100 or less brand new just because there's so many of those on pallets. So that does affect it. But I still think there's a lot of abundance in the whole industry and ways to still make money even despite that. So eBay is a great place because you're reaching outside of your community. So a lot of times people will say, there's no pallet places near me, you know, or I have to drive three hours to one.

13:51That's actually probably an ideal situation because that means in your town, there's not going to be as much competition for the resale market. So I would actually prefer that at this point because I think we'd make more profit. Yeah. How do you turn these supposed disadvantages into your competitive advantage? I came across one story where it was like, well, there's no Ikea near me. And so this side hustler will put together the Ikea order for the community and then rent the U-Haul for the day, go and pick up everybody's stuff. I was like oh you know that's a creative way to go about it but yeah there you go it makes sense did you know there's a disease running rampant alongside hustlers and new entrepreneurs it's called superhero syndrome symptoms include a feeling like you got to do everything yourself thinking you're the only one who can do it right and struggling to let go of certain tasks does that sound familiar to anyone but the good news is there is a cure our sponsor indeed can help you find the best candidates for the roles you need to fill and find them fast.

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15:26Just go to Indeed.com slash Side Hustle Show right now and support the show by saying you heard about Indeed on this podcast. Indeed.com slash Side Hustle Show. Terms and conditions apply. Hiring. Indeed is all you need. A lot of side hustlers suffer from what-if-itis. What if it doesn't work? What if I don't have the skills? What if I pick the wrong path? But one thing 100 % of our amazing guests have in common is they took their shot. They phased down those what-ifs and they got their answers through taking action. Our partner Shopify helps turn what-ifs into why-nots. Shopify is the commerce platform behind millions of businesses around the world, from household names to the very guests on this show.

16:06What if I can't design a website? Shopify's got you with ready-made templates to match your brand style. What if people haven't heard about my brand? Shopify helps you find customers with easy-to-run email and social media campaigns. And what if I get stuck? You can tap in to Shopify's award-winning 24-7 customer support. Let's turn those dreams into and give them the best shot at success with Shopify. Sign up for your$1 per month trial and start selling today at shopify.com slash side hustle. Go to shopify.com slash side hustle. shopify.com slash side hustle okay so you go to the liquidators a big yard or warehouse type of operation you put it in the loaded in the back i guess they help you load it forklift it into the back of the pickup truck in this case you bring it home and they stick it in the garage you start unboxing the stuff and see what what kind of treasures await you this is a typical process for one of these?

17:03Yeah, exactly. It's a lot easier than you'd think to find an item. Amazon, the app even has just a barcode scanner. So you just scan the barcode, pulls right up. And then we usually, if it's kind of a mystery box, if there's not a picture on the outside of it, we'll write in marker what it is and then just put it on a shelf in our garage. But a lot of times it'll say right on it what the item actually is. So, and we're part-time pallet flippers because YouTube is our main business. So I think we'd have to maybe buckle down a little bit more organized if we're trying to do it full time. But we usually go through one to two pallets a month.

17:38So that's, I would say 100 to 150 items at the most that we're having to. And then we have a burn pile, not a burn pile, but a dead pile. I forget what people call it. Yeah, like a dead inventory pile as well. Yeah, this stuff is just not worth anything. Donated or yeah, if it's totally broken has to go in the trash. So yeah. Yeah, that's too bad. But that's helpful to know too. Okay, we're doing a couple of these a month. It's not a full time thing. I think it's a viable side hustle, but maybe difficult to try and turn into a full time thing. I don't know. Do you see people trying to make a full time income from it?

18:16I think you definitely could. It's just it is a grind. So the way we present it on our channel is that no, you may not make 20 grand a month doing this, but what if you could make two grand a month? Like how much would that impact your life? And what would you be able to do with that money? There's a lot of people hurting financially right now. And so to them, that could be the difference between losing their house potentially. I think it's significant and that's why we like sharing it. No, I'm with you. I think it is. I mean, if it's an extra 500 bucks a month, all the way up to how much you want to, how serious you want to take it.

18:50I think that's really cool. Well, and actually, so the guy we buy from, he started his business three years ago, just out of his garage. And now he's buying 20 to 25 truckloads a month to liquidate. So he scaled it like massive, massively in three years. So if you're willing to gamble and if you have that mentality, you really, you could take it all the way up to be something that big, you know? So. Interesting. So he started as a reseller like you and then just like he kept buying more and more and eventually he opened up like his own liquidation business yep he started doing one pallet at a time and then decided to do to do a truckload because let's say i'm buying my inventory at 18 of retail value or 20 of retail value if he buys a truckload of it he can get it for 10 retail value so it's basically like scaling you just have to have the confidence that you can yeah move the inventory it's pretty interesting yeah a place to put it all.

19:47I was going to ask, are there any, you're not dealing with a ton of inventory, but still listing a hundred items and having an organization system to say, well, this one is pending. This is going out to so-and-so. This one I got to ship because it's sold on eBay. Are there any tools or tech or systems that you're using just to manage all that stuff? We just keep a simple Excel spreadsheet for a lot of the management and figuring out our inventory and stuff like that. We like to keep track of it that way, but we can drive down the street in our area and kind of tell who's doing pallets. It's kind of funny because they'll have, usually if you're doing pallets, you have to give up your garage.

20:23So most people will be parking out in front of their garage and then they'll have like a package or two on the porch for someone to come pick up. It's kind of funny. You can almost tell who's doing it, but it definitely does take, I would say if you're trying to start out at least one stall of your garage or a full bedroom, it's going to take up one pallet. So, and then you're going to have some trash and stuff like that to deal with as well. That's true. Maybe more than your average weekly trash pickup as you start to recycle boxes and throw some other stuff away. Yeah. Our dump by us does free recycling.

20:58So that's great. We try to keep the items in the box though, when we're selling them. So I think it makes it more appealing to the buyer because it was more of a new inbox type scenario, but then And also we don't have to deal with the cardboard. So yeah, totally. And then it's just a kind of a lot of back and forth communication with buyers on marketplace or on messenger, you know, the dozens of, is it still available? Like all these messages. Yeah. That is almost too much for my brain. That's more Sarah's deal. She's the communicator with people and she's good at staying on top of that. Especially when you have a really good item and you maybe price it too low and you get 30 people wanting the same, the same item.

21:38It gets a little tricky, but. Yeah. Now all of a sudden I'll get an auction going. All right. I'll put it out. The highest bidder, whoever shows it first. Whenever I post something and it's like that, it's like boom, boom, boom right away. You're like, oh, I priced that one too low. Try that one again. Other times it'll sit there for, like I got a fridge I'm trying to get rid of, sat there for a month. So if anybody wants a fridge, come by and let me know. Have you ever lost money on a pallet? It's like, hey, there wasn't enough in here to recoup our costs here and then you add in the time involved and you're like that was just a waste there has been one maybe two times one time we were like about break even we probably lost money if you include our time and stuff like that but so we buy pallets a lot of times based on for the youtube channel like is this going to be entertaining rather than our strategy of looking up the higher value items and buying it based on the items we like if there's a total mystery box type scenario where you can't see anything.

22:39We bought one of those in the past and we got a little bit burned on it. There was maybe, I think 30 plus umbrellas in it, like beach umbrellas. It was the end of summer. So it was not really, we maybe could have saved them, but we ended up deciding to donate them because we don't want to have to take up that space. That has happened. But I think again, if you can find the right supplier, if you can even just visit one of these places without buying one. I think there's really a lot of opportunity and I really believe it's a great way to make money, extra money. So is there a rule of thumb that you use for how quick you want inventory to turn or once the last stuff is kind of sold down, you know, there's a handful of items left and we'll go pick up the next one.

23:23Or do you think of, I got a six month supply sitting here in the garage, so I got to sell this stuff first. Usually we try to, we'll get over, starting to feel overwhelmed and be like, okay, let's take a little break because that it's too much at that point. And so we'll wait till we sell through more of the items, but we don't have a hard and fast rule because for example, like our last pallet, we got a Christmas tree on, not a great time, but it was like a three or$400 Christmas tree. So it's like, well, if it takes up a few square feet here, that might be worth hanging on to, you know, it had like all the led lights on it and everything already.

23:58So it's like, okay that would be a scenario where i might hang on to it last fall we got a pallet with like a pool chair on it it was like a target four hundred dollar lounger pool chair wow okay saved it and we just sold it for like 180 bucks a couple weeks ago so once it started to warm up again and people start looking for that and that felt like free money at that point so there's no hard and fast rule, but generally we'll keep on to a more valuable item for longer. It makes sense. That's kind of the game of, like you mentioned, buy low, sell high. But at a certain point, you're like, well, how long am I going to wait for this to sell high before I say, oh, I either got to lower the price or it's seasonal items.

24:40Like I wait for the next one to come around. Exactly. Yeah. Gotcha. It's fun though. What mistakes do you see people making when they're getting started in this business or what mistakes have you and Sarah made? Going back to that first pallet, we chose items that we thought we would like, or that would be fun. And that, oh, people must want that. That actually ended up, I think, hurting our profit a little bit on some of those pallets, because just because you don't like something doesn't mean someone else won't. People buy all different types of items. And just because you think something won't sell doesn't mean that it won't.

25:18So one of our best sellers ever was actually, we bought a pallet and it had 50 TV antennas, which who uses a TV antenna anymore, right? Well, we sold through all 50 of them within like two months. Wow. And I think we broke even after selling 15 of them, like 15 of those paid for the whole pallet. And then just because I guess people with RVs want them or like remote cabins. It's just a cheap way for them to get TV. And we totally would never have thought of that. But so just because something you wouldn't buy doesn't mean someone else won't. Yeah. Letting the research kind of dictate which direction that you go to the extent that you can even see the stuff that you're looking for and having to do it kind of quickly make a decision on the spot.

26:08This is the one, you know, if there's 50 to choose from, I feel good about this one. Let's roll the dice. Sometimes it takes us like over an hour to pick one. We're pretty selective. So it's fun. That's all good. And if nothing else, you got a story for the YouTube channel. We used to say that all the time, Bryn and I. Well, if nothing else, we'll get a blog post out of it. Let's see what happens. Yeah. As a business owner, you worked hard to make that phone ring. But missing a business call? it's like watching money fly right out the window. That's why today's episode is brought to you by Quo, spelled Q-U-O.