A ‘pallet deal’ may not be all it appears! Here’s how to avoid taking a bad ‘gamble’ on stock…

£1000 of stock…for just £200

Did you know that you can go to a supplier that deals in ‘wholesale clearance’ and buy, for example, a pallet load of kitchen goods such as kettles, blenders and toasters, for less than £200?

The retail value of these items – and typically you would be looking at around 50 items per pallet – could be around £800 – £1000! In fact, as I write this, there’s a deal just like this for ‘kitchen returns’ over at Gem Wholesale

  • Here is an image of the stock list:

A ‘pallet deal’ may not be all it appears! Here’s how to avoid taking a bad ‘gamble’ on stock…

To view the list in your own browser go here

But, before you get too excited, please read the rest of this blog post because it’s very important!

Many sellers make the mistake of seeing very tempting deals like this, but fail to consider what the stock actually consists of, where they will sell it for a profit and importantly whether anyone actually wants to buy it! Let’s look at these first points more closely.

What is the ‘grade’ of stock?

Taking the example above, a pallet of stock might be graded as ‘customer returns’. This can mean that there is absolutely nothing wrong with the product itself, or the packaging, apart from it having been opened by a customer who then returned it to a mail order company having simply changed their mind.

However, it can also mean that some items have been damaged in transit, there may be parts missing, or the product has become faulty – hence the item being returned – so you, as the buyer of the pallet, would then need to check and repair some of the items before you can resell them.

There are a number of different grades used by suppliers and these can include the following:

  • Grade 1: Generally no faults or very minor faults i.e. torn packaging
  • Grade 2: Slightly damaged i.e. a part missing, a rip or tear
  • Checked Faulty Returns: Items have been checked and have known faults…

Grades do vary between suppliers websites so it’s always best to check these yourself depending on whom you are purchasing from. A full explanation of grades should always be available to you from the supplier.

So this is the first thing to be aware of. You might see a pallet of goods with a retail value of £1000 that you can snap up for just £200 – but read all the information carefully and think about how much time you may need to spend fixing the faulty goods – and just how many of those goods in the pallet will potentially need fixing!

Will anyone buy these items and if so, how much for?

If you are looking at a pallet, view the ‘stock list’ first and then research some of the offered items online – particularly on eBay – so that you get a general idea of the type of sale prices that are being achieved and how regularly that item is selling. You can do this using ‘completed listings’ or ‘sold listings’ on the eBay site.  If there is no ‘stock list’ – don’t buy!

For example, if one of the items in the stock list is a ‘ColourMatch Poppy Red Jug Kettle’, add those keywords to the search box on eBay, then click ‘Show Only Sold Listings’ and you’ll see the number sold and the prices they achieved. In this example, the average sale price is £23.49 and I found 2 recently sold items.

If you have 50 items of stock on your pallet and the cost for your pallet is £200 then the easy way to work out your stock cost per item is to divide £200 by 50, so each item works out at £4.00. (You don’t have to split it this way, as obviously some items will be worth more than others, but for the purpose of this example this is the least complicated way.)

If your stock item costs £4.00 and you sell it at £23.49 then after your selling fees (£1.17 eBay, £1.00 PayPal) and postage and packaging costs (£2.78 delivery, 10p packaging) your net profit on this item would be approximately £14.44. Don’t forget there will also be a delivery fee for the pallet of goods so this should be added into your calculation too.

These calculations should always be done before you place an order!

So, assuming you’ve done your figures like the example above, that’s potentially a great profit BUT remember that there is the possibility that not all of the items on your pallet will sell…or sell for a profit…or be suitable to sell without first being fixed or repackaged. You must be confident that you can sell most of the products you receive in your pallet to avoid making a loss.

This is why it’s so important to check the stock list against what’s currently selling well online before you go ahead and purchase a pallet.

Research the market first rather than jump in with random products that no-one is actually interested in. This should be considered whether you are buying pallets of assorted stock, or you are looking to source a specific item in bulk. Research is key.

Buying pallets of stock can end up being a bit of a gamble! It appears easy – buy a load of goods cheap, list them for resale and make a magnificent profit on each item – but in reality you may be left with stock that you can’t sell, simply because it’s not saleable (i.e. you don’t know how to repair it, it’s literally ‘unfixable’ or it’s not an in-demand product).

Other things to consider…

Whilst this is a perfectly viable way of selling online, you must be vigilant, use your common-sense and it does of course take some effort as you’ll need to constantly be ordering new stock – and listing it – which is time-consuming as your stock will change all the time.

You’ll only have small quantities of each product available, so if you find you have a really hot seller on your hands you could potentially run out of stock very quickly, and not be able to replenish.

On the plus side, this strategy can work for you if you don’t want to import goods or buy from wholesalers, as the risks are quite low. That is as long as you thoroughly check out what you are purchasing (look at the stock list) and calculate the profit potential before purchasing.

Something to think about over the Bank Holiday weekend!

As always I wish you the best of success,

 

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