This transcript was generated from the episode audio and may contain minor errors.
[Music]
Can you make money by selling open box customer returns? You know, you buy stuff on Amazon or some other online retailer and you end up returning it. Return goods are a huge business. They are a category of their own. There's all kinds of logistics and supply chain stuff that goes into managing returns just because so much stuff is purchased online, so much stuff is returned.
So you've got returns and open box items as basically part of a hidden supply chain. And retailers, Amazon sellers, they unload mixed condition goods to liquidators. They actually sell a lot of these items in bulk by the palette, in fact. It's a pretty interesting little world. And some people who get into this and buy and resell, they make a lot of money or at least a very good profit margin.
Others end up with mystery boxes of broken junk. So of course you want to be the former, not the latter. That would be the first, not the second. And the difference, at least a lot of it, is process. Like understanding your sell-through rate, product categories, refurbishment limits before you spend any money at all.
So if you're interested in this, or if you just want to know how it works, let's give this caller, got a caller wondering about how to do it. Gonna give them a checklist to go from curiosity to controlled experiment. Detailed question from Jenna and my answer coming right up. [Music]
Hey Chris, I'm Jenna Raffi calling from Sacramento. I noticed liquidation palettes and open box sections at big realtors full of lightly used or returned items.
Kitchen appliances, small electronics. I'm considering buying returns in bulk. Cleaning, testing them, then reselling individually on Facebook Marketplace or eBay. Is there any real profit after factoring in defective units? Time spent testing and platform fees?
What due diligence should I do before purchasing a pallet so I don't end up with a garage of junk? [Music]
Jenna, there definitely can be profit. So to answer your first question, is there real profit after factoring in these things? There definitely can be, but of course you don't want to end up with junk. And ultimately in the long run, it kind of depends on doing it over and over because if you just get one box or one pallet, it's a little bit random.
But often liquidators will allow half pallet or case purchases. You can kind of experiment and get used to the process. Prefer manifest listed pallets. That's one tip that I got from our reseller community. A manifest listed pallet usually includes like the details of the inventory so you know what you're getting.
Avoid random Facebook ads with no manifest. That's another tip that I heard. Sometimes there are some less than scrupulous sellers who are just selling random stuff. Then it's helpful to focus on a category, which you can also do when you understand what is on that pallet, at least generally. So a lot of people specialize in coffee makers or wifi routers.
It sounds kind of obscure, but like when you actually specialize, you can find lots and lots of items. People are buying and returning these items all the time. And then make sure you think about your margins. Like how much will you be able to sell these items for? Typically, your discount is gonna have to be at least 25% often a good bit more, 35 to 40%.
When people are buying an open box item, they want to pay a lot less than they would for a new item. So be conservative on your estimates as you kind of go through the process just to avoid being stuck buying stuff and then not being able to sell it for a profit. One more tip, for stuff that isn't sellable, you should be able to get a tax write off for it. So it actually kind of works in your favor that way too. So pre-identify like donation centers or e-waste recyclers so that if there's something you can't move, you can donate it, but then also write it off on your taxes and that can help with the overall profit margin.
In conclusion, it definitely can work, but only with disciplined sourcing and tracking. Try it out, let us know how it goes. We'd love to hear from anybody else trying out this business as well. We've got an incredible community of people out there doing stuff. And by the way, this is not confined to the United States.
Anywhere with Amazon or other big retailers, there's typically is a way to get into the open box reselling game. So you just have to kind of look locally and see what is available for you. But it is available at least, if not worldwide in lots of countries. All right, that's it for today. Thank you for tuning in.
My name is Chris Guillebeau. This is "Side Hustle School." [Music]
- From the Onward Project.
