How Liquidation Pallets Work

A liquidation pallet is a bulk lot of merchandise sold by retailers, distributors or manufacturers who need to move inventory quickly. Rather than selling items individually, the goods are grouped onto a pallet and sold as a single unit, usually at a steep discount to retail value.

Inventory ends up on liquidation pallets for a range of reasons: customer returns, overstock from over-ordering, shelf pulls tied to seasonal resets, or salvage from damaged shipments. The source and reason often determines the condition you can expect.

Buyers are typically resellers -- flea market vendors, online sellers, discount stores and exporters -- who purchase pallets below wholesale cost and resell items individually or in smaller bundles for a margin.

Before buying, it helps to understand whether a pallet is manifested (with an itemized list of contents) or unmanifested (sold by category without a detailed breakdown), as this affects both price and risk.