Closeout Pallet Auctions: What You Need To Know


Closeout pallet auctions have become very popular for retail and wholesale sellers across the United States, and the world. When a company no longer needs a product and is ready to unload its inventory, closeout auctions allow those in the industry to purchase products at rock bottom prices. Because these goods are so cheap they often sell for well below the company's invoice cost, providing the opportunity for buyers of those pallets to earn significant profits.

The idea is to closeout all the excess inventory that does not sell and is then sold at a heavily discounted rate. This allows multiple wholesale and retail companies to gain access to products they would otherwise not be able to acquire. For companies that do not closeout their inventory, they risk losing the money they paid for it and having that money returned to them by customers who are purchasing the items they cannot sell. A closeout auction provides an excellent opportunity for a company that is hemorrhaging money to keep itself solvent. It is a win-win situation that benefits everyone involved.

Companies that engage in closeout auctions work with warehouse owners, distributors, manufacturers, and liquidators. A closeout auction allows one of these companies to buy the excess goods in your warehouse. The goods are brought to the auction lot, and in reserve auctions, a price is set for each pallet. If the bid price is greater than the reserve, the goods are sold. If not, they are then offered to another buyer. Most pallet auctions are sold without reserves, since the owner of the merchandise wants to simply recoup as much as possible, and stay focused on their regular business. It also can be better to reinvest the funds into merchandise that can sell, as opposed to holding on to unsold merchandise in hope that someday it can be sold at its regular price. Also, the longer merchandise stays on the shelves of a store, the sooner it will lose its new look luster.

The process for purchasing these pallets can be very simple. Once you register through an auction site such as or, you simply post a bid, make sure the goods you are bidding on qualify for your customer's needs, and then place your bid. Quick tip: make sure that you factor in the cost of shipping to your location. Years ago, before I started dealing directly with many of my current wholesale sources, such as department stores and brands, I once purchased a pallet from at a great price, but I was surprised by the relatively high shipping cost.

You can choose to stay in the closeout auction, wait until the next auction, or walk away from the auction. In most cases, bids reflect the value of the merchandise, and goods in high demand, such as designer handbags with brands such as Michael Kors and Coach, and dresses with brand names such as Calvin Klein and Guess, will receive relatively high bids, but you could score a surprise if you get lucky. You can also bid on lower cost non branded or lesser known branded merchandise, such as pallets from Walmart and Target, but you need to ensure that you have customers for those types of products.

There are also auctions for pallets from non apparel retailers, such as Home Depot and Rite Aid, so you can expand your scope as your market dictates.

Sometimes, the goods at a closeout auction are literally just trash. These include used furniture, old hardware, broken appliances, out-of-date supplies, and damaged and broken goods. Some closeout auctions specialize in certain types of goods, such as electronics, jewelry, clothing, books, etc. However, it's not uncommon for low quality products to be listed at a closeout auction, especially when it comes to store return merchandise. Store return merchandise consists of products returned to the store by customers, and that merchandise can be in extremely poor condition.

There are many different kinds of closeout auctions, including those based on the product it will sell for and/or style. For example, a closeout auction may feature brand name children's clothing from an American department store. Items featured at such auctions range from jeans to dresses to suits, by brands such as Polo Ralph Lauren, Nike, Adidas, and Tommy Hilfiger. You can, and should, look at manifests to see what the contents are of the pallet that you are pursuing.

When purchasing goods at a closeout auction, if possible, first inspect the goods thoroughly before bidding, and if inspection is not available, it is especially important to have detailed information on the pallet, including access to a manifest. It's important to remember that overstock merchandise is generally items that were displayed for sale in department stores and discount store chains, and then placed in large boxes by the store staff, and then shipped to their liquidation processing centers. In other words, while the merchandise can be in brand new condition, it will look like merchandise that has been sitting on clearance racks or shelves and then repacked into boxes.

The good news about closeout auctions is that most of the goods that are featured at such auctions are sold at below their original wholesale cost, and depending on the retailer source for the liquidated merchandise, you can purchase designer label goods for as low as 5% of the original retail value.