Adventures Of A Stay At Home Dad

While starting an Ebay business can be a tremendous opportunity to make a ton of money, you can lose all profit potential by not doing some simple planning before you start selling.

To begin, any business opportunity needs to be approached as a traditional business – with an appropriate amount of planning. Yes, I know, planning and goal setting is so exciting your head may just burst. Many people, myself included, tend to jump in with both feet, however, it is much more efficient and profitable to give yourself some direction before you list your first item. Here are 5 strategies that will help you become an Ebay Power Seller in 90 days.

1. Set Defined Goals – revisit them often.

** OLD CLICHÉ ALERT **

If you wanted to drive from your house to Yorkton in Saskatchewan, Canada, would you not plan before hand? Without a map or a GPS, some people out there may not even know to at least go north from nearly any point in the contiguous United States. Why is starting a successful business any different? What I find helpful is to work backwards from your goal and break it down into smaller steps. Let’s say you want to have $1000 in profit in your first month – with this simple goal, you can work in reverse to determine how much product you have to sell and how much profit you need to make per sale in order to reach your goal.

Don’t stop with just short term goals! Develop weekly, monthly, and yearly goals that you can use to measure your progress. Most people that I have worked with list “making money as quickly as possible” as their primary goal. This is not a goal – until you attach some way to determine success and a plausible time frame in which to work – is is only a dream. Saying “I will make $1000 profit in the next 30 days” is a goal.

1. Decide what you want to sell – Market Research.

Saying that you want to sell things on Ebay, while a great idea, is much too general. Experience has told me that it is necessary to focus on some particular sector. Most people come into this as a one man show with a limited budget. What this means to you is that you probably won’t be able to sell in high volume with low profit margins. The most common mistake people make is to chose something wildly popular – like iPods, for example – and try to sell them with the big boys. Soon you will find that Ebay and payment processing fees obliterate your profit and, because you can’t buy in volume, you realize you won’t be quitting your day job on $4 profits. You will need to find a niche.

Finding a niche can get a little tricky though – I am sure you have stumbled across many websites to be able to find these secret niches for you. I am not going to attempt to validate the abilities of these products although I will offer a few simple steps to follow to find your own niche on Ebay.

Start by picking a category of items you would like to sell, such as antiques, jewelry, electronics, books, and so on. It might be a good idea to make this decision, in part, on your personal taste. Believe me – if you are trying to sell something that you have little or no interest in, you would be better off working at McDonald’s. For this example, lets say you picked jewelry. This is a good start but a small business with no focus is doomed to failure. Will you sell men’s or women’s jewelry? Earrings or wedding bands? Gold overlay or solid gold . . . the options go on and on. The key is to find a niche that has some competition but not too much that your listing gets lost among tens of thousands of others.

1. New, Used, Refurbished – what are you going to sell?

When deciding to sell new, used, or refurbished items, you need to look at each one’s pros and cons. After analyzing your list, you may be limited on what you can sell versus what you want to sell. Lets break each one down to take a quick look.

People on Ebay usually fit one of two categories – those looking for a bargain and those looking for something unique. Selling used items on Ebay can include things like antiques, collectibles, stuff in your basement, etc. can fit in both categories so you know you have a good market. The benefit when selling used is that you can offer it “as-is” without any warranty. It is almost liberating when you don’t have to worry about customer returns! The problem with selling used items on Ebay is two-fold. First, you will need to be meticulous in your description to include every detail about the item – scratches, dents, etc. Pictures will help immensely. Second – and most crucial – is supply. It takes time to go out and find these things to sell and buying antiques in bulk is usually tough to do.

Selling refurbished items on Ebay can be a great choice for a couple of reasons. First is access to quantity. There are many wholesale companies who sell refurbished items that you can buy in bulk. Buying in bulk is a great way to maximize profits and still offer a competitive price. The refurbisher or the original manufacturer will usually offer a warranty which is key when selling refurbished items on Ebay. Also, noting that most on Ebay are looking for a deal, refurbished items are less expensive than brand new. The downside is having to inventory – usually you need to pay for a bulk amount up front and store them somewhere before you sell them. You have to risk your money in hopes that your product not only sells, but also makes you a profit.

Of course what everyone is looking for on Ebay is that brand new buzz item at the lowest possible price – which means fierce competition. It is easy for a newbie to think he can get started on Ebay selling iPhones and electronics. I can tell you by experience that 99% of the factory sealed iPhones on Ebay are at least gray market, if not black market and electronics competition is so overwhelming, you would need to sell in high volume to make decent profit. Selling questionable goods is not a way to get started and you just don’t have the resources to sell in volume if you are just starting out. Overall, though, selling new items on Ebay is very similar in its pros and cons as selling refurbished. Buy in bulk and keep your profit expectations in check and you can be successful.

1. Should you inventory or use a wholesale dropship company?

A quick look at some of the top Ebay sellers will show you that most of the big dogs have done two things that was part of their success: they control their own inventory (have warehouses) and they sell in volume.

Unless you have a fat bank roll to start out with, neither of these strategies are going to work out for you. Even if you were able to fill a warehouse with product, there is only so much time in the day to sell, package, and ship items, so selling in volume isn’t possible. While you may not be able to fill a warehouse, buying in bulk (even light-bulk) is a great opportunity to lower your cost per item and increase your profit. Many wholesalers will give quantity price breaks for buying by the case or the pallet. Even better if you can buy a truckload. Of course buying in quantity has the downside of storage – after all, where are you going to put a truck load of pantyhose? In addition, what will you do with all that product if something happens to the market and it won’t sell? A few years back, I had acquired a large vinyl record collection of over 10K pieces. The market fell out and I was left with at least 8K pieces that were now worth 1/10^th of what they were previously selling at. Buying in bulk must be done with caution and with a good deal of market research beforehand to ensure profitability.

Your other option is to use a dropship wholesaler. To keep it simple – a dropship company is a business (manufacturer or distributor) that will ship the items that you have sold to your customer directly. You don’t have to inventory and you don’t have to buy the product before you sell it. For example – lets say you have a dropship company that carries iPod earphones. You list them on Ebay, wait for them to sell. The difference between the price your dropship company is selling them and the price of the highest bid is how much your profit is – minus Ebay and payment processing fees of course. The benefit here is huge – you don’t have to put up any of your own money in order to sell products. There are hundreds (thousands?) of dropship companies out there representing millions of products – name brand and . . . not so name brand. Just contact me and I will send you a list of them – some are free and some are fee based, but all of them are 100% legit.

When using a dropship wholesaler, you need to be aware of a couple of things. First, most dropship companies have a small fee ($3-$5) attached to every order so you need to be careful to take that into account when calculating profit potential. Second, your products will cost you more than if you bought them outright – also cutting into profits. Another common complaint with some dropship companies is product availability. On occasion, I have sold a product that turns out to be out of stock at the supplier. You are faced with either having to cancel the transaction or make the customer wait. The huge benefit here is not having to worry about storage or buying the product outright.

1. Build a website or blog to make the most of your traffic.

A while back, I wrote an article about using a blog to promote your business. Interactive websites and social media sites such as Twitter and Facebook enable you to connect to your customers (or potential customers). There have been books and courses dedicated to learning the intricacies of social networking for business so I am not going to get into much detail here but, it will suffice to say that you are missing out big if you aren’t adopting this new medium.

The easiest way to incorporate social media and internet marketing to boost your Ebay sales is through blogging. Within 5 minutes of making the decision to start a blog, you can have one up and running. The key to success here is to make sure your blog is not some shill sales page just used to promote your business – readers want value. Most people read a blog to gain information or to read something insightful or entertaining. If all you blog about is what you have for sale, you will be wasting your time. Get into a mindset of helping others through your blog first – your sales message can come later. Over time, the combination of blogging and social media participation can lead to a great deal of additional (FREE) traffic for your Ebay business.

Ideally, each of these 5 strategies would be broken down into longer, more in depth individual posts in themselves (perhaps a 5 part series?). I hope I have offered you some insight into what has helped make others successful in their Ebay business. Let me know if you have some suggestions for others by just adding them to the comments below.