There are many different ways to make money on eBay – broadly speaking though, you can either make money on occassional one off transactions (see eBay arbitrage) or you can set up a proper eBay business… Here’s how:
The Key To Business on eBay
The main key of course is having something to sell – this is after all a products business, and the market place is buzzing with buyers looking for your products. That’s the beauty of eBay, if you have the right products, finding buyers is not a problem at all.
The downside to eBay is that it’s roots essentially are as a sort of flea market of wonderful and eclectic items. In practicality, this means that it is very hard to charge a good price for anything. If you want to sell on eBay and actually make a profit you are going to need to buy at low prices so that you can sell at still discounted prices and still make a margin.
Deciding What To Buy
For most people, there is one single question which prevents them from getting their business started “What do I sell?”. Rather than trying to figure out what you need to sell though, start by thinking about what items you can actually get hold of and whether or not they would make for a good eBay business. To build a successful eBay business you need to be flexible and have an eye for a bargain – it’s not about selling what you want to sell, it’s about selling what you can sell.
Sourcing products
There are many many different ways to find products to sell on eBay, and I will cover these in future posts – in fact there will be a full blog category for product sourcing ideas. But this post is about starting up, so I am going to show you a great way to find stock to kick your business off to a flying start!
How to find good deals
What we are looking for is wholesale lots and job lots, which we can split up into individual parts and sell on at a massive profit. The reason this works so well is because the vast majority of people simply aren’t prepared to take a gamble on unknown lots. If you know exactly what is in a lot, there is less risk, so the price goes up. Just a little uncertainty though, and you can get a deal.
Additionally, people hate buying stuff they don’t need. I have seem times when a lot of 3 or 4 items has gone for less than just one of them could have sold for, seriously…
So start off by logging onto eBay and browsing by category, then simply navigate to the wholesale category and have a browse. This method takes patience, there will be a couple hundred duds for every potential winner. But you will soon learn what the best lots look like. You can also browse normal categories using the phrase “job lot” for more options, although I would start with the wholesale category personally.
Reducing the risk
Selling products online is by it’s nature going to require a little bit of risk, compared to say Adsense earnings or affiliate marketing. I mentioned already that you need to buy lots which are a little uncertain… Well this is the real secret; I tend to look primarily for auction lots. Sure if I see a good deal on a buy it now, I might take a punt, but when you start out, if you follow this tip you can’t lose:
Only bid on listings which are auctions and where your bid is at least 30% higher than the starting bid was and where there are already at least 3 bidders. The reason for doing this is that you guarantee that when you win, someone else was there ready to pay virtually the same price you paid. This means that if you win, and you set up all your listings and fail to sell anything at a profit – or just decide it’s not worth the effort… You can just re-list the job lot exactly as you bought it and you can’t almost guarantee it will sell again for about what you paid!
Ok so prices can fluctuate – you might pay $400 for a lot and it only sells for $370 maybe – but a risk of $30-50 is a whole lot different than a risk of $400. This is a great way to experiment knowing that your actual risk is lower than your outlay. I have done this myself – we all buy duff lots every now and then, but knowing you can resell them and get your money back is a great feeling.
Lots to look for
Variety
All of the best lots are the ones with variation. You don’t want to buy a lot of 50 of the same item. If you buy 50 different items on the other hand you can furnish a small shop; 50 listings means 50 chances to make a sale, so you’ll turn over your money a lot sooner.
Margin Vs Profit
Personally, I like margin, if I buy a lot for $100 I will sometimes be able to sell it’s contents for $500. As a rule of thumb, the lower the price, the higher the margin. High margin is good because eBay and Paypal take about 13% of your selling price – so if your margin is only 20% you are only really making 7%.
Listing fees
Just a note to add to my last point, unlike selling via your own website, you will have to pay to list your items. Don’t go so low that your listing fees eat up your margin. Selling items for $3 each is a bad idea (usually), $20 is great, $80 is probably a bit too much again – that’s my preference at least.
Doing business
Once you have your first lot of stock, you need to actually sell some stuff. This is actually the easy bit – although it does require some work. This post is about strategy, so I’m not teaching you how to use Turbolister (seriously though, do use it)…
eBay is a big price war, and to compete effectively you need to keep prices low – without killing your margin. So make sure you keep your costs low. This means you need to figure out a good way to do things efficiently and cheaply:
Turbo lister, and other bits
eBay’s standard format isn’t good enough. If you are listing 30-100 items at a time, or posting 5 or 6 items a day, you need to utilize technology. Turbolister is free and does the job well. It is even better if you can get your head around using excel to import listings.
Logistics
Going to the post office is a pain, especially when you have to queue for hours. Packing is a pain too. Make sure you think about how you are going to get orders from your computer screen, via your stock storage area into a jiffy bag. The quicker you can do it the more money you are making per hour.
Marketing
Ok, your business is set up now, and hopefully you are saving costs where you can, listing items nicely and in a way that makes them sell. But there is always room to improve. It may not seem like a big deal yet, but eventually you will need to think about marketing and growing your business to a more established position.
I’ll cover those bits later, but for now – make sure that every time you make a sale you send the customer an email, thank them for their custom and invite them to sign up for your newsletter… Which you will eventually be starting. Every customer on your list is a customer who might come back and buy again.
Summary
That’s it then. Well, it’s a start. There is enough there that anyone reading this should be able to go and make a few bucks in the next couple of weeks – so go and do it, then come back and tell me how you did… Go on, shoot.