Monthly Archives: May 2005

Be realistic…

As some of you know, I spent many years buying and selling both on and offline and several of my products are based upon my own experience in this area.  I know that the vast majority of my customers and subscribers have an interest in trading whether it be on eBay or at the local market but more and more I am seeing people with completely unrealistic expectations of what they will be able to do.  Most commonly these unrealistic expectations are in respect of how much it actually costs to purchase specific products and what they can then be sold on for. 

I regularly get emails from people who want to know where they can purchase products such as mobile (cell) phones, new release DVDs, Playstation games and similar at, say, a 50% discount to resell on eBay.  The fact is that such a thing is not available – it is a simple case of supply and demand and competition.

Take DVDs for example, most people think that these are excellent products to resell on eBay because they are very popular, not particularly expensive and easy to package and ship.  Unfortunately, they could not be more wrong.  The DVD market is one of the most competitive that there is – take a look for yourself and see how many auctions there are on eBay for DVDs at any one time.  I have just looked and counted almost 300,000!  At any one time there will only be a certain number of buyers wanting to purchase a particular DVD and if you take into account the numerous different places there are that each buyer could purchase from, it is likely that in general, there will be more copies of an individual DVD available than there are buyers to purchase them.  This situation causes prices to fall.  The other factor that forces prices down is the fact that one DVD is the same as another.  By this I mean that from a buyers point of view, there is no difference to a new DVD purchased on eBay to one which is purchased from their local DVD store.  Often the only way to differentiate is on price and of course, the only way to make the price more attractive to a buyer is to lower it.

The above reasons help to explain why the wholesale discount on a new release DVD is just £1 or £2 at most ($2 or $3 roughly in the US).  When you take into account the fact that the large retail chains can purchase thousands of DVDs at a time and receive a bigger discount than individual traders, you soon see why it is very difficult for a small business to compete in such a competitive industry.  You simply cannot purchase new release DVDs at 50% discount and even if you could, it wouldn’t be long before prices were forced down as there is always someone willing to sell a little bit cheaper than the next man.

It isn’t just DVDs that fall into this category.  Take mobile (cell) phones.  Here in the UK you can walk down just about any high street and get the latest phones either free or for a minimal token payment.  The stores are relying on making their money from the line rental contract that you will have to sign in order to get the phone.  Of course, the actual cost of the phone is not free – most new mobiles are actually worth £200 or £300 which means that if you want to buy a batch of phones at wholesale, you are going to be looking at a pretty high unit cost.  As with most electrical products, the market is competitive and prices have been forced down which means that the difference between your wholesale buying price and your retail selling price is minimal. 

There are numerous products that suffer from the same market conditions as DVDs and phones and new/small traders really should avoid trying to sell such items at all costs because it will usually be frustrating and ultimately not financially rewarding.  When trying to decide what products to sell, you need to be thinking about the type of market that a particular product is sold in.  If there are already numerous sellers and many large companies selling at considerable discounts this is far from ideal.  The exception to the rule is if you are able to add value in some way to make your ‘offering’ more unique.  I wrote about adding value last year in one of my newsletters.

At the end of the day, it is all about research, being realistic and having an understanding of the market that you want to operate in.  Whilst it would be great to be able to buy and sell new release DVDs (or whatever) all day long, doubling your money every time, I am afraid that this is just not going to happen.

Fed up with eBay?

For many people, their first experience of working online involves selling products on eBay.  This was how I got started back in 1998 and I know countless other people that have done the same.

However, it is important to remember that eBay is not the ‘be all and end all’ – there is a much bigger online world out there.  My reason for mentioning this is that I have spoken to three people this week who each make a decent full or part-time income on eBay but who are fed up with it and looking to move in other directions.

Having sold on eBay myself, I can understand why sellers do get tired/bored/frustrated with the auction site – it is highly competitive and it takes an incredible amount of hard work to succeed.  In addition, it is normally the case that the more successful you become, the harder you have to work.  Listing auctions, handling customer enquiries, packing, shipping, sourcing/buying stock, keeping up with feedback, monitoring the competition – selling on eBay is a tough job and it is no wonder that after working in this way for a few years, many people wish they were back in the land of the employed!!

Don’t get me wrong, there is good money to be made on eBay for anyone willing to put the effort in and many people enjoy trading on this huge auction site.  But it isn’t for everyone.

Having spoken to numerous eBay sellers in the past, it seems to me that of the ones that don’t enjoy working on eBay, the particular task that they enjoy the least is the packing and shipping of products.  Funnily enough, this is exactly the bit of trading that I grew to dislike too.

I (and the sellers I have spoken to) didn’t have a problem with creating sales descriptions, dealing with emails, collecting payment (naturally!) and the other administrative tasks involved in running an online business.  But wrapping things up and taking them to the post office is something completely different and for me and many others that’s where it all started to fall apart.

As I said at the beginning of this article, if you are getting fed up of doing the eBay ‘thing’ or if you just don’t fancy the idea to start with, there is a wealth of alternative opportunities available online.  My own solution was to get rid of the one aspect of eBay trading that I didn’t enjoy – the packing and shipping – and start to produce and sell digital products which could be delivered to the customer automatically.  I still have to write sales pages and build websites, I still have to deal with emails etc but I don’t have to handle any physical products (neither do I have to deal with payment collection because that too can be handled automatically by software).

Of course my products are very relevant to eBay sellers and indeed, there are numerous individuals and companies out there that have made a fortune off the back of eBay without ever having sold a single product on the auction site.  I am sure that there are numerous other problems that eBay users have that could be solved with a new piece of software or a particular service and if the idea takes off, there are 135 million registered users on eBay to market to!

eBay provides a wonderful opportunity for hundreds of thousands of people but it isn’t for everyone and if you find yourself frustrated/bored with the same old routine everyday, start to look for something outside of the eBay world.