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September 03, 2007
Don’t lose track of the figures when selling on eBay
Selling on eBay may not be rocket science and you do not need to have a degree in Mathematics to become a successful eBay seller. But if you are to maximize your returns you will have to become pretty skillful at handling and understanding the numbers.. Getting your math right is necessary because costing is an important component of online business and if you do not understand the technicalities, you might easily end up paying more than what you might actually be earning. eBay is all about offering cheap deals, rebates, discounts, freebies etc, all of which imply that as a seller you will have to learn to work your way around tight margins, something that can be done easily by utilizing basic math principles, tools and techniques.
It would not have been a problem if you had low sale volumes, say around 10 to 20 unit sales per month because then you could just use a calculator to assess your overall costs and profitability. However, if you are a high-volume seller, you need to employ standard costing tools and techniques because then the calculations will become more complex. The calculations will then involve all the associated cost components such as unit product cost, in bound shipping costs (if any), listing fees, and paypal account charges. Moreover, since some of these cost components vary depending on the type of product, you will have to take extra precautions to ensure that your calculations are accurate and represent the true state of your existing online business. Once you get a clear picture, you will know exactly where you need to make changes so as to reduce costs and improve overall profitability.
By getting your math right, you can also make accurate demand forecasts, based on which you can then place your purchase orders. This will automatically result in a substantial reduction in inventory carrying costs, leading to improved profitability. Improving your math aptitude will also enable you to design and test different types of rebate and discount schemes, just to check which scheme gets the attention of customers and is most profitable.
It might be that you were weak in math in school, but still you do not need to lose sleep because all you will be required to do is basic calculations involving simple functions such as subtraction, addition, multiplication, division, percentage calculations etc. So, if you are not too sure of your mathematical abilities, but still want to become a top-notch eBay seller, it is recommended that you sign up for a crash course, even if it is just a day long. Getting the math right is a prerequisite for eBay sellers and should not be overlooked.
Posted by Dave Bromley at September 3, 2007 01:19 PM
