Online auctions might appear at first glance to be an ideal opportunity to make some extra money in these stricken financial times. Sine eBay was launched in 1995 many so called “gurus” have highlighted eBay as an ideal money making opportunity. A few years ago this was very true and it is possible that more eBay millionaires have been created than from any other business opportunity. However, times and the market place have changed and moved on in recent years and it is now far harder to succeed as an eBay seller than it used to be.
Do They Add Up?
The case of Tony an eBay power seller is typical. He started selling on the online auction site around 5 years ago. His method of operation was to buy job lots of small electrical items, toys and other suitable items and offer them as individual items on eBay. At the time this was a sound and successful business model. The trouble that he found was that on a couple of occasions he was given seven day suspension orders by eBay for selling items the manufactures had prohibited being sold on any online auction sites. Tony found this particularly annoying as he came across dozens of competitors selling the very same items on eBay without any restriction.
Eventually he decided to start concentrating on selling “as good as new” paper back books on eBay. He found a supplier who could offer pallets of books at a very favourable rate which meant he was only paying a few pence per book. This gave him the opportunity to sell the books for considerable gross profit
Tony eventually had over 1400 titles listed on eBay and was making sales in the region 300 to 400 book per month. At first glance it would seem to indicate he was being successful but his accounts showed a different picture. Although his sales were high so were his expenses, eBay listing, final valuation fees and Paypal charges significantly ate into his profit margins. He eventually calculated that these charges plus the cost of the books was taking a huge 75% of his income. In real terms for all his work and effort he was only making around £150 a month..
Tony had fallen into a trap that has snared many power sellers; they simply saw eBay as a means to sell items to customers. The ones who have succeeded and grown realised three important facts, firstly selling low cost items such as second hand paperbacks will never in the long term make big profits. There is too much work to make and ship each sale for it to be really worth the effort. Secondly successful sellers find a niche and stick to it. General fiction books is a too wide category, specialising in a niche such as aviation or sports books means that any customer who makes a purchase could well be interested in any other books that you might have on the subject. This gives you the potential to make follow up sales outside of eBay.
This brings up the third vital point a successful online auction seller does not rely on just making one sale to a customer but looks for repeat sales. This can be achieved by building a rapport with your new customer by sending out a list of other associated products that you have for sale,. One good way to establish regular contact with a customer is to offer a free report or newsletter which among other things would promote what you have to sell. These days it is also very simply to build a web site of blog that you can direct customers too. This can also contain details of niche related items you have for sale.
It is important that you do your sums and work out the net profit you will make on your online auction sales. Even at 75% this could be justifiable providing you are using it to attract customers you can make further offers too. This means that you can make repeat sales directly without using the online auctions. Just think how much bigger a profit you would make if you did not have to pay listing and the others fees associated with online auctions. You could be surprised how much more profitable your business could become if you do the sums.
