I got a call last night from a woman who was asking me about selling on eBay. She really didn’t want to listen to what I had to say. All she kept asking me was “Can you make a lot of money on eBay”? “Do people make a lot of money of eBay"? "Can I make $1000 a month in my spare time"?
Yes, some people make a lot of money on EBay, however they work their butts off. Their homes are overrun with boxes and boxes of merchandise. They put in 80-hour weeks. After 5 years of working in the same sector, they do have some short cuts and secrets and can do quite well. Some people make a decent amount of money working about 40 hours a week. However no one makes a boatload of money sitting back doing nothing. As with anything else, you can’t get something for nothing. Like any other profession, not everyone is suited to it. It requires a certain aptitude. I know a guy who makes 150K a year selling computer systems to big companies. Hmmm, if I did that, I’d make 150K a year too! Actually, I would rather stick needles in my eyeballs than make cold calls. I hate the idea of selling face-to-face or over the phone. The people on the other end of the phone would also hate me! That type of sales requires a certain type of likeable personality, a nice sounding voice, persistence, and sales talent that very few people possess. I had 2 friends who went into this type of sales, because they heard that it would put them on easy street, when they the wrong personality for it; they both went into heavy debt.
The same can be said for the stock market. Just because some people become millionaires in the stock market, doesn’t mean we all have the talent for it, or we all would be! Some people do very well owning a restaurant. Does that mean that everyone would be successful in running a restaurant? I think it takes certain know-how, and an excellent understanding about advertising, location, food, atmosphere, menus, customers, pricing, staffing etc. It’s common knowledge that even though a restaurant can sell an entrée for $20 when the ingredients only cost $3, that lots of restaurants fail.
For some reason though, everyone thinks that possessing know-how, aptitude and specific skills are not required to be successful on eBay.
It takes a lot of time to learn the eBay ropes, to work and learn through trial and error. It takes a lot of marketing know-how to convince buyers to buy from you instead of the 50 other sellers selling the same thing. A successful eBay seller understands pricing, marketing, and market research. They have a talent for customer service, digital photography, writing ads, organization, promotions, computer skills, and multi-tasking.
50% of the listings on eBay do not sell! This means that the people putting up their auction are making some kind of mistake. It could be their price is too high; it could be their photo is horrible; it could be there is zero demand for their product; it could be the market is flooded. I sell 95% of my listings. I sell at the highest price I can possibly get but it also has to be low enough that someone is willing to pay it. Easier said than done. Every time something is listed and doesnt sell, eBay takes a few dollars, so it is waste to list something for sale and not have it sell. Pricing right is an art. On ebay there is also a choice of format, a choice or how long to list something (1 day, 3 days, 5 days, 7 days or 10 days?). There are all kinds of options- knowing the pros and cons of each of the options can make or break an auction.
How does one get started? The biggest hurdle is locating a product to sell. If it were possible to buy brand new ipods for $50 and sell them for $200, then everyone would be doing it. This type of deal does not exist. Before getting started, it is necessary to find a source that sells items cheaper than they sell for on eBay. This is extremely hard because eBay shoppers want the items discounted and eBay takes quite a cut. It is necessary to not only find an item at a price that will bring a profit, but you also have to find something people want to buy. You can buy 500 pairs of bright gold basketball shorts for only 50 cents apiece, but is there a demand for them? Why are they being sold so cheap? Usually it is because department store leftovers were ordering mistakes: the styles or sizes didn’t sell. The department store buyer miscalculated the demand for a particular item. If they didn’t sell on the 75% clearance rack at Target, it is not going to sell on eBay.
But the universal desire to “get rich quick” has spawned a whole industry of people willing to teach you how for a price. They promise huge profits for no work. They promise secret lists of sources, drop shippers, wholesalers and suppliers. Like any good scam, they tap into the emotions and popular notion that you can start your own business and make good money in your spare time from home for very little work. It is very similar to “Make Money in Real Estate for No Money Down”! Lots of people are now aware of that whole scam, but when it comes to eBay, they are not. Most of these resourceful scammers (maybe I shouldn’t call them scammers, they are actually pretty smart making themselves rich) are selling the items for more than you can sell them on eBay. I took a free trial on one of these sites. Every single thing they pointed you to was either not at all in demand on eBay or else eBay was flooded with these things by other poor souls purchasing it from them already.
Some of them are selling “pallets”, where you purchase one to two tons (literally) of merchandise, sight unseen, without an inventory list. These pallets contain department store returns or stuff that didn’t sell. You have no clue what you are buying or if you can make any money.
Since eBay is a business that you can start on your own, without consulting anyone and that does not require a whole bunch of capital, it makes people think that anyone can be successful at it. In fact I started out just selling stuff I had around the house and anyone can do that. I wish eBay were around when my kids were babies because it would have been a good way to make extra income selling their outgrown clothes and toys. Even that no longer has much money in it though! Every single stay-at-home mom is selling her children’s clothes on eBay so there is a huge supply. And as learned in Economics 101 when supply outweighs demand, prices plummet. Unless you have something very sought after, it is hardly worth selling used children’s clothing anymore. In 2000 and 2001, when eBay was newer and less moms were at it, I could sell a child’s outfit for $10 and that same outfit today is only selling for $2.
This blog rant was caused by that crazy woman calling me last night, who had the idea that she could come home from work, put in an hour or two in each night and make $1000 a month. I hear this constantly and it is starting to get on my nerves.
Monday, February 12, 2007
Friday, February 02, 2007
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