Strategies

I had someone contact me from a Facebook group, and their question got me to thinking about selling strategies, specifically whether to sell new or used items.  I decided to expand on what I told them and share that information here.  Hopefully it will help you in making a decision on how you want to approach your ebay business.

There are several different approaches to selling on ebay.  The first is often a huge subject of debate, with both camps firmly entrenched in their selling philosophy.  First there is the volume seller.  These sellers make a small amount on each sale, but list a large volume of items.  I call this the McDonald's approach.  McDonald's doesn't make a large amount of profit from each food item.  Actually it's only a few cents.  However, because they sell millions of items per day the volume carries them to some nice profits.  Now this only works because of the volume.  Unless you have access to a huge amount of product, and can list that product quickly, then you are not going to make much.  This normally works only for the new item seller, but I have seen some used sellers accomplish this, but not many.

Next you have the high margin seller.  These sellers are making upwards of $20 profit per item they sell.  They have a fixed range of items they carry, and only back-fill listings when something sells.  Most ebay sellers fall into this category.  Of course there are some who haven't grasped this concept yet and are still making small margins.  Once they figure out that it takes the same amount of work to make a $5 profit as it does to make a $50 profit, they begin to grow their business and get some serious sales.

Next is the new item seller.  They find items they can purchase cheaply and resell on ebay.  They may be sale items from a store or overstocks and liquidations from wholesalers.  Typically, the margins are not as good on these items due to the cost, but there are deals to be had if you are diligent enough.  It takes a lot of time and work to find these deals, and it is not something most new sellers are willing to try because of that.  The up side is that you will normally get several items of the same type/style so listing is much quicker.

Finally, we have the used seller.  These sellers will generally get their inventory from thrift stores, yard sales, estate sales or auctions.  Over time they learn what items are valuable and give them nice margins.  This also usually has the largest group of "variety" stores on ebay.  Most will sell anything and everything that will get them a nice margin.  Most of the items they buy are purchased very cheaply, so the monetary investment is minimal.

Now that I have laid out the different types, let's look at which one best fits your selling model.  The used items can be done with a minimal amount of money invested.  There are several supply chains available to obtain inventory.  The margins are good, and there is demand for a lot of these unique items.  The down side is the time spent visiting the outlets to source the inventory.  Additionally, since everything is a one off, you have to spend time on each and every item to get it ready to list.  You also have to list each one individually.

The new items will cost more to acquire, and the supply chain for them is very narrow.  You will have to invest a substantial amount of money to get the deals.  Your cost per item can be as much as double or triple the cost of a used item.  Typically, you are going to be buying in bulk.  The plus side is new sells better on ebay, if it is in the right category.  You will also typically get several like items so listing them is much quicker.  You also don't have to clean them so your time spent prepping is less.

If you choose to go with new items, make sure you have the cash reserves to do this.  If things don't sell like you expect them to, you could wind up losing money.  If you used credit or the last of your cash reserves to purchase them, you may find yourself in deep water.  This is something I only recommend for people who have the disposable cash to make this gamble.  I typically tell people to start with used items.  Learn ebay, learn what sells.  Don't jump into new until you fully understand how everything works.  You don't want to end your ebay career before you really get started.

No matter which route you take, do your homework.  Make sure you know your numbers and don't get caught not knowing if you are making a profit or not.  What looks like a good sale could wind up having you working for less than minimum wage!