http://andrewminalto.com/how-to-start-a-profitable-ebay-business/
Can you really start a profitable eBay business with less than £50? Yes, you can and in today’s blog post I’ll guide you through the exact system you need to know to make this happen.
Quite often I get emails from people who want to start selling on eBay but they’re out of cash. Literally. People who have lost their jobs or students who are simply students! I almost always recommend that they to start with theUsed Goods concept as that’s the only business model on eBay where you can turn a decent profit WITHOUT investing huge amounts of money buying wholesale stock.
We’ll get into more detail on how this concept works in a minute, but for now let’s just get clear on what you’ll need to run this system:
1) an eBay account
2) a PayPal account (if you haven’t done it already, you need to upgrade to a Premier account to be able to receive money, accept credit cards and sell on eBay. This upgrade is easy and free.
3) £50 (you can start with less, but £50-£100 is ideal)
4) 1-2 hours a day to spend on this project
Basically that’s all you need to make this work!
If you’re totally new to eBay and your eBay account has no feedback, I recommend you get some feedback before you start selling anything. The easiest way to get this done is by buying some cheap stuff on eBay in the first place. I’m talking about £0.99 items with free shipping. Just make 5-10 purchases and get your first 5-10 feedbacks.
You can purchase some presents, household goods OR even stuff you’ll need for the business. For example, paper, shipping labels, envelopes or jiffy bags – all in small quantities just to get you going. I’d say 5 feedbacks is the minimum to start selling but if you can stretch it to 10, that will be perfect.
Before We Begin
Once you have 5-10 feedbacks, you’re ready to start selling! You’ll have to upgrade your eBay account to a Seller’s account (free) if you haven’t done so already. eBay will simply ask to verify your identity, ask how you’ll pay your eBay fees and what payment methods you’ll accept. This process will take just a few minutes.
When you’re done, it’s time to start listing your first items! But before you do, there’s one more task you need to take care of – you have to learn how to create listings that sell! Don’t be afraid of how this sounds, there’s no magic involved here. I have actually put together a quick guide to this topic which you’ll find here –Anatomy of a Perfect eBay Listing.
Listing creation skills will be crucial to your success with this system, so don’t skip this step! Learn how to create good looking listings: it won’t take you more than an hour or so. Once you create your first listing, then you can simply duplicate this listing for all the other items you’ll sell.
Ok, so once you have mastered the art of creating listings that sell, you can actually start selling! To get some practice, start with unwanted items you can find in your house. Stuff like:
Anything that is gathering dust on your shelves will be perfect for this task! The main idea here is to get you some experience before you move onto selling money items.
PLEASE NOTE! If you’re already selling on eBay or have done it before, there’s no need to execute this step. You can start off directly with money making items.
After getting some practice selling your own unwanted items you can proceed with the money making items and this system. So, how does it work?
The System
The idea behind the Used Goods concept is very simple – you buy undervalued used items on eBay and sell them back on eBay for a healthy profit. First, you have to understand what an undervalued item is.
eBay is a massive marketplace where millions of people buy and sell on a daily basis. A large number of the sellers are professionals (like you and me), but most of them are actually “normal people” who use eBay to get rid of their old stuff, unwanted games or a movie they only watched once. They will be the people and listings we’ll target in this eBay business concept.
To make this more visual, let’s take a real life example and go through the steps you need to take to make this system work. Let’s imagine you have £50 you can invest in this business. For that money, these are the kind of items you’re looking for:
* Video Games
* Blu-rays, DVDs
* Toys
* Clothing
* Mobile Phones
* Tablets
* Handbags, accessories
* Other similar items
* Blu-rays, DVDs
* Toys
* Clothing
* Mobile Phones
* Tablets
* Handbags, accessories
* Other similar items
In a word – you’re looking for used items that can be purchased for less than £50. If you’re good at or have knowledge about a specific goods category, choose that! It’s always easier to work with items you know a lot about, and it will make the buying/selling experience much easier. But even if you don’t have an expert status in any of these categories, you can still make this work with simple goods such as video games, movies or toys.
For our example, let’s pick video games – one of the most suitable goods categories for this system. First of all, this market is massive. Secondly, new games/versions come out on a regular basis and many people just put their used games up for sale on eBay.
What you do is simply check Amazon or any other large online video game shop and pick one popular game to start your research. It can be any console and any game, not just the latest releases.
I picked FIFA 13 for PS3 for this example.
Now, my task is to determine the TRUE market value for this used game. This can be done in two ways:
Terapeak
If you have a Terapeak subscription (7 day FREE Trial available) this process will take just few minutes. What you do is simply login to your Terapeak account and do a search for the game you’re interested in, in this example: FIFA 13 for PS3.
In Terapeak, make sure you have:
* Enabled the USED filter (so that results are displayed only for used games)
* Narrowed down results to the most suitable category (in this case Video Games & Consoles > Games)
* Narrowed down results to the most suitable category (in this case Video Games & Consoles > Games)
Click the magic GO button and wait for the results!
Click on the Image to Preview in Full Size
What we’re looking for here are:
* Average Price (in my example it shows £26.52 GBP)
* Sell-Through Rate (in my example it shows 78.59%)
* Sell-Through Rate (in my example it shows 78.59%)
IF the sell-through rate is below 60%-50%, drop this item and look for a different one as it will be quite difficult to sell off the item in a market with a sell-through rate of less than 50%. Ideally this number should be in 60%-80%+ range.
Average price is that market’s true value indicator. It shows the average price that this kind of used game is being sold for on eBay and, in most cases, that’s the price you can expect to achieve IF you create good looking listings and use proper listing techniques.
Just to be sure, I always check the selling price manually by going to page five (depending on how many pages there are) in the Terapeak results to see if that price can be achieved:
Click on the Image to Preview in Full Size
As you can see from the screen shot above, £26-£27 really is the going price for a FIFA 13 game for PS3. We’ll call this number True Market Value.
eBay’s ADVANCED Search
If you don’t have a Terapeak subscription, you can still find out the average selling price for any item by simply using eBay’s Advanced Search:
Step 1 – Check the Used Only box
Step 2 – Check the Completed Listings box
Step 2 – Check the Completed Listings box
Then you can quickly browse through the latest listings for this item that have already ended. You don’t have to make any specific calculations here – just observe the numbers and figure out what the average price is. Go through the first 3 pages to make sure you’re getting this number right:
Click on the Image to Preview in Full Size
In our example, eBay’s advanced search results prove our Terapeak data – this game goes for on average of £26-£27.
Setting Your Profit
Next step is to determine your profit goal. Now you know that the game will sell for £26-£27, that’s your starting point. You’ll want to list it with FREE shipping to get higher in search results, so that’s roughly £2 off that number, leaving you with £24-£25 pounds. Then there will be the eBay Listing Fee, Final Value Fee and the PayPal fee.
I like to keep things SIMPLE! I just take roughly 15% that will cover eBay and PayPal fees. In most cases this will be fairly accurate plus it’s not like you need to get this right down to the last penny.
You want to subtract that 15% from the selling price (in our example £26-£27). Let’s stick with £26 for this example to avoid complicating things.
What you do is calculate 15% of 26 and then take it away. Example:
15% x £26 = £3.90
£26 – £3.90 = £22.10
Then you need to take shipping and packaging costs away from this number:
£22.10 – £2 = £20.10
So, roughly £20. That’s our BREAK EVEN point. If we buy a used game for 20 quid and resell it on eBay for £26, we will not make any profit or loss. If you can buy this game for less than £20, you’ll start making a profit.
I have put together a special EXCEL spreadsheet for people who hate doing maths like these. You can download it by clicking on the image below:
Click on the Image to Download Spreadsheet
To run this spreadsheet you’ll need Excel or Open Office (FREE) software installed on your PC.
How much to aim for?
It depends on the niche, the item and your ability to create the best listings you can. In this example, I’d say £5 profit per item would be a good deal! This means you would buy an item for £15 to make £5 pounds NET profit. That’s roughly 30% ROI, which most eBay sellers can only dream of.
With bundles, which we’ll cover later on, you can easily achieve a much higher ROI – even 100%-200% is not unusual. But for now let’s just stick with individual items.
What we have done so far:
1) We picked an item suitable for this business model (a used video game – FIFA 13 for PS3)
2) We researched the average selling price (MARKET VALUE) for this game – £26-£27
3) We made calculations to get a BREAK EVEN point – £20
4) We decided that we want to make at least £5 NET profit on this transaction
5) By doing this, we got our target buying price – £15 or less
2) We researched the average selling price (MARKET VALUE) for this game – £26-£27
3) We made calculations to get a BREAK EVEN point – £20
4) We decided that we want to make at least £5 NET profit on this transaction
5) By doing this, we got our target buying price – £15 or less
So far so good, right? Excellent.
The next step is actually the most important one in this whole system. Why? Because the money is actually made at the time you purchase the item, not when you sell it. IF you buy an item at the wrong price, you won’t be able to make your desired profit. If you buy an item in bad condition, again, you won’t be able to sell it back on eBay for true market value.
Buying Your First Item
You may ask – but how this can work at all? If all FIFA 13 for PS3 games are being sold for an average price of £26-£27, how can I get it for £15? You can, because that’s the average price. There will be listings that sell same item for £35, and there will be £0.99 listings that end with no bids whatsoever! (I’ll show you that in a moment).
The thing is – eBay is full of both professional and amateur sellers. Used goods in general attract more amateur selling – ordinary people who use eBay just to get rid of old stuff. And with this business model you can take advantage of them! As they:
1) Don’t know how to list an item properly (poor pictures, no descriptions, awkward listing end times, etc.).
2) Don’t know the true value of their item, that’s why most are being posted as £0.99 auctions (MANY without a reserve!!!).
3) They don’t care much about the final selling price as long as it sells. It’s not their business! They’re happy for any extra money they can bring in this way.
These 3 points make these sellers vulnerable and an easy target for business minded people like you and me.
Ok, so now you have to start looking on eBay for a used item that meets your set criteria (maximum purchasing price). You can do this in various ways:
1) Manually browsing eBay directly.
Simply go to eBay and search for the item you’re interested in. Use filters wisely! Apply the used items filter and sort all results by lowest price first. See whether there are any listings that meet your buying criteria. Look for low price BIN and Best Offer listings first. If the BIN price is below your target price, purchase the item.
FIFA 13 for PS3 Sold for £7.50!
If there is a Best Offer option, offer your target buying price as the offer. You’ll be amazed how often people are happy to make a quick sale, even if the price you offer is below the market’s average value. The Best Offer strategy works best with newly created listings, so for this, sort all listings by creation date to see which were added most recently.
FIFA 13 for PS3 Sold for £8.00!
The majority of listings will be auctions. Just put your maximum bid in (that will be your target buying price) and let eBay manage the bid for you. It will increase your bid up to your maximum setting each time someone else bids on that item:
This listing ended with no bids at £0.99 and NO RESERVE!!!
The manual eBay method takes more time but doesn’t cost you a thing. Plus this way you can get a better feeling for what’s going on in your particular niche.
2) Using Auction Snipers.
There are various free and paying auction sniper tools available, such as:
What these tools do is help you to win more auctions! They’ll place a bid on your behalf in the last few seconds before the auction closes, thus increasing your chance of placing that last bid.
3) Using Stuff Alert.
Another great and FREE tool you can use when working with this eBay business model. Stuff Alertwill send you daily emails based on search criteria you have specified. For our example, FIFA 13, you can set up an alert in Stuff Alert so that it sends you an email when new listings are posted. This way you can set up hundreds of alerts based on your search criteria and you don’t have to do a manual search on eBay every day to find listings that are of interest to you.
IMPORTANT! As we’re dealing with used goods here, always make sure to read listing descriptions properly! Look for any signs of faults/damage, etc. Ideally, stick with items that are described as new or slightly used. I wouldn’t purchase any faulty or defective items, even if the price is very good, as it will be very difficult for you to sell the item on.
Introducing Bundles
The pot of gold with this concept actually lies not in single items, but BUNDLES! Yes, you can make a phenomenal profit by applying the same system to bundles.
Take a look at this bundle listing:
13 Blu-ray movies sold for less than 40 quid. That’s an average 3 quid per Blu-ray movie. Most of these movies can be sold back on eBay for £6-£8 each. And this is not even the best example – search eBay for the phrase “Blu-ray bundle” and you’ll find auctions with 20, 30 and 50 movies, all selling for an average price of 2-3 quid per movie.
All you do is purchase such a bundle and list each item separately to get the maximum market value out of each item.
Most of the time people who list bundles simply don’t have time to list each item individually and they don’t know exactly how much the whole bundle is worth. So if you see Best Offer on such listings, don’t be afraid to offer half the money that’s being asked for on BIN. If it gets refused, increase your bid a little and make another Best Offer. Do this until you have reached your maximum buying price.
Here’s another great example:
Original, genuine toys bundle UNSOLD for 15 quid. C’mon! There are more than 20 items in this bundle, some of which are selling alone for 10 quid on eBay. There’s no way you couldn’t make money with this bundle as your cost price per item would be 75p or less.
Toys, Blu-rays, DVDs, video games, clothing – these are all perfect items for bundle hunting and there are thousands of these listings available on eBay, each and every day!
IMPORTANT! When you deal with bundles, ALWAYS make sure the seller has listed each and every item in the listing so that you can calculate each item’s average market value. Don’t gamble, don’t just hope that this bundle looks great and you’ll make tons of money! Quite often a bundle looks great, but when you calculate average market price for each item, the total value is actually not that great.
Additional Buying Channels
When looking for items to sell on eBay, you don’t have to limit your product sourcing channels to eBay alone, not at all! In fact, using the methods listed below you can get even better deals:
Gumtree – this is a superb source for getting cheap stuff locally to resell on eBay. Who posts on Gumtree? People who are too lazy to put a listing together for eBay. Or people who simply don’t know how to use eBay. Or people who hate eBay. Whatever! The good news is that when buying locally, via ads on Gumtree, you can always negotiate the price down to ridiculously low amounts. Especially if you buy bundles of bulky items or much-used items.
Also use this opportunity to source more goods – for example, you pick an ad for 3 used Blu-rays. You go and meet the seller to buy these films. On the spot you ask whether the person has any other used items for sale (like video games). In most cases the answer will be – yes, sure! When this happens, you’re in charge! You say your offer price and most people will be happy to get some extra cash, right on the spot.
Charity Shops – another great way to find bargains for resale on eBay.
Friends – yes, why not? Ask your friends, work colleagues or neighbours whether they have any unwanted items they would love to get rid of. MOST people will be happy for the opportunity to make some ready cash for basically nothing (no-one really watches a movie twice).
Local Ads – check your local newspaper for the classified ads section. An even better way of doing this is by putting up your own ad, something along these lines: “We Pay CASH for your JUNK! Call John on 01 7777 6666”, along with some descriptive text about what exactly you’re offering.
This method alone can be a real goldmine! You can put an ad in the local newspaper, create a Facebook page or get some business cards done so you can leave them with your customers. Even a promotional flyer in the local community can work brilliantly for this concept or Facebook ads you can target down to your street level – the opportunities are endless here!
When making any purchases away from home, always be sure to check what the average selling price is for any particular item on eBay. For this, you’ll need a laptop, iPad or a smart phone, so you can check the prices on eBay without going back home. You can even use Terapeak this way.
Last Step – Selling
Once you have purchased your first item or a bundle, you have to sell it back on eBay, that’s the main idea here, right? Yes, exactly! And for you to be able to reach your target selling price (the market’s average price), you have to create perfect eBay listings and know how to list them.
You have to master these 3 things:
1) Product pictures
2) Descriptions
3) Listing creation/formatting
2) Descriptions
3) Listing creation/formatting
As for the product pictures – this is really easy. As you’re working with used goods here, no one expects stock quality images. Even more – people want to see REAL images of the item, taken by you!
NEVER use stock pictures when selling a used item! Nowadays, it’s even against eBay rules.
Take your own pictures, several of them. Ideally 3-4 images per listing. If there are any defects or scratches make sure you take photos so that these defects can be seen. Otherwise you’ll end up with dissatisfied customers and bad feedback.
Lastly – descriptions. Again, this one is very easy with used goods. All you have to do is say what the item is AND perfectly describe its condition. Be honest with this, don’t try to make it look better than it is, people will notice anyway and in the long run it won’t do any good for your business.
Product Pictures + Description + Nicely Formatted Listings
These are the keys to success with this system!
As for best listing times and format. I would definitely recommend using BIN listings when you list your item for first time (first 7 days). With BIN listings, you can target your profit precisely and if you set your BIN price based on the market’s average value, with your great looking listings there shouldn’t be any problems closing the deal and making that sale.
Best listing end times – they vary from item to item and you would need to use Terapeak to find out the best selling time for your particular item. BUT, in general a good guideline is to end your listings on weekdays, between 7-11PM. That’s when most people are back from work and spending time online.
There will be exceptions, of course – for example, baby toys. These you would probably list to end during the day as most mothers will be staying home to take care of their babies and maybe they only have a spare minute to check eBay at 11AM. Again, Terapeak is a great help in finding best listing times.
REMEMBER! If you sign up for Selling Manager Pro (5 quid a month), you won’t have to pay any listing scheduling fees and you get access to all SMP features, such as automated feedback and emails.
If 7 days have gone by without bids on or purchase of the item, simply re-list it with a slightly lower price. If the same thing happens for the second week in a row (very unlikely), reduce the price down to yourBREAK POINT level and re-list it for the third time. Just get rid of the item so you’re not losing any money. LEARN from each situation like this. What did you do wrong? Was your pricing correct? Maybe you should stay out of that particular range of goods?
Shipping
Always try to dispatch goods within 24 hours of purchase, Monday – Friday.
If possible, use free shipping (add shipping costs to your price) as free shipping gets your listings featured higher in search results.
Always pack items in suitable packaging materials - cardboard boxes, mailing bags, Jiffy envelopes. You can get all of these materials cheaply right on eBay. If you’re just starting out, by buying these packaging materials you can easily build up your feedback to 10 or so.
And basically, that’s it!
BUY > SELL >DISPATCH
Rinse and Repeat!
The good thing about this system is that IF you follow my guidelines, do your research properly AND set the right buying price point, it’s actually very difficult to lose any money at all. As I said, in the worst case scenario you’ll simply get your investment back but you won’t lose any money.
CONCLUSION
There are really no excuses anymore! Anyone can follow this system and make money on eBay without investing huge amounts of money in wholesale stock. Yes, this system is time consuming (the buying part) but the pay-off is not too bad either. Also, when you get experience and become good at this, you’ll see that you can spot deals in a few minutes, just like that.
To make your life easier, use all the automated tools available to you:
If you automate the process from A-Z, it won’t take you more than an hour each day to process 2-3 items and maybe even more. If you can put more time into this, you can actually make a full time living out of this eBay business model. Why not?
If you plan to do this on a serious level, ideally you will need two eBay accounts – one for buying and one for selling. Just so that buyers can’t see in your feedback where these items are coming from and at what prices they have been purchased.
Of course, this is not a sustainable business; it’s more like a part-time job – but one that pays well and allows you to stay at home or earn extra money while you have a full-time job.
The main purpose of this system is to give you the ability to start with limited funds (20-50 quid is all you need) and build it up from there! By reinvesting the money you make from this business, in few short months you will have at least £1K in your bank account. And then you can start working on a proper, long-term business model and start dealing in brand new, wholesale goods.
With that being said, even this used goods business model can be turned into a full-time venture, with an office, warehouse and staff to do the hard work for you. There will always be junk people want to get rid of and there will always be buyers on the other side who are happy to get a real bargain. This will never end. So if you really put your hard work and energy into this, scale the business, get repeat customers (buy locally, advertise), I can’t see any reason why you couldn’t make a full-time income based on this model alone.
Sure, you’ll face problems from time to time – like buy broken items or buy items that can’t be resold but show me any business which is stress and problem free. There are NONE! Make sure you have a quality control system in place AND make customer support your priority; this is crucial when you sell used items on eBay. You should have a no questions asked returns policy to minimize the risk of getting bad feedback based on the condition of goods.
Obviously, I could go on for hours and hours about this topic, the best selling practices and so on, but I hope the quick overview I gave you in this post is good enough for you to get started.
Good luck and if you have any questions at all, feel free to post them below in the comments section.
