10
Sourcing Items to Sell on eBay
I started this book by explaining my eBay journey and how it all began with the consignment of a handful of dusty old war medals. That was June of 1999. If you fast-forward to today, I am still sourcing goods by consigning them. Consignment is a simple and pain-free sourcing opportunity. A person has something they no longer want (or never wanted, e.g., a gift without a gift receipt), and you offer the convenience of a service where you prepare, photograph, sell, pack, and ship their item, and divvy up the loot. Everyone has something to sell, but not everyone has the time needed to list on eBay. The commission you charge can be very healthy. For most items, I charge 50 percent. Quite a bit of that goes to eBay and PayPal to cover their fees, and from the balance of my commission, I have to cover overhead. Not everyone will fork over half the value of their stuff to have you manage it, but many will gladly do so. So long as the supply of consigned items exceeds your ability to list, you can charge whatever fee the market will bear. To the novice, asking for half seems absurd, but as you dig deeper both online and by speaking with bricks-and-mortar consignment stores, you’ll discover that it’s status quo.
In the world of consignment, the person or company providing the product is referred to as the consignor, and the retailer (that’s you, eBayer) is the consignee. You don’t pay for the inventory until it sells. Remember that storing the merchandise costs you something (e.g., rent or mortgage payments), and the cost of doing business must be considered, too.
With consignment relationships, you’ll expand your selection into new product categories and offer buyers a broad selection. There’s little risk since you don’t own the inventory, and if the product doesn’t appeal to customers and remains unsold, you can simply give it back.
What about contracts? No money for a lawyer? I cannot dispense legal advice because I don’t have a law degree. However, my own attorney has informed me that oral agreements are “just fine.” I even looked this up: “All contracts may be oral, except such as are specially required by statute to be in writing.” California Civil Code § 1622.
If you know the consignor really well, a handshake will get you going. For everyone else, how about a simple agreement in plain English without all the legalese? It’s not brain surgery.
And how long should you keep the item on eBay? For my regulars, I ask for a minimum of 30 days and most consignors are happy to let it ride until it sells. After all, you’re providing free storage.
Although you’ll notice that I absolutely love consignment, there are oodles of other ways to source goods to resell on eBay for mega profits. Quite often, the surplus items that both people and companies are trying to get rid of are stuck in storage for a reason—nobody wants them and you don’t, either. There’s also a bunch of people out there who are lazy and won’t put in the modest amount of work required to primp, present, and sell their items on eBay. In this chapter, I’ll help you identify the market trends so you don’t acquire hard-to-move items. Let’s also explore big profits from scratch-and-dent, imperfect, open box, damaged, and discarded goods. I’ll be your guide on the path to discovering the perfect products to help you really get cooking on eBay. Let’s put our heads together and go hunting for great stuff to sell!
Researching and Testing the Market
Make no mistake about it, business is very competitive. Some might say “business is war,” but I tend to think of a successful business environment as a dolphin tank, not a shark tank. My most successful business friends are collaborators, not instigators, and that’s why I love to connect with other businesspeople to query them on important topics. Hours before I typed these words, I telephoned a highly successful fashion icon and retired businesswoman and listened to her tips on identifying fashion trends. She said that with all the money she poured into fancy surveys and reports, her best intel came from walking the aisles at retail stores. This validated what I already knew, which is that there are no magic beans in research, just hard work.
Always have the courage to try something new by putting up a little inventory and testing the market. eBay is immediate, and the results are fast. When selling products that you think should appeal to young people, conduct your research by scanning through the social media posts of young people. Look at influencers with massive followers. Check out product reviews, and see how many “hits” the post received.
Look at the big chain stores and their ad campaigns. Benefit from their big advertising spends by looking for products they are promoting heavily, and take advantage of the halo effect. If you sell fashion, subscribe to the latest fashion magazines and peruse the ads.
While I’m convinced that discount stores and the “dollar” stores are ripe sources of goods to sell on eBay, look no further than the clearance shelves of big chain stores to identify slow-moving and unsuccessful products. You’ll learn a lot about the latest, hottest products by asking people in your immediate orbit.
warning
Only buy what you’re willing to lose. Never bet the entire farm on an inventory purchase. You can score big profits on the “right” purchasing decision, but if you make a mistake, the loss shouldn’t put you out of business.
Identifying Market Trends on eBay
Way back in Chapter 4, I explained how to pan for eBay gold and the importance of using the sold items filter on eBay’s completed item search when conducting item price research. Looking for the next big trend and hottest product to sell? Look no further than eBay to identify the latest trends to help you make predictions. eBay allows dummy auctions, which are listed in their test category. Be sure to exclude these listings from your consideration during research because they do not represent actual sales. These mock listings are easy to identify because eBay requires the word “test” in the listing title.
Common commodities are a breeze to research. Rare items are more challenging, which also opens up opportunity. The harder it is to find something, the more likely you’ll be able to sell it at your asking price. Retail demographics and consumer preferences transform rapidly, and digital channels such as eBay make product pricing and demand transparent.
tip
Use the Research tab within your Seller Hub to search for products by keywords, manufacturer part number, UPC, EPID, EAN, or ISBN. If you have a Basic, Premium, Anchor, or Enterprise Store, Terapeak Research is included in your subscription, free of charge; if you don’t have a Store, you can spring for a Terapeak subscription.
Drop-Shipping Products to Sell
There’s a ton of skepticism surrounding drop-shipping (which you first read about in Chapter 4). Drop-shipping is a form of product sourcing involving a “middleman,” in which the seller markets the actual goods being sold. Once a sale is performed, the seller orders the item for a (usually slightly) lower price and then forwards it to the end-buyer. The seller then keeps whatever profits are left over. Opportunists are advertising drop-ship “systems” and offering the hope of easy money. Drop-shipping is one means for sourcing product to sell on eBay, but you’ll need to filter out all the noise and ignore the unrealistic claims you’ll find all over the internet. Many (if not most) of the programs that are aggressively advertised make money for someone other than you (the program creator). Run quickly in the other direction if anyone wants to charge you a fee to allow you to drop-ship their merchandise. Wholesalers should only charge you for the product and a reasonable fee for packing, plus the actual cost of shipping.
The big problem with drop-shipping is that it’s not easy to find products that will earn enough profit to pay the eBay and PayPal fees and put money in your pocket. Sourcing goods for drop-shipping takes research like any other method of sourcing, and you’ll have to review your progress to ensure slow-moving items are taken off eBay to avoid paying insertion fees on dead business opportunities.
If you are a computer genius and can get eBay’s computer system to automatically send your orders to your drop-shipping supplier without human intervention, you wouldn’t need to make much on each sale. Labor is generally your biggest expense after the cost of the item. Here’s a dreamy scenario: If you made one penny on each sale and moved one million orders a month, you’d earn $10,000 a month for doing nothing more than posting the listing. If you aren’t a computer guru, then you’ll need to manually send every order to the drop-shipper and upload the tracking information into eBay. The reality is, every supplier that will agree to ship directly to your eBay buyer will have their own way of accepting orders, and only a very limited number of them will allow direct access to their computer systems for automated ordering (such as connecting via an application programming interface, aka an API).
eBay permits drop-shipping, but you’re ultimately responsible for the safe delivery of the item. You’ll usually need more than same or one-day handling time enabled on your listing with a few exceptions—if you can persuade your wholesaler to ship fast and return the tracking number back to you in short measure, you might be able to avoid order defects caused by missing your handling time deadline.
You are not allowed to list an item on eBay and then purchase from another retailer or marketplace that ships that item directly to your buyer (e.g., you can’t buy from another eBay seller and drop-ship the product without them being “in on the gig”). eBay doesn’t allow this type of arbitrage activity, and you’ll get a slap on the hand if you’re caught doing it (or worse, be banned from selling).
After finding the hot products and steady sellers on eBay, reach out directly to the brand manufacturer of each product and ask if they offer to work with eBay sellers on a drop-ship basis.
Taking a Chance on Less-Than-Perfect Goods
Competing in brand new, low-margin goods is bound to lead to failure. Everyone has tried or is trying to do that. Analysis and intuition are not enough to profit in a low-profit retail space. The only thing to do is source goods that have generous margins, and that means exploring everywhere. Buying for resale is a skills-based job and you have to actually develop the skill for it or you will fail. But failure is a part of success and there will be failures along the way. Failed experiments are not only acceptable, they are necessary, but you must not bet the farm on these experiments. Never undertake experiments in a cavalier way. Study and research carefully before adding inventory. The less-than-perfect and secondhand business has always been a bright space for online resellers. There’s someone out there who likes to tinker and fix things or doesn’t care about a scratch or dent here and there. Explore this lucrative opportunity and fill your pockets with wads of cash!
There are oodles of sites that offer entire pallets of consumer products that are customer returns. You can even buy pallets on eBay. The majority of these product aggregators are official liquidators for retail stores, and the pallets are generally uninspected returns. You gamble when buying them. You can find these firms by Googling “customer returns.” As with all business opportunities, you’ll face competition, and uninspected returns involve some probability of risk since you don’t know what’s working or why the products were returned in the first place. Pallets of goods involve substantial freight charges, which can cost nearly as much as the merchandise itself, so be sure to factor in the freight as part of your acquisition cost.
Make the rounds at your local independent retailers, and ask to speak with the manager. Ask if they’ll sell you customer returns at a discount; or even better, offer to consign the items and sell them for a fee so you have zero investment and no risk. Most big chains have existing relationships and won’t change their returns process management, but local, family-owned businesses will appreciate the opportunity to cash in on their dead returned stock.
Retailers take products out of their original packaging and display them as floor models to generate interest and retail excitement. Millions of these floor models are either sold at clearance, or they pile up in stockrooms. This can mean money for you, as a reseller. In order to tap into this wellspring of goods, it would be wise to build relationships with store managers and discover opportunities through networking. Here are some of the potential places to meet brick-and-mortar store managers:
▶ Call the store and make an appointment (busy store managers prefer scheduled meetings over walk-ins)
▶ Attend events hosted by your local chamber of commerce (membership is generally not required to attend paid mixers)
▶ Talk with volunteer business mentors found at places like http://www.score.org, which is the nation’s largest network of expert business mentors (and a resource partner of the U.S. Small Business Administration)
▶ Attend Rotary Club meetings
▶ Drop in on church events to meet other business owners
▶ Search on social media and online
▶ Visit local business-oriented conferences
▶ Volunteer for local nonprofit organizations
Don’t miss out on frequently-overlooked floor models that are otherwise completely perfect profit opportunities on eBay. Furniture and jewelry have big margins and are often marked up double what the retailer paid. Most everything else isn’t really marked up that much, but as a new retail season approaches, the floor models have to go and retailers are more than willing to sell them for a song.
A dead smartphone can still fetch a pretty penny on eBay (the buyer knows how to fix it). There are literally millions of broken items (and perfect ones) sitting in dresser drawers, hall closets and garages. Offer hauling or personal organizing services to locals on sites such as Craigslist or Nextdoor. You’ll be simply amazed at the amount of profitable merchandise that’s collecting dust in people’s homes. You can charge for your time and then offer a credit on the bill for any items you offer to buy from your clients. Busy executives, hectic parents, and retired seniors all appreciate help decluttering their residences. Score big profits this way and be a do-gooder at the same time.
Everyone has broken stuff at home. If you’re handy and know how to fix things, let everyone in your orbit know that you’ll take their broken items off their hands. Battery operated watches come back to life with a couple of inexpensive tools and a ten-cent battery that you bought on (you guessed it) eBay. A laptop becomes usable again when you purchase a readily-available power adapter to replace the one that’s missing. If you’re willing to restore items, you’ll uncover the big profits to be earned with unwanted merchandise.
Shop Retailer Specials and Outlet Stores
Your smartphone makes you a shopping master in seconds. Retailers have proprietary apps you can download that will recognize the store you’re standing in. Walmart is an excellent example. You do not need coupons to land lucrative deals at Walmart. Scan the barcode on the shelf or the UPC on the product enough times, and you’ll discover Walmart’s hidden clearance deals. These are unpublished, in-store clearance specials. Whatever the price is you see on the app, that’s what you’ll pay at the register, even if the shelf price is higher. After scoring retailer specials, you’ll be able to turn a profit by immediately reselling them on eBay.
Outlet stores are a bit like a wolf in sheep’s clothing, giving the perception that you’ll be on a treasure hunt to find superior deals. The truth is that many outlet stores operate as their own separate “brands” with goods being sold that were only designed to be in an outlet. Many “better, off-price” stores don’t carry many of the really high-end products shoppers want.
A mobile deal-sleuthing app can help. While not the only game in town, Shopular is among the most popular. There are shoppers who won’t make a decision without it. The eBay mobile app has a tiny camera icon on the right-hand side of the search box and when you press it, you can scan UPC (and QR) codes to instantly check prices. To see eBay’s sold item pricing, click Filter and then click the Sold Items toggle. When checking out deals in-store, you’ll know if you can turn a profit. Remember to add sales tax into your profit calculation unless you have a resale permit on file at the store.
Buying from Well-Established Dealers and Sources
I love buying from older people. Shop owners who have been in business forever typically own the building they’re in. They’re established and have lots of experience reselling to other retailers. These long-time retailers have no rent and don’t need to make as much profit as their competitors who just opened their doors. It’s smart to buy from well-established companies because they have the smarts to know the big difference between a retail customer and a wholesale buyer such as you. Most seasoned businesspeople work out their wholesale pricing, knowing you have to make a reasonable profit.
The margins with second-hand goods are usually the best. Trading in secondhand goods is more lucrative when you have specialized knowledge. A generalist like me is less likely to take big risks on items unknown. A person who deals exclusively in candelabras wouldn’t hesitate to drop big bucks on a pair of Sheffield Georgian period Rococo candlesticks. I lack the confidence in such decisions and would prefer to consign over buying such an offering.
Here are some places to find merchandise to resell where seasoned sellers tend to trade:
▶ Antique malls. With shelves full of dusty toys and cabinets lined with obscure curios, thrifting pros know how to shop relics in these precious places.
▶ Consignment stores. They survive on commission and are motivated to move items and make deals. Plus these stores aren’t as picked-over as thrift stores and flea markets.
▶ Pawnshops. Long-established pawn brokers have loads of inventory and can wheel-and-deal because they make loans for a fraction of the item value and have lots of room to negotiate (they make most of their money on interest from making loans).
▶ Flea markets. Avoid the vendors who are obviously commercial, and ask merchants if they sell online—many don’t and won’t because they love cash and being “under the radar.”
▶ Garage sales. Advertised sales will have more vultures clawing at the good stuff, so go very early (and drive around the neighborhood looking for unadvertised garage sales). I don’t mind “professional” garage sale operators because they tend to know how best to price items for the wholesale trade such as eBay sellers.
▶ Estate sales. Use caution here because most are operated by professionals who really know what they’re doing; however, there are deals to be had.
▶ Live auctions. Be careful because other frenzied bidders will pay more than the true value of some items; however, government-seized property auctions can present some juicy opportunities.
There’s a huge opportunity trading with well-established dealers and sources and as you develop relationships with these prime suppliers, the opportunities will grow as these businesspeople get to know and trust you.
Making the Most of Found Items and Freebies
Look for opportunity in places everyone else scoffs at. When I worked at eBay, I was responsible for handling budgets amounting to millions of dollars, and I traveled the world setting up exhibits at the most exciting and well-attended trade shows. eBay gave away truckloads of unique, branded merchandise. We would open up case after case of T-shirts, pens, notebooks, pinbacks, and a zillion other tchotchkes. Most big companies give cool stuff away for free at trade shows to anyone who stops by their exhibit space. Go to the website for the convention centers and big hotels in your area and check their calendars. Attend all the free tradeshows you have time to visit, and take a backpack or rolling cart with you. Go at the start of day one to get the most popular stuff and then come back at the end of the last day to see what’s left over. The employees for these big firms would rather unload their freebies on you than deal with packing them up and shipping them back to corporate. Plus, they’ll look good in the eyes of their managers when they return home empty-handed, having given all those______(fill in the blank with whatever’s appropriate, e.g., “adorable”, “awesome”, “cute,” etc.) promotional items away.
I should take this opportunity to say that I never have too much self-pride stopping me from grabbing potentially valuable items from the parkway in front of people’s homes on trash day (a parkway is that bit of grass next to the curb that the city essentially compels you mow by not maintaining it themselves, but you don’t legally own it).
While it’s convenient to source sellable items locally, you can also take your search global during the course of your business or vacation travels. You know all too well how expensive vacations are. Either you go on them regularly and max out your charge cards, or you’re bitter that your friend is rubbing your face with their selfies from Montenegro because they heard about the place in the Bond film Casino Royale (the one with Daniel Craig, not David Niven). Cool local handmade goods are how the indigenous peoples of many countries survive. Tourism is the engine for many destination towns, and you can pick up curiosities and sell them on eBay. For many years, my Mexican friend would bring me back a bag full of beautifully beaded Huichol handcrafted masks made by the indigenous people of the Sierra Madre Occidental range. He still makes several trips a year to the region. I made fistfuls of money reselling the masks, and he kept a tidy profit for himself, too.
Think of other opportunities to acquire unique merchandise. Monuments, museums, iconic amusement parks, and most places of interest sell items that are not readily available everywhere. Sell a “piece of the place” to eager buyers across the globe.
warning
Be wary of advertised “going out of business” sales. Many are legit, but some are bogus. Clever shop owners use this scheme to lure in customers, sell through their inventory and close, just to re-open with a different name (and the same owners). Most states regulate these sales and limit their duration. Check prices very carefully. Most of these sales don’t permit returns.
There is nothing wrong with having a big mouth. Upon reflection, I realize that many great business opportunities unfolded because I’m a vocal person. Announce what you’re doing, and in time, the merchandise will be arriving by the truckloads. Print up flyers and post them on local community boards. You can say, “I clean garages and attics. We can make a deal on unwanted items. Top prices paid. Text or call me at (818) 555–6789.” No need for those tear-offs with your number. Anyone interested will take a photo of the flyer.
Post want ads on free and low-cost sites. The obvious ones are Craigslist and Nextdoor. Many communities have local sites. Join social media groups, but be sure you’re following their posting guidelines. You’ll find wholesale deals on other marketplaces that you can buy to resell on eBay. Check prices carefully because retailers love to lure unsuspecting buyers by using the term “wholesale” for products that are priced at retail.
Just after every major gift-giving season, remind family, friends, and colleagues that you will sell their unwanted presents for a commission. Christmas is the largest gift-giving occasion for Americans—even for those who aren’t religious. For the Japanese, there’s Ochugen in July and Oseibo in December. Hindus and Sikhs have Diwali. Italians exchange gifts during the Feast of the Epiphany. With so many cultures exchanging presents and the huge diversity ever-present in our communities, you’ll find an endless number of items to sell without investing a single dime of your own money. Figure 10–1 shows a plethora of goods that a local church literally set outside for anybody to pick up—and I did.
I responded to an online social media post by the church down the street from my home. The post said, “Tons of Free Stuff—Boxes and boxes of items that need to be gone. We have a rescue mission that is only able to collect 15 boxes, so there are tons left. First come first serve.” Within seven minutes of this post going “live,” I arrived at the church and hauled away hundreds of valuable, collectible vintage CDs, movies, vinyl record albums, and antiquarian books. All for free. Figure 10–2 shows a wholesale opportunity that I found on the Facebook Marketplace.
tip
eBayers can contact each other by clicking the Contact link from the profile page. You can find your profile page by typing https://www.ebay.com/usr/[your-ebay-id] and add a message of up to 250 characters. eBay does not allow contact information (such as a phone number) on your profile, and you cannot promote the sale of items outside of eBay.
FIGURE 10–1: A Pile of Goods Resting in the Rear Parking Lot of My Local Church
FIGURE 10–2: Facebook Marketplace Wholesale Ad for $50 Violins
Building Lasting Relationships
There is something that I cannot emphasize enough, which is that in order to succeed in business you must build meaningful, lasting business relationships, and that certainly applies to how you source your products, too. You’ll catch more flies with honey than you will ever snag with vinegar. Be authentic and show mutual respect for consignors and vendors. Nurture strategic relationships rather than making transactional ones. Let go of expectations and focus on exploring supplier relationships. Trust is the secret sauce of building long-lasting alliances. Time and hard work glue it together. A closing thought—if you invest heavily in a relationship that isn’t moving forward (e.g., your supplier’s prices leave no room for you to profit or your consignor wants you to work for an impossibly low commission), then be frank with your trading partner, cut your losses, and move on without being a jerk about it.
In the next chapter, I’ll discuss in more detail what I know you’ve been thirsty for—eBay Stores.
