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Secrets of the eBay Millionaires
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off developing your own sales niche. As one PowerSeller told me: Too many people try to do what everyone else does. You already have 10 or 20 people selling computer equipment on eBay. New people look and think, I can do that, too. They find out right away that they can t compete with sellers who have built up a business over time. It s tempting to start out with an approach along the lines of, I ll find the two or three things that are sold most often on eBay; since that s what people want the most, that s what I ll sell. There are several problems with this copycat reasoning:
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Stiff competition If something is already being sold heavily on eBay, that indicates that some sellers are already heavily involved in offering that type of merchandise online. You re likely to encounter a wall of competition. Lower feedback Customers who are used to making purchases from sellers who have higher feedback ratings (and by extension, more established reputations) than you do will be unlikely to switch to a less-established seller like you unless your prices are substantially lower. Potentially low margins If there is already heavy competition for something being sold on eBay, chances are the profit margins are already very small: The existing competitors are driving each other s prices down. In order to have any hope of attracting customers, you would have to cut your profit margin to a razor-thin level. (And the manufacturers or wholesalers that provide you with inventory to sell might not approve of this; they may accuse you of undervaluing their products and hurting other authorized sellers.)
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The challenge is this: finding something that people want on eBay but that isn t already being sold extensively on the site. Such items still exist. For instance, I collect fountain pens. I love just about everything having to do with fountain pens. However, starting a big fountain pen business would probably be a bad choice for me that is, unless I could find a particular limited edition brand of pen that isn t being sold on eBay, as PowerSeller Drew Friedman did (see 4). The market is already covered by many established sellers. However, there are fountain pen and writing accessories such as carrying cases and ink that aren t being sold extensively on eBay (at least, not at this writing). I would be much better advised to try to sell ink and accessories rather than writing implements. Even if you find something that is in demand and isn t sold by lots of others on eBay, you also need to make sure you can supply them on a steady basis, and that you can make a profit selling them.
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CHAPTER 1: From Penniless to PowerSeller: Carving Out a Niche
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Sell Something You Can Supply
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One of the most important things to keep in mind, when you are in the planning stages of your new eBay business, is the fact that you need to find something that you can resupply on a steady basis. You can bet that Phil Leahy has many suppliers who will sell him CDs and DVDs in great quantities for very small prices. You need to achieve this goal, but you don t have to do it all at once. The classic route followed by many eBay sellers goes like this:
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1. You start by cleaning out your own clutter and selling it at auction. 2. You move to cleaning out your relatives clutter, and the clutter of
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anyone else you know.
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3. You scour all the garage and estate sales you can find for merchandise
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to sell. This path only takes you so far, however. Before long, you run out of things to sell, and you re spending as many as 10 to 20 hours a week to locate perhaps 10, 20, or 30 sales items. It s hardly cost-effective. And if you live in the snowy northern climates, you are limited by the fact that garage sales are only held a few months out of the year. Most PowerSellers on eBay overcome this limitation by supplementing their sales of antique and one-of-a-kind items. They find merchandise they can buy cheaply and resell at a profit all year around. Some sell collectible figurines; others deal in perfume and beauty items; others sell Christmas ornaments, which seem to be in demand most of the year, not just during the holidays. In Figure 1-4, you see an example from the eBay Store run by Kevin Boyd of Preferred Discounts LLC. The name of his store indicates the types of items that he is able to buy cheaply at a wholesale price and sell for a profit any time of year: cigar humidors, cigar cases, pipes, and books. Table 1-1 presents a snap survey of some prominent eBay PowerSellers, with examples of each seller s occasional product line (the things that fall into a niche market) and examples of products they can sell all year around. Of course, you don t have to come up with a primary and secondary product line. Lots of sellers sell only DVDs, only motorcycle equipment, only shoes, and so on. But notice that the things I just mentioned are things that can be sold year round anyway. That s the point: make sure you are able to find a steady supply of merchandise you can sell all year around.
See 4 for more on finding a wholesale supplier for your merchandise. For many eBay sellers, finding a good supplier is the key to sales success.
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