Finance and Inventory Selection Mistakes to Avoid When Selling on eBay

Finance and Inventory Selection Mistakes to avoid when selling on eBay

We built our online business up to annual sales of over $1 million. We’d like to share some of our experiences-both the good and the abominable.

When developing your eBay business plan, ask yourself: What is your current financial situation? How much money do you have to invest and how quickly do you need a return on your money? This will help you determine what types of items you will sell, and at what point you will want to stop investing profits back into your business and instead draw them out as a salary.

Don’t worry if you feel you have nothing to start with. There are always techniques to bootstrap your way to a successful eBay business. More upfront investment can get you started rapid, but you have to avoid making mistakes impartial because you have the money to do so. Be careful about borrowing the money to start your business.

When we started, our best items were carefully selected cash purchases, and our worst were large “liquidation lots” purchased on impulse and on credit. You are best off if you don’t halt your day job and don’t plan to draw any money out immediately. This will take the pressure off and give you time to hone your strategy.

When we started out, we had been buying closeout items such as lego here and there and selling them for nice profit margins on eBay. We slowly built inventory, but we paid for it out of profits, so it didn’t affect our family finances. But our business was also growing very slowly, so we started looking for other opportunities.

Unfortunately, we got the “brilliant” idea to occupy a semi-trailer full of returns from Wal-Mart, (from a broker we found on the Internet) which we figured would lauch us into the big leagues of consumer product selling. We paid for it with our credit card. If we had had to pay cash, we wouldn’t have been able to make this purchase, which would have been a good thing.

Because we hadn’t done adequate research, partly because a complete manifest of the products was not available, we giantly underestimated the time and concern and cost involved in listing these items.

We had multiples of several items, but since they were returns, each had to be checked individually for defects. Some of the items required cleaning or repairing, and several were completely worthless, which raised our per-item investment. Auction descriptions and pictures could not be duplicated and had to be tailored to each item. Items did not immediately sell, and had to be relisted, adding to our time and expense.

A few buyers either didn’t read our description of defects carefully, or claimed we hadn’t disclosed them. We had to obtain returns. We rented some warehouse space for storage, and the rent plus payments on the credit card bill got ahead of the revenue we were generating from the eBay auctions.

We had broken almost every rule we have listed for you above. We didn’t have a distinct direction, hadn’t considered the time that would be involved, and invested a big chunk of borrowed money with no thought to how long it would take to get a return on our investment. Our family time was chaos. The “truckload of junk” as we referred to it as, ended up being marginally profitable, but we had almost nothing to show for it.

In conclusion, don’t invest borrowed money into your eBay business. If your inventory is paid for, you’ll Force yourself to put more thought into inventory selection, and avoid rushing into mistakes that could really cost you.