Let's say you're a PowerSeller who wants to try to ramp up your sales by buying in bulk on the Reseller Marketplace, then reselling the merchandise on eBay or through another sales channel. Despite the tempting deals you'll encounter in the Marketplace, it's always best to have a well-planned business strategy before you dive in.
First, before you make a purchase, it's important to realize that the wholesale and liquidation lots of products you'll be offered usually consist of excess merchandise, such as last year's models, store returns or factory seconds. These items may be new or refurbished, but they're not likely to be the most up-to-date items available in today's market. However, when you consider that an attractive price can often overcome a buyer's hesitation when it comes to certain product categories, this may not be a problem--as long as you pick the right categories. For instance, you could probably sell 12 dozen Pirates of the Caribbean Captain Jack Sparrow action figures with no trouble, but you might not be able to sell 12 dozen royal blue women's tweed jackets with fringe.
"There's absolutely no doubt in my mind that with the right product, you can make money as a seller and as a buyer in the Reseller Marketplace," Peterson says. "As a seller, it opened a new dimension for us that has allowed us to maximize the return on our investment."
Another thing to decide right away is whether you prefer to offer a wide-ranging inventory or specialize. It can be beneficial to specialize because you'll become an expert on a particular product or product line, and you won't have as many decisions to make when it comes to selecting products. In addition, you'll save yourself a lot of preparation time when listing items because you can reuse product descriptions and photos.
On the other hand, specializing can be risky when you're buying liquidation lots because once the lots are gone, they're gone for good--and you'll need to find another specialty item, which in essence amounts to starting a whole new business model. Also, if your product line is too narrow and sales are flat, you could find yourself sitting on hundreds or even thousands of items (albeit in various models, sizes and colors, depending on what you're selling) with little hope of recovering your costs. That can be catastrophic for your business.
"If you can't move a product fast enough to affect your cash flow, don't bother," says Jason Guarino, 31, founder of Key West Distributors Inc. (eBay User ID: keywestinc), a Raymond, New Hampshire, seller of small consumer electronics with 2007 sales projections of $750,000. "Sure, $10 for a widget that sells for $30 on eBay is a great deal. But if you need to buy 100 and only move five a week, is it worth it? Don't let the thrill of bidding affect your judgment."
Offering a well-balanced line of related merchandise can help offset these problems--and of course, the Reseller Marketplace is the perfect place to investigate other potential product lines. But do some due diligence to find out what the market will bear so you don't find yourself stuck with products no one wants. "You can't be stupid about what you buy," says Howard, who projects 2007 sales of $150,000. "To have a good experience, you have to research the product first. Just because something is a good buy [in the Reseller Marketplace] doesn't mean it will sell."
The obvious place to start your market research is on eBay. Search for the item you're planning to sell and note the selling prices on individual listings. If there are a lot of open auction-style listings for the item and few or no bids, you might want to try another product.
Finally, pay attention to inbound shipping charges on the lots you're interested in because they can add considerably to the per-piece cost of the items. Also be sure to find out how the product will be shipped to you. Imagine scoring a great deal on digital cameras, for instance, and one day finding a semi loaded with hundreds of boxes--or even dozens of heavy pallets--parked in front of your house with no one to help unload them. Then, you'll need a place to stash all that inventory once it's off the truck. If your garage, basement, entire home and so on are not large enough to accommodate your treasures, you may have to rent a storage locker, use a temporary storage unit (like the ones available at pods.com) or lease a warehouse.
Taking the Plunge
Once you've made these decisions, you should be primed and ready to jump into the Reseller Marketplace, although Frischling does have one more important piece of advice: "If you're looking to expand your sales base, the Reseller Marketplace is a great place to do it," he says. "But start small. Lots priced in the sweet spot of $2,000 to $5,000 are a good place to start. Then it's all about velocity--if you turn, turn, turn the merchandise, you'll make a profit."
Eileen Figure Sandlin is an award-winning freelance writer and author who writes on business topics.