While it's true that selling products on eBay can be a quick, low-cost way to launch an online business, following the herd by selling the "hot" product of the moment isn't a great idea. To the contrary-chances are, you'll be stomped in the ground by the herd and left lying in the dust with your unsold inventory in hand.
We talked about starting a profitable eBay business in December 2003, and the advice I dispensed then still applies today. The most successful eBay sellers are those who understand that success on eBay relies on many of the same factors as success in a brick-and-mortar business. Smart sellers:
- Research the marketplace and the competition to determine the salability and profitability of the product.
- Test the market with one or two units before committing to a product line and tying up their cash reserves in inventory that may never sell.
- Adjust their product offerings until they find a product or product line that sells consistently.
- Know that long-term eBay success doesn't come from "one off" sales. The key to real eBay success is to find a product that sells well and sell that product over and over again.
I asked Timothy Mina, author of The Online Auction Expert's Bible to Selling on eBay, his thoughts on launching a successful eBay business. "With an eBay business, you set your own hours and set your own goals," Mina says. "You can work as much or as little as you want and whenever you want. Many sellers supplement their income by selling on eBay, and many others have turned it into a full-time business."
Mina cites the following reasons for eBay's growing popularity among entrepreneurs who want to start an online business:
- You can start up quickly and you don't need special skills.
- There is very little risk and investment required to get started.
- The marketplace is huge. There are millions of potential customers waiting to buy what you're selling, 24/7, with the click of a button.
- There's less stress and no boss. Yes, there is work involved, but the work can be done at your own pace. You are your own boss and you set your own schedule.
- You can follow your passion and do something you love. If you sell something you enjoy selling, online auctions aren't just profitable, but also fun and exciting.
Mina recommends creating your eBay business with niche items, especially if you're going to rely on eBay as your primary source of income. According to Mina, there are many benefits to targeting a specific niche market:
- When you find a profitable niche, you'll become a certified guru of the items you sell and ideally be the only one on eBay offering the products.
- Your expertise will make it 10 times as easy to spot bargains when you're shopping for products to resell. Bargains might be all around you, but if you don't know anything about what you're selling, you won't know how to spot bargains that are right in front of you.
- You'll find different ways to add personal value to your products. These low-cost add-ons or unique twists to your products will drastically increase your sales and profits by making your items unique and desirable.
- You'll have little or no competition from other sellers, so you can corner your niche market.
- By dealing with the same type of customer over a long period of time, you'll get to intimately understand the mindset of your target customer and what your customer wants. This will help you sell your products better and allow you to market your products in ways others haven't thought of.
- You'll be knowledgeable and enthusiastic about what you sell, and you'll be attentive to your customers' desires. This results in satisfied customers, name recognition and a lot of repeat business.
- You're going to find something you're passionate about and specialize in it. If you love what you're doing, you have a much greater chance of sticking to it and loving it. It won't even feel like work-it'll be like you're getting paid to play.
So how do you find your niche? Mina recommends doing an inventory of your hobbies and interests to help you identify a niche you would enjoy working in. Answer these questions:
- What are you passionate about?
- What do you collect?
- What do you like to read about?
- What do you do in your spare time?
- Do you have a favorite pastime?
- What was your major in college?
- What jobs have you had?
- Are there any other fields in which you have a great amount of knowledge?
- What clubs do you belong to?
Mina also recommends that you spend time on eBay studying the category listings. This may give you additional ideas for hobbies you can turn into an eBay business.
Once you've defined your hobbies or interests, brainstorm how you can turn them into a business.
- How can you turn your expertise into a product?
- How can you add value to current products related to your interest?
- What products can you sell that may be one-of-a-kind and have little or no competition?
- Can you think of novel ideas that people who share your passion would love?
- Is there anything related to your hobby that you can create yourself (such as an e-book or a how-to, perhaps)?
For more information on how to create your own e-book product, see last month's column.
Tim W. Knox is the founder and CEO of three successful technology companies: B2Secure Inc., a Web-based hiring management software company; Digital Graphiti Inc., a software development company; and DropshipWholesale.net, an online organization dedicated to helping entrepreneurs launch and prosper from their eBay or online sales business.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.