There is a wealth of information on how to start your own business on Ebay, if you want to call it a "wealth." At one time, I bought into the idea that anybody could get rich on Ebay. Are you like most of us, and don't really have a product to sell? No problem! Log onto Ali Baba, the online marketplace that connects Westerners with Chinese manufacturing firms, and you can order supplies wholesale direct from the factory. Then you simply add a profit margin of, say, 100%, design a neat little auction, and post said auction upon Ebay! What could be easier?
Is all of this importing of cheap plastic junk from China really such a good thing for the U.S.A.? Most of the things you find on Ali Baba are computer mice, flashlights, LED lights, keychains, pens, funky toys and gadgets galore, just the sort of thing destined for our nation's landfills and not the type of thing to decompose within a hundred years either. But let's put ethics aside for the moment and focus upon a real world example that involved the author.
I never bought anything from Ali Baba, not necessarily because of scruples, but because I realized there was too much of that sort of junk on Ebay already. But I did get myself into the Ebay game, importing not from Asia but from Europe.
A couple years ago, I purchased about fifty kilos of salty licorice from a Belgium manufacturer with a wholesale division in New York. The manager that I spoke with on the phone peppered me with questions, because I was not one of his usual clients and did not have a business license. He wanted to know how I hoped to sell the licorice. It was not difficult for me to realize that anything that I told him, he would try himself, so I told him I would be selling the stuff at local flea markets and made no mention of Ebay.
I was just testing the waters, as a matter of fact, to see whether there was any profit potential in this Ebay thing. Prior to making the call, I had researched Ebay thoroughly and knew for a fact there was no good source of salt licorice. All the other sellers were offering tiny quantities of 60 - 120 grams at high prices, whereas I intended to sell by the kilo at a quite reasonable price, while still allowing myself a healthy profit.
The licorice arrived right on schedule without any problems and was delicious, although I had no intention of consuming fifty kilos myself, regardless of the current status of my middle section. I designed a cute little auction that looked just like the sort of thing one might find in a gourmet magazine, posted it on Ebay and waited. My feedback rating, it should be noted, was 100% positive, and I knew that my good reputation would encourage buyers.
At first, I was quite successful. I sold several batches with a sweet 25% profit margin. Things were going well, and my head was in the clouds with plans of expanding my business. Years from now, I would be featured in "Fortune" magazine as the guy who built a multi-million dollar licorice empire. I imagined jetting around the world, buying factories and opening up shops in all the major cities. Then my dreams crashed.
After a few weeks, I noticed that my auctions were failing. No one was even bidding on my licorice. What was the problem? My customers had all given me stellar feedback--they loved the licorice, just as I did. I researched licorice on Ebay and discovered that somebody was selling the same stuff at a lower price. How much lower? About 30%, or my entire profit margin and then some, that's how much lower. I sold the remainder of my stock at cost, with no profit. This is when I realized that unless you have a special connection with a manufacturer and can cut out the middlemen, buying in large quantities, then you aren't safe from competitors. I had to get out of the licorice business and get out of Ebay altogether, because I don't have any such business connections and don't have deep pockets either. All I'm good for is computer stuff, and I understand the business side well enough to know that knowledge alone won't take you far on Ebay. Most items up for sale are commodities that are very sensitive to price.
If you want to make money on Ebay, my suggestion is not to negotiate with the Chinese. Why? Because a rich man with ten million dollars is already doing that, and the Chinese are cutting him a sizable discount to secure his business. He can stomp on you with impunity on Ebay. Commodities are the province of the rich, who can purchase in scale. The poor should focus upon products that require knowledge and skill.
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