Recently I’ve had sellers ask me how to scale their business. They’re doing a good amount of sales, but want to get to the next level. The biggest difference that I notice between amateur and professional sellers is that professionals usually have a system in place, specifically for risk management. This is the primary difference between say, making $XXX/day and making $X,XXX/day. At scale, trading is all about managing risk.
Main types of eBay risk:
Often times, selling and making money on eBay can be as simple as buying cheap wholesale, and then selling it at market price. While this is good for starting out, there’s a few main types of risks that you’ll need to control if you’re going to scale on eBay:
Can you list it up without getting it taken down
I think this is one of the most overlooked ones. A lot of beginners see cheap items wholesale, and think “wow, if it’s selling at $X, and I can buy it for $Y, then it’s the profit is $X-$Y. Not so fast… Some items and certain brands are notoriously hard to list without getting the listing taken down – yes, even if your goods are authentic. One of the worst feelings is when you’re sitting on a large inventory of things you can’t sell because every time you list, it gets taken down.
Solution: Test listings on a broken-in account to see if they’ll stay up. Stay away from high risk brands. “But this seller can list it”, you might say. Yes, but they might be an authorized distributor or some 20,000 feed-backed power seller. Until you’ve listed a few items, and they stay up for a few days, you don’t really have data on whether the item is listable (at least for you). Sometimes, certain brands can get harder to list over time especially if the brand becomes more aggressive at monitoring their listings. Usually this happens over months though.
Will people actually buy this product.
If your item stays up, you’ll want to make sure that people actually buy it. Sure, you can search sold items or use Terapeak to see the sell-through rates, but this isn’t the same thing as actually selling it and validating the demand. Don’t be lazy, and actually sell at least one before ordering a batch wholesale.
Solution: Test this by actually selling at least one of the item before you order a batch wholesale. Once they buy it, drop ship it from Amazon or another online retailer directly to the customer (so you don’t get a bad feedback); sure you might lose a few dollars but think of this as buying data.
By the time I receive my shipment, will the item still be in demand?
Some items are seasonal or trends, and shipping from overseas sometimes takes a while.
Solution: If possible, stick with DHL if you’re ordering overseas, or if you’re going with slower options, make sure that the item you’re selling has a strong history of demand (by looking at previously sold items to see that it’s been selling well for a while).
What are the return rates on the item.
Now that you can list the item up, you’ll want to make sure that the returns are not excessive so that you don’t actually lose money.
Solution: Test this by selling a batch of 10-20, and seeing what % returns there are. Don’t order a large batch until you have an idea of what the quality is like.
Will it pass through customs.
I remember back in the day when I got started, I would order really high risk branded items, and they’d get stuck at customs or delayed for weeks. This mostly happens if you’re ordering high risk brands and tend to order in large amounts.
Solution: Manage this by staying away from high risk brands, and sticking to smaller shipments. Why smaller shipments? Because larger packages tend to get stopped and inspected more often = delay.
Do you have enough capital to run this business while you’re investing money in inventory.
While you don’t need very much capital to start, try not to spend all your money on inventory so you can cover other expenses; if you have to start smaller, then do so, and do it methodically.
Solution: When you don’t have much money what you have is time, so be patient, stick to the process, and don’t over-extend yourself. You don’t want to burn out and quit early on.
What happens if my account gets shut down or suspended?
Everybody thinks this won’t happen to them…until it does. Sometimes, it just takes one bad customer, or a delay in some shipments.
Solution: We can help you get set up with another account to solve (and can customize it in your name and start you off with high selling limits too). Even if your personal account is running, it’s a good idea to have a backup account. You can see our packages here.