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Be realistic when selling on eBay....
By: Richard Grady
Be realistic when selling on eBay....
Copyright 2005 Richard Grady
As some of you know, I spent many years buying and selling
both on and offline and several of my products are based
upon my own experience in this area. I know that the vast
majority of my customers and subscribers have an interest
in trading whether it be on eBay or at the local market but
more and more I am seeing people with completely
unrealistic expectations of what they will be able to do.
Most commonly these unrealistic expectations are in respect
of how much it actually costs to purchase specific products
and what they can then be sold on for.
I regularly get emails from people who want to know where
they can purchase products such as mobile (cell) phones,
new release DVDs, Playstation games and similar at, say, a
50% discount to resell on eBay. The fact is that such a
thing is not available - it is a simple case of supply and
demand and competition.
Take DVDs for example, most people think that these are
excellent products to resell on eBay because they are very
popular, not particularly expensive and easy to package and
ship. Unfortunately, they could not be more wrong. The
DVD market is one of the most competitive that there is -
take a look for yourself and see how many auctions there
are on eBay for DVDs at any one time. I have just looked
and counted almost 300,000! At any one time there will
only be a certain number of buyers wanting to purchase a
particular DVD and if you take into account the numerous
different places there are that each buyer could purchase
from, it is likely that in general, there will be more
copies of an individual DVD available than there are buyers
to purchase them. This situation causes prices to fall.
The other factor that forces prices down is the fact that
one DVD is the same as another. By this I mean that from a
buyers point of view, there is no difference to a new DVD
purchased on eBay to one which is purchased from their
local DVD store. Often the only way to differentiate is on
price and of course, the only way to make the price more
attractive to a buyer is to lower it.
The above reasons help to explain why the wholesale
discount on a new release DVD is just £1 or £2 at most ($2
or $3 roughly in the US). When you take into account the
fact that the large retail chains can purchase thousands of
DVDs at a time and receive a bigger discount than
individual traders, you soon see why it is very difficult
for a small business to compete in such a competitive
industry. You simply cannot purchase new release DVDs at
50% discount and even if you could, it wouldn't be long
before prices were forced down as there is always someone
willing to sell a little bit cheaper than the next man.
It isn't just DVDs that fall into this category. Take
mobile (cell) phones. Here in the UK you can walk down
just about any high street and get the latest phones either
free or for a minimal token payment. The stores are
relying on making their money from the line rental contract
that you will have to sign in order to get the phone. Of
course, the actual cost of the phone is not free - most new
mobiles are actually worth £200 or £300 which means that if
you want to buy a batch of phones at wholesale, you are
going to be looking at a pretty high unit cost. As with
most electrical products, the market is competitive and
prices have been forced down which means that the
difference between your wholesale buying price and your
retail selling price is minimal.
There are numerous products that suffer from the same
market conditions as DVDs and phones and new/small traders
really should avoid trying to sell such items at all costs
because it will usually be frustrating and ultimately not
financially rewarding. When trying to decide what products
to sell, you need to be thinking about the type of market
that a particular product is sold in. If there are already
numerous sellers and many large companies selling at
considerable discounts this is far from ideal. The
exception to the rule is if you are able to add value in
some way to make your 'offering' more unique. I wrote
about adding value last year in one of my newsletters - you
can read it here:
http://www.thetraderonline.com/jul2204.html
At the end of the day, it is all about research, being
realistic and having an understanding of the market that
you want to operate in. Whilst it would be great to be
able to buy and sell new release DVDs (or whatever) all day
long, doubling your money every time, I am afraid that this
is just not going to happen.
----------------------------------------------------
Richard Grady has been helping ordinary people earn online
since 1998. He writes a free newsletter which is published
every two weeks. To subscribe (and claim your free gifts),
visit: http://www.thetraderonline.com/
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Richard Grady has been helping ordinary people earn online since 1998. He writes a free newsletter which is published every two weeks. To subscribe (and claim your free gifts),
visit: http://www.thetraderonline.com/newsletter.html
Contact him at http://www.thetraderonline.com
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