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Be
realistic when selling on eBay....
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by:
Richard Grady
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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.
About the author:
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
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