Making Money With an eBay Consignment Business

The eBay Seller's News, July, 2009, Volume 9, No. 10

eBay Tips, Tools, News and Resources for the Professional eBay Seller
by: Skip McGrath

In This Issue:

Musings from eBay and beyond

1. Making Money With an eBay Consignment Business
2. How eBay Sellers Can Make Extra Money Selling Warranties
3. eBay Tips From The Twitter World
4. eBay Fraud – What the media has missed
5. New eBay Wholesale Sources for July 2009

"Time flies like an arrow. Fruit flies like a banana" 
~Groucho Marx

Musings for July 2009

The eBay Consignment Business is booming once again. Must be Karma or good timing as I have just released my latest book, Making Money with An Online Consignment Business. See the first article below for information.

The summer slowdown is in full force. The first half of June was actually pretty good. Sales were well up over May. But then as we got close to the July 4th holiday weekend everything seemed to crash. If you are seeing this don’t worry too much about it. It happens every year about this time. Think about it: Are you spending as much time on the computer now that the weather is nice as you did back in the cold days of February?

Typically the summer slowdown lasts until about August 20th or so, when the Back-to-school selling season starts. Even if you don’t sell back-to-school items, you will start to see some pickup in late August and then things really pick up after Labor Day. Of course the economy is slower and unemployment continues to rise, so the pickup may not be as strong this year.

The summer slowdown is a good time to review all of your listings, update your photos and descriptions, experiment with new keywords and, in general, give your business a tune up to get ready for the fall selling season.

Combined with the summer slowdown is the fact that eBay’s traffic has been dropping. The internet tracking service Nielsen Online just released a report that eBay traffic was down in April and May.  Ina Steiner at AuctionBytes has the complete story along with charts that show traffic and page views and a comparison with Amazon. The numbers look pretty grim but they are not all bad. Even with the tough economy, eBay still had slightly over 54 million unique visitors. That is still a pretty big market.

Speaking of Amazon; I am attending a conference in Seattle called the Sellers Conference for Online Entrepreneurs which the organizers describe as The Independent Conference for entrepreneurs who utilize Amazon as a sales channel.

A few eBay sellers have left eBay for Amazon, but the greater trend is that more and more eBay sellers are utilizing Amazon as an additional sales channel.  I have been selling on Amazon for over two years now with mixed results (some products are doing well while others aren’t).   So I am hoping I can learn some new and better techniques to take better advantage of Amazon.  I’ll be sharing that information with you over the coming weeks.

I learned to sell on Amazon from Steve Lindhorst’s excellent book, Selling On The River which I highly recommend for any eBay sellers who would like to expand their horizons to Amazon.  If you are a “mature American” like me, Steve also wrote a version of the book for our sister publishing company, The Official Geezer Guides --The OGG to Selling on Amazon. Both books are fairly similar so don’t purchase both of them.

In the last issue I talked a little about importing from China. This week I learned about a company called China Sun Trading Company. I have not used them personally, but I did speak with a seller who does and he said he had a good experience.  China Sun handles all of the import chores for you. They advertise “door-to-door” service which means they find the suppliers and do all the work involved in purchasing, inspecting, shipping, customs clearance and delivery to your door. I don’t know enough about the company to endorse or recommend them, but they may be worth checking out if you are interested in importing directly.

I didn’t do a special announcement but I just lowered the price on my information marketing system, How To Create and Sell Information Products on eBay, Amazon and The Internet.

I have been selling this course for the past three years as a printed manual delivered in a custom clamshell package with CDs.  But with the economy slowing and costs rising, I decided to go all electronic.  This means I could lower the cost. So if you have been considering this book, you can now get it for $30 less and it comes with a $20 discount on the Complete eBay Marketing System. So that’s a total savings if you want both books.  I have a few printed copies left at the older (higher) price. Since eBay requires shipping physical products, I will have them on eBay until they run out. If you would like one of these, here is a link to the eBay listing.

New Articles:

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1. Making Money with An Online Consignment Business – The eBay Consignment Business Operations Manual

The consignment business on eBay has had its ups and downs over the past ten years, but it seems to be on the upswing again. I remember eBay Live in 2005. I think there were at least 6 companies exhibiting that were offering eBay Consignment Drop-Off Store franchises and solutions.  Now they are pretty much all gone.

Hundreds of eBay sellers invested as much as $60,000 in a franchise only to lose their shirts. The problem wasn’t with the consignment business model –it was with the expensive overhead franchise system model.

Although most of the franchise stores are gone there are hundreds of eBay sellers operating profitable drop off stores around the country. And many more eBay sellers are making good money selling on consignment without a drop off store –operating out of their homes, a modest low-rent commercial location, and some are even using storage lockers. And, the consignment business is booming.

Consignment selling on eBay is actually one of the businesses that is benefiting from the poor economy.  When the economy is in trouble, people need to raise cash and they are doing it by unloading a lot of stuff they splurged on over the past few years.  This is a win-win-win. The consignor wins by getting rid of stuff the can no longer afford and raises badly-needed cash. The Consignment seller  wins by earning a commission and The eBay buyer wins by finding a great bargain!

I have always referred to consignment selling as “the perfect eBay business.”  The largest single problem eBay sellers’ face today is sourcing products. It is harder and harder to find products that they can sell on eBay at a profit.  The consignment business solves that problem.

Consignors bring you merchandise to sell. If it sells you earn a commission. If it doesn’t then you return it to them.  Once you learn the basic eBay selling skills, you can start an eBay consignment business with little or no investment other than your time and the cost of some eBay fees to list items. If you want, you can stay small and just make nice profits working pretty much part time. Of, if you are ambitious and want to work a little harder, this is a business you can grow pretty quickly.

I wrote my first book on the eBay consignment business, called How to Start and Run an eBay Consignment Business, back in 2002. It sold about 10,000 copies from this website and on eBay.  Then in 2004, the McGraw-Hill Publishing Company approached me to write a version for the bookstore market.  That book sold over 40,000 copies. It is now out of print but you can still find some copies floating around on eBay and Amazon. However, it is now also seriously out-of-date too.

I hadn’t really written much else on consignment selling outside of a few articles and blog posts since then, but I have kept my hand in consignment selling and followed the market.  Then late last year, as the economy started to crater, I noticed a real uptick in consignment selling on eBay –and it was coming from sellers both large and small.  So a couple of months ago I started working on a completely new version of my original book. I updated and expanded the information, removed all of the obsolete material and created a ton of new material. I also decided to expand the scope beyond eBay.  So although it is primarily an eBay consignment business manual, I also cover other online selling venues such as Craigslist, Kijiji and Amazon.

Making Money With an Online Consignment Business – The eBay Consignment Business Operations Manual is available today.  The book includes 7 bonus items including attorney-written contracts, sales forms, pre-written advertisements and other materials you would need to start and run an eBay consignment business.

Please note: This is not a basic “how to sell on eBay” guide.  If you are going into the consignment business on eBay you need to learn basic eBay selling skills first.  So if you are new to eBay and want to explore this business, as a bonus I am including a $20 off coupon towards the purchase of my flagship product, The Complete eBay Marketing System.

Click here to learn more about Making Money With an Online Consignment Business – The eBay Consignment Business Operations Manual.

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2. How eBay Sellers Can Make Extra Money Selling Warranties

If you sell in the following product categories you may be missing out on some extra income.

Reliabid has recently launched a new warranty service for eBay and website sellers called WarrantyFeed.  They offer a 30% commission when you offer a warranty to your customers. Unlike SquareTrade, the former eBay resolution service that now also offers warranties, WarrantyFeed covers more product categories and they cover new, refurbished and even used products.

WarrantyFeed is not just for eBay sellers. If you have a website that uses one of the popular shopping carts, you can easily integrate WarrantyFeed right into your website shopping cart so the warranties are presented automatically.

The SquareTrade system only covers products purchased in the prior 30-days, whereas WarrantyFeed covers products purchased up to 90-days ago.

WarrantyFeed is 100% free and automated. Buyers pay WarrantyFeed for warranties and they pay you 30% of the net sale.  However, if you sign up within the next two weeks, they are offering my readers payments of 40% for the first six months and 20% on shopping cart sales. NOTE: You won’t see that offer on the website but they will set up the extra commission in your account if you use this link: WarrantyFeed

There are no minimum thresholds. If you have a PayPal account WarrantyFeed will pay commissions daily. You don't need to visit the site and submit a request to get paid. Commissions are paid automatically the day the warranty is sold.  The neat thing is that the system works automatically. You copy some code into your auction description that is basically a widget.  When someone buys, WarrantyFeed sends them an automated email referencing the item they bought on eBay and giving them a link to purchase the warranty. If they buy –you get paid. Simple as that!

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3. eBay Tips from The Twitter World

If you have followed the last couple of issues you know that I have started playing around with Twitter. It has really worked to increase traffic to my eBay listings. It is also a lot of fun (most of the time).

In my blog last week, I announced a contest where readers could win a copy of my newest book by submitting their best eBay tip through a 140 character Tweet.  I promised to publish the tips here in the newsletter (not in my book, as one loony blogger claimed).  Well we got some great tips, but I had a bit of trouble selecting a winner.  I guess you would say it was a tie.  So both powerselleraob and Fuzzyworld will get a book. (I will contact them through twitter to arrange delivery)

I received over 35 tips and don’t have room here to publish all of them –and many were similar, so I just selected the best ones.

powerselleraob eBay trick - Keep in touch with eBay buyers and get repeat business - direct them from your About Me page to a squeeze page with Opt-In box

Fuzzyworld My eBay tip, be 100% honest and upfront about what you’re selling. Don’t hide flaws. Being Honest brings more sales & better Buyers too!

ncasalejr My Tip - use Photobucket to convert pics to HTML tags and save money by avoiding eBay photo fees

TheEvenger Got an odd sized item? Find the right box to ship it in BEFORE you list it. When the item sells, you're ready to go - no panic search for box

ncasalejr TIP - Use a listing software program to make your listing more appealing. For ex. Garage Sale

CrystalDLeonard My best tip after years of selling is to be very fair in shipping international, if you price it right they come back and buy lots more.

bhall7x :Brian Hal…l Saw an eBay user name today of "Trickmaster"--not a good way to instill confidence in your buyers

TheEvenger Advantages of free shipping: easier accounting, fewer buyer questions, plaster listing w/the word "free," better placement in search results

One of the tips I got sounded very interesting, but unfortunately it went against eBay policy. The reason I want to show it is that I have seen this recommended before and it can get you in trouble with eBay. (I removed his username).

XXXXXXX: Offer free shipping insurance by insuring orders yourself. Don't buy insurance, just factor lost shipments into your cost of doing business.

There is a common misconception that you can self-insure your shipments on eBay. In fact you can self-insure, you just can’t call it insurance or tell buyers you are “self-insuring.”  eBay took the position a couple of years ago that offering to self-insure was essentially offering insurance and to do that you need an insurance license.  You can “effectively” self insure by simply standing behind all of your sales and offer a 100% no-questions-asked guarantee. If an item is lost or damaged you replace it or give a refund. When you do this you are effectively self-insuring, but you just can’t call it “insurance.” If you do want to offer insurance, check out ShipInsurance.  They offer shipping insurance that costs far less then what is offered by the Post Office or the shipping carriers –and the claims process is easier and faster.

I also got a couple other interesting tweets in response. My next article talks about the reduced amount of fraud on eBay, but apparently there is still some left. Here is her tweet in all caps no less.

DJCHINADOLL I'M MORE CONCERNED W/THE SAFETY OF BUYING SOMETHING FROM ABAY. MY FRIEND BOUGHT SOMETHIN & OPENED THE BOX & THERE WAS A BIG ROCK IN IT!

Maybe that’s because she was on ABAY and not eBay???

And I am saving the best for last. I am not sure why this guy followed me in the first place.

xanaxlover U can take my best eBay tip and shove it,,,, far in your as-. f-off,,,who do u thinking u your dealing with?

“xanaxlover” –now there is a great eBay username???

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4. eBay Fraud – What the media has missed

I often speak with reporters when they are doing a story about eBay. Invariably, the question of fraud comes up.  Real and perceived fraud has been something eBay has struggled with for years.  In the area of real fraud there is some good news. I have confirmed from some inside eBay sources that fraud on the platform has dropped significantly over the past couple of years and dramatically over the past five years. Like most sellers I didn’t care for many of the new policies but it may turn out that this was like giving medicine to your kids.  It tastes bad but it cures what ails them.

I asked eBay to comment on the issue and give me some hard facts, but their official spokesperson for that issue was not available in time for my deadline. eBay did provide a bland statement that sounded like it was written by an attorney, but I would love to get some real facts.

Besides preventing real fraud, the other challenge for eBay is perceived fraud.  This is not only a problem for eBay, it also affects every eBay seller.  Simply put, if the marketplace thinks that eBay is an unsafe place to trade then they stay away. So although fraud may be a very tiny fraction of eBay transactions, the perception that this fraud is widespread hurts all of us.

When I speak with reporters and mention that fraud on eBay is a lot lower they are either surprised or skeptical.  Changing this perception is important to eBay and to us sellers. eBay has a large sophisticated press relations operation. Perhaps this is an area eBay should pay attention to.

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 5. New eBay Wholesale Sources for July 2009

I have been corresponding with the folks at Go Wholesale who power the Free Wholesale Search Engine on my site. They have made several improvements over the past year to improve the results.  This can be a great place to find wholesale sources, but please take a moment to read the information on the page before using it.

Tasha Apparel offers a large line of woman’s wholesale fashion styles including shirts, dresses, tops, slacks and active wear and they also sell high-fashion plus sizes.

JD Closeouts specializes in drug store closeouts so you often see great offers on health and beauty products there.  This is not high-end stuff, but in this economy where people are looking for bargains these may be the products to sell.

GoldFather’s Jewelry sells fine fashion jewelry and chain by the inch
they carry a full line of  gold layered & rhodium finished charms, rings, necklaces &  bracelets. They also stock a full line of tools, gift boxes and polybags.

AE Traders sells a full line of Biker gear, clothing and accessories.

Surplus Giant Inc. is an international distributor of branded closeout products. They offer surplus, and wholesale deals on computers, laptops, iPod, luggage & travel, camera, and electronics accessories. They carry leading manufacturers such as Targus, Kensington, Logitech, Microsoft, Belkin, Lowepro, Samsonite, Wenger (Swiss Army) and others.

Kerusso is a leading producer of Christian T-shirts and innovative religious gift products

That’s it for this issue –see you in a couple of weeks.

Skip McGrath
The eBay Seller's News

P.S. If you missed the last issue, click here to read it.

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