Having the Goods
The majority of online auction sellers start small, with items found inside their own homes or attics. In a consumer-driven society, we all tend to collect stuff — amazing quantities of it — over periods of a few years. The explosive growth of self-storage mini-warehouses in America is one testament to our long-term prosperity. Periodically, we end up with too many things in our houses or apartments, and either we have to find more space (“Put it in storage!”) or we have to pare down (“We need to have a garage sale!”). Increasingly, people are realizing they can sell almost anything on eBay and other auction sites.
For a short time, at least, your own home or apartment can supply you with enough goods for a small-scale auction selling business. Family and friends may also want to get rid of things and may gladly donate them to you just to get the boxes, bags, and excess furniture out of their way.
Some good things from your household that can sell online include:
Antiques (items at least 100 years old)
Vintage items (The definitions of “vintage” can vary widely and often depend on the item. But at least twenty to thirty years old is a good starting point.)
Old china, serving utensils, silverware, and cooking appliances
Toys, games, posters, trading cards — almost anything that has been boxed up or stored for at least a decade or two
Clothing that is new or barely worn (i.e., because it was too small when you bought it or received it as a gift years ago)
This is only a partial list. Do a simple test. Look around in your home and gather up five items that you could easily live without. Find each item's identifying information, such as model name, type number, and manufacturer. Use the search tools on eBay to see if similar items are listed. If a few have been auctioned or are for sale right now, there is a market for your item. Note the final selling prices. Repeat the test as desired and start setting aside any items that have a market. You may be surprised at how quickly your “sell” collection can start to grow. With just a handful of things to auction, you can launch your business and start learning — and earning — as you go.
Can online auction selling be a good family business?
Absolutely. Some family members can scout for goods to sell while other family members manage the listings, collect the payments, and ship the sold items. For variety, swap jobs.
Focusing Your Business
At some point, of course, you will run out of personal items to sell. Before you get there, start giving this question some serious thought: Do I want to keep doing this as a part-time, second-income business, or do I want to become a full-time online auction seller? You can keep a small selling operation supplied with inventory just by spending some weekend time going to garage sales, yard sales, flea markets, moving sales, estate sales, and other common events. Of course, you may find yourself bumping elbows with other people grabbing for the same goods to sell online.
Another common approach is to bid on certain items from other auction sellers, and then try to sell them again online for a profit. This can work if you are familiar with particular types of merchandise and with the trends in their prices. A variation on this theme is to look for listings with poor pictures that have no reserve price and are about to expire with no bids. You can often win the item for a dollar or less and have it shipped to you the cheapest way. Then you can take new photographs, create a new listing, set a reserve price that would give you a profit — and hope bidders will show up wanting to win it.
Yet, another approach is to buy merchandise online from so-called below-wholesale suppliers such as Specialty Merchandise Corp., or travel to going-out-of-business sales, fire-damage sales, storm-damage sales, and other sales where merchandise, office equipment, and related items may be priced artificially low.
Several online auction sites, including eBay and uBid, offer online merchant programs that can help you move from individual seller to small business owner and beyond. Consider these programs carefully and examine your own needs and goals before enrolling and paying. It may be prudent to take some basic business courses first, and then reassess your selling goals before focusing on entering an online merchant program.
If you choose to grow your online auction business and make a run toward full-time employment, be prepared for issues such as renting an office or some warehouse space to store inventory and getting a part-time worker to help you. In a business that relies heavily on inventory, you cannot spend all of your time managing auction listings and shipping packages. You will need someone else to pack and ship the sold items while you are rounding up more goods to list.
Selling on Consignment
Many online auction sellers like to work with consignment sellers, people who scout around and find things that others can sell. In a consignment arrangement, you don't have to gather and maintain an inventory. You agree to auction the consignor's items in return for a percentage of the selling price, typically 25 to 50 percent. The best advantage of this approach is that you are paid first when an item sells. You subtract your commission and give the balance to the consignor.
A key disadvantage is that you have to know and trust the source of the goods. You don't want to discover, as some have, that you have been selling stolen merchandise on consignment. Another drawback to consignment sales is that many auction sellers already have rushed to embrace the concept. Since 2003, thousands of franchise and independent auction drop-off stores have opened across the United States. People can simply bring items to these stores to be sold on eBay or other sites, and the stores take care of selling, shipping, and paying the consignor's proceeds if the item sells. The people who have the merchandise don't have to fool with auction sites or computers. Unfortunately for individual eBay sellers, the concept has caught on and grown.
People who used to give old items away or sell them to the first taker have realized that they can get more money by selling them online, even if they don't have a computer. So, they have been flocking to auction drop-off stores. More than 7,000 of the stores had opened nationwide by mid-2005, but some auction experts were questioning the long-term viability of the concept.
Another example of the spreading consignment trend is eBay's Trading Assistant program, which has been around since 2002. People who want to sell something on eBay but don't have the time can use an eBay directory to find a local Trading Assistant. These are independent businesspeople who run consignment-selling operations on eBay. Trading Assistants will often pick up an item from a seller's house, list it for auction, and then pay the seller after subtracting their fees from the proceeds. The individual Trading Assistants set their own fees with no involvement from eBay. To qualify as an eBay Trading Assistant, a seller must have a feedback score of at least 50 and a minimum feedback percentage of 97.
Another approach to selling without inventory is to team up with a wholesale drop-shipper. MegaGoods.com and DropShip.com are two of the numerous examples. Typically, as the seller, you become a member of the wholesale drop-shipper and are give access to an online catalog of goods such as consumer electronics or household items. They supply photos and descriptions of an item so you can place it on an auction site. To make a profit, you must set a reserve price greater than what you will have to pay the wholesaler. Usually, there are membership fees and fees for the services you use. When a winning bidder pays you for the product, you pay the wholesaler the catalog price for the item, plus a drop-shipping fee, and pocket the difference. The wholesaler then drop-ships the product, with your return address on it, to the winning bidder.
If something grabs your interest, don't grab your credit card or checkbook. First, spend some time doing careful background research on the program and its promoter. Never rely on a professional-looking Web site and e-mailed testimony from “satisfied customers.” Before you pay, be sure you know what you will get for your money and how it might help you and your business.
You don't have to maintain an inventory when you use the drop-ship approach. You pick items from the wholesaler's catalogue and pay an auction site to list them for sale. If the item doesn't sell, you are out the listing fees, just as you would be if you posted one of your items and it didn't sell. You can try again with the same item or pick something else from the catalog to try to sell.