Ebay Sourcing: Locating Products to Sell
If you’ve had a chance to get an account on eBay and sell a few items for yourself, I’m sure you’ve discovered how amazingly easy it is to turn old useless items in your house into cash. After your first eBay transaction you might ask yourself “can it really be this easy to make money on eBay?” or “why don’t I just do this every day and make some serious cash?” Well it is that easy, but the one problem most new eBayers run into is: you have a limited amount of junk lying around in your house that you want to sell. Sooner or later, your supply of money making items will run out. I know your pile of junk at home seems endless now, but trust me, once you get addicted to the cash you can make from that junk, it disappears all too quickly.
Then what? Well now you know how eBay works and how you can make a quick buck on the site but no products to sell. Let me tell you, at this point you have a huge advantage. You’ve figured out all the basics of eBay and all you need now is a reliable source for products that you can sell for a profit. There are many routes you can pursue to acquire products for resale: drop shippers, wholesalers, lots, manufacturers and so on. I will give you a little insight into each of these, including pro’s and con’s for each method and hopefully give you a direction to go in to acquire more products to sell. As a side note, don’t waste your time asking other sellers on eBay what their sources are for the products they sell. They will not give you this information as the last thing they want is someone to compete with who’s selling the same items they are. But if you keep reading, I’ll show you how to acquire your own, profitable, sources for products to resell and what kind of profit margin you can expect.
Drop shipping an item is the process of purchasing an item and having it shipped straight to your customer. In this process, you never have the item in your possession and you never have to deal with keeping inventory on hand. All you do is collect the money from the customer, pay the drop shipper, and keep the difference for yourself. Drop shipping an item is usually the most popular and the most exciting method for a new seller on eBay. There are, however, a lot of downsides to this method.
First off, you never see the item and have no way to check the quality before sending it to your customer. This can be a little scary especially since you are risking your reputation on eBay. If a customer gets the wrong item or a poor quality item, you either have to accept a return from the customer and hope the drop shipper gets it right the second time, or risk negative feedback. Another factor to consider is although many sites offer drop shipping options, many times their prices are no better than what the items are already selling for on eBay, leaving you with little to no profit. Lastly, it’s widely known that good drop shippers are in high demand and hard to find so many scammers have taken advantage of this and made fake websites promising drop shipping services to anyone and incredibly low prices. If it seems too good to be true (i.e. you can easily make a 50% profit or more by reselling their items) then it usually is.
There are legitimate drop shipping companies however. Try running a search for “drop shipping” and checking the websites it finds on the last few pages. These are usually more likely to be the legitimate drop shippers whose prices are reasonable enough to make you a profit. However, don’t expect to click on in and get a list of prices. Usually you need to e-mail them express your desire to become a reseller for their products and/or fill out an application. Also, some companies have very basic web pages since they typically don’t do the majority of their business online. You’ll have to e-mail these companies and it’s best to make a contact at the company. This would be someone who will handle your account personally and who you can hold responsible if things go wrong.
Wholesalers are companies in which you can fill out an application and become a distributor for their products. You generally will get special pricing as a distributor (usually 15-50% off the list price) and you can resell these items for a profit. This is a much safer way of acquiring products as these companies usually ship you the item first, have good return/exchange policies if there’s any issues with the product, and typically they are not out to scam you.
The only downside to this type of resource for products is you usually need to have a business license. I know it sounds complicated but acquiring a business license and business tax id is not all that difficult. You’ll have to see what it costs in your state but where I live its $75 and the state will approve just about any application for a business license. Often times you can get more than one company name with your fee. I was able to get up to three different business names for $75.
Find a company offering products you are looking to sell. Check their website for any info on how to become a distributor for them. If you can’t find any information on their site, send them a professional e-mail asking how to become a distributor for their products. Good social networking is the key to finding products that you can resell for a profit. Usually you’ll get a very informative and positive response. Companies want a lot of distributors out their marketing their products for them. Many companies survive solely thanks to the fact that the have a variety of distributors all over the world.
Some successful sellers on eBay spend their time searching through the “wholesale/large lot” listings with hopes of buying a large quantity of one item and reselling the lot individually for a profit. This actually is a pretty effective way of turning a profit on eBay and many individuals/companies do this and make a considerable amount of money. There are very often large lots of items that need repair, product returns, overstock items etc. The biggest profits can be made by buying these large lots on eBay and reselling them locally through other methods. Where reselling these items on eBay can yield 10%-15% profit, selling them in person locally can usually enable you to make a profit of 50%-100%, sometimes more. This personally was my preferred method of making money via eBay for a long time as I was amazed at the markups on the price I could get away with. Advertise the item you want to sell in the local paper, have a yard sale, or sell the item via Craigslist. Sure you’ll have to meet up with people, show the item, and deal in cash but the profit margin is amazing!
There are downsides however, such as the potential for defective items. When a seller on eBay is selling a large lot it’s often difficult, if not, impossible for the seller to thoroughly check all of the units in the lot for defects. Because of this most sellers of large lots do not have return policies for individual defective units. Therefore, you do run the risk of a portion of your inventory you purchase being defective. A good estimate would be at least 5% of your inventory from a large lot being in non-sellable condition. For items like electronics, this number could be higher. Remember to take this into account when figuring out how much you can make from a large lot purchase. Also, make sure to check what the individual items are going for on eBay. You don’t want to go through all that work of buying the lot and selling each item individually if you’re going to break even. So remember to check the going price of the items and bid accordingly, leave yourself room for a solid profit upon resale.
Many of the richest people in the world get their start by having an item custom manufactured for them. Once you come up with an item that there’s a demand for, but doesn’t exist, you can have it manufactured for you. This often times yields the largest profits as there is no middle man like there would be if you use wholesalers or drop shippers. Also, if the item you produce gains in popularity you could suddenly find yourself as the “inventor” of a hot new product and make huge amounts of money. You can have domestic manufacturers produce your product or an overseas company. Now more than ever, the most popular choice is to have a china based manufacture produce your products. There’s many ways you can get in touch with a manufacturer however a website called “TurnKey” has made the job easier by providing a full directory of manufacturers. Try to contact one of these companies that produce items in your category and like before, try to work with one person at the company. Having a good contact you can rely on will make a huge difference here. Be prepared, however, when you use a manufacturer and produce a custom item you’ll need to design it and send the plans to the company that will produce it for you. Now generally they’re very forgiving with your designs. You don’t need to be an engineer as they are used to working with businessmen who don’t necessarily have any engineering experience. Usually after 10 or so e-mails back and fourth clarifying your plans, they will start producing the item for you.
If you are having the item made overseas and shipped into the country, the manufacturers will usually have a rather large minimum order. A business partner of mine had an overseas company produce electric guitars for him and his minimum order was about $5,000 worth of guitars and took about 3 months to have produced and shipped into the country, however, he did acquire the guitars for a great deal and was able to make a nice profit on his investment. Also, before you have the full order shipped to you, have the company make you a “model” and send it to you. This is a common request and most manufacturers will have no problem sending you one unit for your approval before producing your whole order. Like all transactions online be careful for scammers on this site as well. I had another friend of mine get burned by a company he located here. He lost $10,000 on an order he placed that was never sent to him. So once you make a contact at the company, ask for references and do your own research on the company as best as you can to make sure they are legitimate.
There are other ways to source products to sell on eBay but these three are the most common and time-proven methods. A great tip when starting out is to stick to something you know a lot about. My business partner had a vast amount of knowledge on guitars. He knew which types were desirable, which weren’t, and even how to put guitars together himself. It was his hobby long before he got in to the business of selling them on eBay. This was a great advantage to him because he knew the product he was selling inside and out. He knew what he what guitar buyers look for and what they would be willing to pay a little extra for. That is why I suggest you get into the business of selling a product you have a considerable amount of knowledge about. You’ll have an advantage over anyone else with less knowledge who’s attempting to sell a product similar to yours.
I wish you nothing but the best with your future endeavors on eBay and remember to stay creative, stay within a market you are familiar with and you’ll be a successful “eBayer”.