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Selling Stuff on the Internet - Can You Make Money?

Updated on March 12, 2017

You may need to build your own website.

Web Hosting, Domain Names, Web Site Building Software etc.
Web Hosting, Domain Names, Web Site Building Software etc. | Source

My First Attempt

This is probably one of the most asked questions I hear from friends and co-workers. Can we make money selling stuff online?

Here is a short article on my personal experience attempting to do just that. You will notice that I avoid using specific business and website names. This is to prevent me from accidentally inserting personal opinions and thereby potentially altering the reader's opinion.

My first attempt - about 10 years ago - I set up a website and engaged in what is known as affiliate marketing. Basically - this is a method of generating income by joining well known online retailers affiliate programs. These affiliate program links are normally located in the small print on the main webpage for the well known "Big-Commerce" related website.

In a nutshell:

1. You have to setup a website with web pages that promote items for sale from the Big Commerce site. You have to pay for the website domain name and web hosting, along with other things. For these services, I chose GoDaddy and still use them today.

2. You then need to generate traffic to your web pages in hopes that the online shopper clicks your link for an item. There are several online services that would love to take your money to drive traffic to your webpages.

3. That link has a code specific to your affiliate account. If the online shopper purchases the item from the Big Commerce site, then you will receive a small percent of the sale. That amount is predetermined by the affiliate agreement.

4. The actual cost of the item for the online shopper is the same whether they purchase the item from your link, or directly from the Big Commerce site. So why not take a cut for helping the consumer locate the product online?

5. Your affiliate earnings are considered advertising fees, more or less. Your earning are also going to be taxable, so pay attention to those "Terms and Conditions" that you agree to when joining the affiliate program. Some of the Big Commerce sites send an annual 1099-Misc type income tax form, others expect you to monitor and claim the earnings yourself. Be aware of this.

So - did I make any money? Not really. The overhead costs to buy my website domain, get my website hosted (available on the internet for all to see), and the fees to other online companies to promote my pages exceeded the earnings I made.

Money Out the Window

Source

What Did I Do Wrong?

For one thing, I have since learned that web search engines treat websites differently. They will treat a website that has existed for say, 2 or 3 years, better on search engine returns than a new website. It appears it behaves the same as everyone else. We tend to shy away from new shops because they have not built a good reputation yet.

Another thing I did wrong was the failure to consider that my domain name had nothing to do with the items and products I was promoting - and - I failed to update my website page html meta tag code to add the keywords for those items and products.

Without that, the web crawlers and spiders had no idea my website page was relevant to the items and products. So when an online shopper searched for the product "blue widget", even though I was promoting that product, my website page did not return in the list of search engine results.

My take - given what I know now, this is what I would need to do if I were to try it again:

1. Plan sufficient time to get proper domain names and build appropriate and relevant content web pages.

2. Plan time to for your website and pages to mature and build a reputation with the search engines.

3. Learn more about marketing strategies before committing a budget to pay for other companies to promote my pages by sending traffic to them. One method of this is called "pay per click". You can look that up later.

Warning - this should be well noted: If you are like me and have a day job, you NEED to review your employer code of ethics to determine that your part time website affiliate job is not promoting products that your employer also sells.

This will most likely be considered a conflict of interest. An example of this is - you work as a car salesman and your lot owner also has a parts counter. You decide to sell or promote used or new car parts on your website. This conflicts with your employer expectation that you would direct your customers to the dealer parts counter so your employer makes money.

Example Online Store

Example Online Store for Amazon Marketplace
Example Online Store for Amazon Marketplace | Source

My Next Attempt

My next topic is going to cover selling stuff on marketplace and auction sites.

A few years ago I decided to try selling some items I had around the house that had never been used and were still in boxes. In order to do this I had to learn how to sell items on a popular marketplace site, as I have been buying items from them for years and noted that some people sold used versions. Think about buying a DVD. I would buy a new DVD on this site, but noticed that several individual sellers listed the DVD as used without scratches for a couple dollars less.

Here is what I did:

1. Read all the "Terms and Conditions" to becoming a seller on that business site.

2. Got more ink for my printer so I could save money using the business mailing discounts and print my own postage.

3. Set up the seller account. This requires validating your checking/saving account with them. You do want to get paid, right?

4. Identify items to sell and ensure I had mailing and packaging material. We normally have 2 business days to mail out items we sell, it would be a bummer if you realized that you don't have the right sized mailing envelope or box and have to run out and buy them - for higher cost than if you buy them in bulk.

5. Locate your item on their website and see what everyone else is selling it for. Are they charging the buyer postage, or providing free shipping?

6. When determining your price to sell, remember the fees that you have to pay when the item sells. Normally it can be 15% of the list price plus postage. One site also has an added $1.50 list fee.

Please note at this time that you may earn more by selling groups of your product to reduce the number of times you pay the list fee. An example is if you are selling a silver coin. Each coin may sell for $25 and you pay postage.

Remember that in order to make money, you must take home more than the price you originally paid for the item.

Here is an example in the table below:

Return On Investment (ROI) Example Breakdown

Amount Customer Paid
List Fee (average 15%)
Postage/Packing Material
Take Home (ROI) $$
$25
- $3.75
- $2.50
$18.75
5 Items bundled at $125
- $18.75
- $4.00
$102.25 (equals $20.45 each)
$49.99
- $7.4985 (round to 7.5)
- $3.00
$39.50
Example shows that selling multiples of an item in a set can increase your actual earnings due to savings in postage and package materials.

Still Following Along? What About Online Auction Sites?

I also sell items on a popular online auction site. The math is similar to the above example but the fee structure is different. In the marketplace example, you may have noticed that you paid the shipping and the fees included the cost of shipping.

If I require the customer to pay the shipping, the fees do not apply to shipping and I could potentially increase my profit.

The online auction site I use charges fees against the entire sell price whether you or the customer pay the shipping. Their list fees are a little lower on average, and you can learn how to price items appropriately to earn the same profit as the marketplace.

A note here is that with the online auction you have a very good chance of selling your item within 7 days. The only risk here is that you do not control the final purchase amount, the bidders do. This same site also provides a method to list your item for sale without using the auction method. You are again at the mercy of the customer to determine when your item sells, unless you pay a small fee to set a reserve price for the auction.

A few more things I have learned:

1. I paid less for my packing envelopes on the online auction site than if I had purchased them directly from a local big box store. That reduces my total cost.

2. The customers on the marketplace may or may not have access to the online auction site. If you have multiple items it may make sense to list some on each site. Just be careful of your inventory.

3. I always mail out items sold in the 2 business day window. This is my reputation at stake here. Customer feedback does influence other customers decision to buy from you.

4. If you are going to specialize in 1 or more items to sell, make sure that you know and understand your product. The more accurate description you provide the better chance of selling.

5. If you have an item or product to sell on the marketplace site, it must be listed in their catalog. If it is not, you can add it as long as you have a valid UPC code. What if you are selling handmade items? You can purchase new UPC codes on the auction site!

6. Lastly, if you are doing this part time, like me - make sure you set aside enough room in your house to store your inventory and packing materials. Try to start small. Only sell 1 product, but keep an inventory of 5 to 10 so you do not run out. After you get established, you can branch out and sell related products.

So - did I make money? Yes, and I continue to do so.

Don't forget to know how to pay your taxes!

If you find that you are ready to start a small business with to support your internet sales, here is a link for Small Business For Dummies Books on ebay. Small Business for Dummies books are available for specific topics including guide for dealing with taxes, human resources, networking, financial management, marketing, and more!

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