Running an ebay business

[Of The Vultures]

Let's start with an announcement that we'll be welcoming a new addition to the family shortly and since I'll be home on maternity leave, I will need a way to generate extra cash from home. Hubby's wage will be covering the mortgage etc but we need to do renovations as well so that's where the extra cash will go.

This is where ebay comes in. Hoping some of you who are/have been running some sort of ebay business will be able to comment.

I have some ideas of the kinds of products I might sell and have scouted for some potential suppliers on alibaba.com - but, and here come the questions - how does importing actually work in terms of cost (shipping... what else?) and compliance with Australian standards etc?

Do I need an ABN?

Would you recommend setting up an ebay store?

How do you keep track of all the cost/revenue for the purpose of declaring to the ATO?

How do you deal with the logistics of having to post (potentially) many items per day - automated invoicing / some kind of postage labelling / packaging / dealing with post office...?

Any hints/tips/things I need to know?

Comments much appreciated

Oh I should add that I have sold household stuff we didn't need on ebay in the past so I have an understanding of how the process works, just not on a business scale.

 

[Truly Exotic]

Sorry, but I'm going to sound like a negative Nancy

I used to have an eBay business

But it's going to be very hard, today

Ebay and PayPal fees are ridiculous

Competition is high, unless you've got some really niche product such as handmade crafts or something unique

The days of making a profit as a hobby I think are over

Even drop shipping is no good now

The only way you could make a profit via a ebay store is volume, volume, volume at low margins, but you will have competition from overseas sellers anyway

Give it a try but unless you get lucky or have something very unique. I wouldn't get your hopes up

 

[coastal]

Your at the mercy of Ebay

If you don't maintain 98% rating they will close you down. Au post is not reliable at all, items regularly get lost in the post. Ebay shut me down

I was selling an item for $15...I purchased it for $3 in china...happy days...sols 200 of these in 2 months.. then some dude started selling it from Aus for $6..so you have people happy to under cut you to make 20 cents profit.


Sell items that not many people are selling from Aus and you may have some success. Look at selling bulk items. I had great success selling bulk packs of Temp Tattoos..Purchase for $5 and sell for 15...sold 1000 packs in 18 months.

I started expanding and buying loads of products to sell.. my idea was to have 500 products selling 10 - 40 units per month on average per product, but some would sell more and some would sell less. Minimum profit was $1 per item. Highest was $15 per item.

You would need to make sure you have enough stock as sometimes I would sell out within a week and would have to order more and that might take 1 - 3 weeks to arrive depending on the postage level from China

Ebay it great to test a product, but you are at the mercy of Ebay and I gots shut down

I would rather set up a website and build a business up like that.

 

[property_girl]

Congratulations on the new addition to the family. I didn't have a business on Ebay, but for about a year I did sell. I agree with all of the above advice. I was lucky enough to buy LOTS of brand new Burberry clothing that was being sold at a 90 to 95 per cent discount (Burberry was getting rid of all its old stock). I had purchased five jackets that sold at $2,500 each for $200 each. I on sold them for $400 to $700 each. Another dress I had purchased at $150 with a tag on it for $5000, sold it for $700. I also bought Prada and Max Mara clothing from Italy and on sold it on Ebay. I also had LOTS of brand new Prada boots. I had bought them at AUS$120 and sold them for $400 to $600 (retail was $1000+).

The money was good but you also need time to do it. It takes a while to put up the ads. Then when people want postage prices to Denmark, Hong Kong or wherever you have to go to the post office. Then with sending you have to wrap properly and spend nearly every morning at the post office. It would be a hassle with a new baby.

I never had a problem with Ebay. You have to be honest and do the right thing by the buyer, and you will be fine.

Be careful with Alibaba. I had a bad experience with it. And remember that if you are selling some things like lamps, the products that come in from China might not be up to Australian standards.

 

[lizzie]

Skater has an ebay store selling a niche product ... maybe give her a heads up.

Asides from growing garlic, I make a niche product from my second home kitchen - that no one else makes - and sell through local outlets and once a month at a local market. Not making a killing yet but turning over around $1,500/month of 1.5 days a week work.

Personally, I think, in the current market of being able to buy and ship products, yourself so cheaply from overseas, you have to decide what your "point of difference" is. Why would someone buy from you rather than someone else?

Also, in the early days I used to buy from Ebay, but unless I know they have what I want (like particular bedsheets) then I don't bother - to much junk to sift thru and hardly any decent stuff - would rather just google the item I'm after and go direct to suppliers

 

[Investig8]

Congrats on the new addition to the family.

I was heavily involved with ebay in the early days when it was what we called the wild west of the internet, realised over time it's just not worth building a business and/or a brand on a platform you have no control over. This goes for facebook, adsense, youtube etc etc.

Use these platforms as a part of your overall marketing strategy, treat them as highly effective testing and marketing tools however build on a platform you control and no matter what the slap (if one should happen), whether it's ebay, youtube, facebook or even google, you still maintain control of your asset and essentially your financial future and all the time, blood, sweat and tears you put into building this business will not be wasted.

As for the paperwork, if it's a business your really going to invest your time and money into then seek professional advice as to the correct structure to suit your current and future needs.

I find it's similar to property investing, separate your entities, itemise tracking and control of your income and expenses, then run reports monthly or quarterly to assess what is and is not working, make adjustments to your process, systems, product lines, offerings, sales and marketing, test and measure, rinse and repeat.

My current perspective on starting a business is simple, be careful what you ask for, be very clear what it is you really want to achieve because sometimes I would consider a day job (standard 9-5 working for someone else) as a complete holiday in comparison to running my business. Be prepared to wear 15 hats and have no experience in 90% of them.

If within 12 months you hate what you do, and it's causing more financial stress on your family, if it's creating strained relationship with you and the family due to the tiredness, time, stress and commitment, then get out before it's too late or you might just get what I like to call the "golden handcuffs" and once that happens it becomes trouble, because you begin to really hate what you do but because it makes money and maybe even a lot of money you stay with it, everything else then starts to fall apart around you.

If none of that concerns you then enjoy what you do with a passion and be fearless, don't look to creating a hobby, create a business with the intent to making a profit, a lot of profit, then re-invest ..

Have an awesome day! :

 

[Shahin_Afarin]

I remember reading a post about one of the guys on the forum that did this full time selling gym equipment or something along those lines. I can't recall who it was though.

 

[westminster]

Congrats on #2!!!!

I used to have an Ebay business around 8 years ago when it was a lot easier, now I don't think I'd be able to make the same money.

Ebay reports to ATO so you need to keep really good records.

You might be better off with one of the things which ATO considers a hobby like Thermomix/tupperware/blah blah demonstrator. But of course they aren't for everyone and you need to go out, it's not a from home thing

 

[devank]

I remember reading a post about one of the guys on the forum that did this full time selling gym equipment or something along those lines. I can't recall who it was though.

AITH

He had/has a better business model than just E-Bay only. He surely did extremely well though.

 

[moyjos]

I have an online business and eBay is one channel along with our own website.

Yes eBay has fees as does PayPal (together they add up to around 8%) but so does any business. I just account for it as a cost of doing business.

My core products are Flyscreen mesh and accessories and yes I do quite well.

Bookkeeping is important as in any business. I have a Star Track Express account and an Aust Post account, and in nearly 5 years, I have never had anything go missing. I provide a tracking number with every parcel so perhaps that gives them a kick along.

Find some products and give it a go

 

[Ace in the Hole]

AITH

He had/has a better business model than just E-Bay only. He surely did extremely well though.

Yep, started on eBay about 10 years ago.
Over time sales went from almost 100% eBay generated to under 5% today. Still doing about 150k on eBay and it's still a great lead generator and form of advertising.
I reckon we do way more sales off eBay which originated from customers finding us on eBay, works well that way to avoid the high fees.
Margins are still as great as ever, it's just a pretty passive system which requires very little maintenance.

Gumtree is good for that too, just started listing recently but getting considerable leads which is profit for nothing.

Rarely get anyone trying to bargain, even though we are not the cheapest around.

Products must have high perceived value and not simply be cheap junk, too hard to compete in that market.

 

[INVSTOR]

Someone I know has paid to do a week long course on this next week. I was a bit horrified you'd pay to do this as it seems so 10+ yrs ago to me! We'll see I guess!

 

[Mindmaster]

An eBay guru Peter Suns runs weekend courses. You go to his "free" evening seminars where he gives minimal useful info and spends the whole evening promoting his courses and how you'd be stupid not to give him your money.

A lot like property spruikers only more dated and cheaper

Definitely a rip off but could still be worth going.

Someone I know has paid to do a week long course on this next week. I was a bit horrified you'd pay to do this as it seems so 10+ yrs ago to me! We'll see I guess!

 

[INVSTOR]

An eBay guru Peter Suns runs weekend courses. You go to his "free" evening seminars where he gives minimal useful info and spends the whole evening promoting his courses and how you'd be stupid not to give him your money.

A lot like property spruikers only more dated and cheaper

Definitely a rip off but could still be worth going.

I just did a quick search, seems to be quite a few seminars around! I guess when your eBay business stops producing profits it would be a good way to make some money!

 

[Ausprop]

lots of silly ways to get caught too - I tried one product that was a test kit... for some strange reason AQIS has it on its banned list for some bacterial agent in it, so they incinerated my stock before it cleared customs!

 

[Of The Vultures]

Thanks for all the replies It does sound like it's perhaps not as easy as it used to be, and I certainly do not want to be trading on high volume/low margins, too much hassle.

Products must have high perceived value and not simply be cheap junk, too hard to compete in that market.

AITH, I agree, I'm looking at some products in the homewares category but only interested in selling good quality product, there's already a heap of cheap rubbish out there that I have no interest in distributing.

they incinerated my stock before it cleared customs!

Ouch! This is part of the reason I'm not getting into electrical products or anything that could possibly land me in hot water with regards to Aus standards not being met.

Thanks all for the dose of reality, I think I'm going to give it a go but test the waters with a small order first. My brother is a customs broker so that should help a lot with the shipping/clearance side of things.

If anyone has any comments as to what they use to track cost/income, please feel free to share. I'll start off with good old Excel but there must be something more streamlined out there other than full accounting packages?

Thanks all, please feel free to keep the comments coming

 

[Ausprop]

the other big problem is GST, on ebay most traders are not registered and their profit margin is less than the GST on the product, meaning you can only turnover a small volume before you are making a loss. Even some of the larger traders I see, I look at some of their proudcts and honestly wonder h0w they can bothered with the few cents they make off say a $30 deal.... one lost item in the post and it will take another 100 sales to make it up. postal damage is more the problem than completely lost items. Some items I've received photos of and have honestly wondered how they got so damaged - one I recall looked like someone had repeatedly jumped up and down on it.

also ebay buyers are incredibly demanding - tehor standards are above that expected of normal retailers which don't have a feedback system e.g. bigW. if you don't post the next day and provide tracking or the mail is slow or your listing is slightly inaccurate you will cop a lashing and negative feedback

 

[Tony3008]

...Even some of the larger traders I see, I look at some of their proudcts and honestly wonder h0w they can bothered with the few cents they make off say a $30 deal.... one lost item in the post and it will take another 100 sales to make it up. postal damage is more the problem than completely lost items. ...

I just bought a USB adaptor off eBay, $2.77 including postage. Even if they cost the supplier nothing, I'm hard pushed to see how anyone can make money doing this.

 

[depreciator]

I've bought a couple of things off eBay recently and I reckon the sellers probably do well.
The first was three ceiling lights for a flat I did a reno on late last year. The bloke selling them had set himself up in a storage unit in Ultimo. So that was his office and he sat there all day. Most of his sales would have been mailed out, but I walked there from the office and picked my order up. He had half a dozen different sorts of lights that he imported in bulk and sold. But he made the comment that he needs to keep adding to and deleting from the mix as other people see what he's doing and start bringing in the same items and pushing the prices down.
The most recent thing I bought was a flat pack stainless steel bench and a bench/sink combo. Having bought stainless benches years ago when they were made here, I was surprised at how cheap the stuff was. Going by the size options and the service over the phone, the company selling the stuff must have a pretty big operation with a massive storage facility.
Scott

 

[skater]

Skater has an ebay store selling a niche product ... maybe give her a heads up.

Yes, that's right. I've been trying to get sales off of eBay, but that part is hard going.

But it's going to be very hard, today

Ebay and PayPal fees are ridiculous

Competition is high, unless you've got some really niche product such as handmade crafts or something unique

The only way you could make a profit via a ebay store is volume, volume, volume at low margins, but you will have competition from overseas sellers anyway

The fees are manageable, but you do need to make sure you account for them when setting your price. Some sellers have no idea, so do your homework as you don't want to have the same products as someone who's happy to make 5c profit on an item (yes, there's a heap of sellers like that).

Overseas sellers are rife, but a lot of buyers won't purchase from them. Beware of items that have too much competition, as everyone undercuts each other.

Your at the mercy of Ebay

If you don't maintain 98% rating they will close you down. Au post is not reliable at all, items regularly get lost in the post. Ebay shut me down


Ebay it great to test a product, but you are at the mercy of Ebay and I gots shut down

I would rather set up a website and build a business up like that.

If you are honest and reliable, you will be fine. Sometimes the buyers get an unfair advantage & it costs you money. Again, this is a cost of doing Business on eBay. Make sure you are good at your wording, and know the rules. If you tick the wrong tick box for cancellations you will end up with a defect, so tread carefully there.

I didn't have a business on Ebay, but for about a year I did sell. I agree with all of the above advice.

Then when people want postage prices to Denmark, Hong Kong or wherever you have to go to the post office. Then with sending you have to wrap properly and spend nearly every morning at the post office. It would be a hassle with a new baby.

I never had a problem with Ebay. You have to be honest and do the right thing by the buyer, and you will be fine.

Be careful with Alibaba. I had a bad experience with it. And remember that if you are selling some things like lamps, the products that come in from China might not be up to Australian standards.

You don't have to post to overseas locations, unless you want to. All costs can be found online at www.austpost.com.au so it's easy to give a postage quote. For overseas stuff I always calculate it at a higher weight than the item is, as this gives me a 'buffer' should I stuff up in anyway.

Australia Post are reliable. I've only every had one parcel lost, although have had to open plenty of 'missing' cases. They have all been located & delivered except for the one.

As a Business customer, you can get them to collect from you. This is what I do. I only post twice a week. I have this written on all my listings. If I get a numpty that is demanding, I always refer back to the listing. For instance, I might say "As mentioned in the listing, I post on Tuesday & Friday mornings, so your item will leave here on Friday".

Always, always, be polite to your customer. ESPECIALLY WHEN THEY ARE A PAIN IN THE AR$E.