Wednesday, December 13, 2006

Attempting to get rich on eBay

My husband sold stuff on eBay until just recently, and before that he sold used books on amazon. And I was never sure we were actually making any money. I can see he made money on individual items, but I'm not sure we made money over all. He does the taxes, and there's usually profit of a few thousand dollars, but I just have to believe that he's put in the right numbers. Sometime, I don't think he did.

One year he did the taxes, and he came up with a profit of only five hundred dollars or so, when it had been like five thousand the year before. So I said he should stop if he did all that work and invested all that money for a five hundred dollar profit. So he went back and looked at the thing again, decided he hadn't filled out the forms right, and came back with a three thousand dollar profit. Sometimes I think he lied to me and paid taxes on a profit he didn't make rather than admit it wasn't going to work out and give up the business. And even if he didn't do that deliberately, I still think that he didn't count every little thing and that he'didn't really make all that money like he thought he did. I don't think he has any way of figuring in the gas, and I don't think he has figured out how much time it takes him to do all that or if the profit is enough compensation for that amount of work.

Some people have suggested that I sell scarves on eBay. It's not really a good idea if I'm trying to make money. I'd need to charge too much money for the ones I'm doing now. I need more than two skeins of yarn at 2.29 each, so to be on the safe side I get four. I could do two scarves with six skeins of yarn, so let's say that it takes six dollars of yarn for one scarf. It takes about two hours for me to knit a stripe, and there's fifteen stripes, and then I have to do the fringe. So for more than thirty hours work I'd want like three hundred dollars per scarf. Obviously, I wouldn't get that much for them. I donated one to an auction with a couple of dollars worth of candy and some nice wrapping stuff, and the winning bid was $43. So, that would work out to about a dollar an hour. I'm going to eventually try a machine scarf, but I haven't done it yet so I don't know if that will work out either.

But, let's say that I could come up with something that took me an hour or so to make, and that with the cost of supplies and everything I made a few things that I sold to friends for twenty dollars and thought that was adequate compensation. If I start trying to sell the same item on eBay for the same $20, I'm not going to have the same profit margin, if I make a profit at all. Now, if I've spent about six dollars in supplies and sold the thing for $20, I'd have $14 left. But now if I put the thing on eBay, I have to pay all sorts of fees. Now there are different fees depending on what you want to do, but my husband usually spent about a dollar to list each item. There are fees depending on how many pictures you have of the item and other things that you do to make your listing look nice. There are different fees depending on how much the starting bid is. If you have a low starting bid, you have a lower fee for that, but then someone might actually have a winning bid that is lower than what you wanted to sell the item for. There's a reserve bid thing, but I don't really know how that works and there's probably a fee for that too. So you'd probably start off with an opening bid of $20 (or $19.99 is probably going to save you some money on the fee). Maybe there's another fee depending on the winning bid, but I don't remember. So now maybe the week has gone by and you didn't get any bids, so you lost your dollar or so in fees. Or maybe you got one bid, but the buyer changed his mind, and you're still out the fees. Or maybe you sold the thing for $19.99, and the buyer pays, and you are happy. Or maybe the thing sold for more than the opening bid, and then you are really happy.

But let's say that it sold for $20 and you spent $6 on supplies and $1 on fees. Now you have to ship the thing. You should have already figured out how much that was going to be and had a way to add that to the bill. If, for some reason, you added a shipping amount that was too low, you are stuck with it anyway. You can explain to the buyer that you need more money, but he's really not obligated to send it to you. If you agreed to sell for $20 plus $5 shipping and the postage is $7, then you're out the extra $2. There are probably some exceptions, like if you only listed domestic postage and the buyer lives somewhere else, but probably you'll just mutually agree to cancel the sale rather than pay international shipping, and again you are out $1 in eBay fees for an item that did not sell.

There is also such a thing as an eBay store, but I do not know what is involved with that or what kind of fees that would require. But if you have a store you don't necessarily have to have things that people bid on and the items can be for sell for as long as you want rather than be on auction for a week.

Then there are the other costs of shipping not included in the actual postage, and if you didn't raise the shipping fee yourself to include that, again, you're not going to get paid for it. For instance, you need a box to send the thing in. If you deal exclusively in priority mail, that comes with a free box, but it may not come in a size that you like. Also, there are a couple of priority boxes that have a set price for the box, and you need to be aware of those. So you might have to spend some money on a box if maybe your item is really big or an odd shape. But other than that, you can get a couple of different size boxes and ship the items in those, but you will still have to buy packing tape and perhaps buy plastic bags or bubble wrap or tissue paper, and those you will have to provide yourself. Then, there is the time and gas money that you spent going to get the packing tape and bubble wrap and such, and the time you spent actually packing the item.

There is also the time spent at the post office. We always went to the post office, but you can make arrangements to have packages picked up. We would have needed to buy special equipment to do that, so we never tried it that way. If you are only selling a few specific items, and you know exactly how much each thing weighs after it has been packaged, that shouldn't be as much of a problem. You could make a trip to the post office once a year or so to make sure what the postage is for one of item A to be sent to different regions, and then what is the postage for two of item A, and what is the postage for one of item A and one of item B, etc....And then you'd only have to make special trips to the post office when there's a change in postage rates or an unusual order or when you've agreed to international shipping.

Now, assuming that you already have a computer and a printer, you are going to have more wear and tear on the machines, and need extra paper and ink to print labels and receipts and such.

Now, I have no idea how much all of that would really add to the cost of the item, but let's say you now want $25 for the item that you used to sell for $20. So now maybe it doesn't seem like such a good deal to the buyers, and they stop buying. And now maybe you are stuck with a lot of packing tape and such that you'll never use and you're out some fees before you gave up on the idea. I think you have to decide ahead of time what is a reasonable amount of money and time to risk and then be willing to just throw that away if it doesn't work out. If you don't decide that first, you'll always be trying to do it a little bit longer and maybe it would still work out but maybe not. You'd just never know when to quit if you didn't decide that sort of thing a head of time.

There is also the eBay rating system to deal with. Everyone who buys something from you is supposed to rate you as positive, neutral, or negative, and you are supposed to do the same for all of your buyers. You would think that neutral would be okay, but somehow when the numbers are added up, neutral is bad, and negative is doubly bad. If you do not get straight positive feedback, your rating will not be good, and without a good rating the smart customers will not buy from you. And there are a lot of people out there that will buy once or twice but don't use eBay enough to know this, and you could get a bad rating through no fault of your own.

But, all of that being said, if I could make something in an hour with $6 of materials that I think I could get $20 to $25 for on eBay, I'm probably still going to try it. But I won't waste too much time trying to make it work, and I have the added benefit of already having someone who knows all this stuff and could initially do some of the work for me.

I don't know if any of that helped, especially since I wasn't the one actually doing all of this stuff and I don't specially know what any of the fees are. But a friend asked about it, and I thought I should post it here as well just in case it could help someone else.

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