Small Business Success Secrets

When It Comes To eBay, Don’t Follow The Herd
Q: I want to start an online business. Since I don’t know anything about ecommerce and
building websites and such, I’m thinking about starting out selling products on eBay, then
pay someone to build a website for me once the money starts coming in. The big question
is: what is the hot product to sell on eBay to make money fast?
-- Bob D.
A: While it’s true that selling products on eBay can be a quick, low cost way to launch an online
business, following the herd by selling the “hot product” of the moment, is not a great idea. To
the contrary, chances are you will be stomped in the ground by the herd and left lying in the dust
with your unsold inventory in hand.
We talked about starting a profitable eBay business in a previous column and the advice I
dispensed then still applies today.
The most successful eBay sellers are those who understand that success on eBay relies
on many of the same factors as success in a brick and mortar business.
 Smart sellers research the marketplace and the competition to determine the salability
and profitability of the product.
 Smart sellers test the market with one or two before committing to a product line and
tying up their cash reserves in inventory that may never sell.
 Smart sellers adjust their product offerings until they find a product or product line that
sells consistently.
The last point is perhaps the most important. Long term eBay success does not come
from “one off” sales. The key to real eBay success is to find a product that sells well and sell that
product over and over and over again.
I asked Timothy Mina, author of the new book, The Online Auction Expert’s Bible To
Selling on eBay, his thoughts on launching a successful eBay business.
Why is eBay so attractive to entrepreneurs?
“With an eBay business, you set your own hours and set your own goals,” Mina said.
“You can work as much or as little as you want and whenever you want. Many sellers supplement
their income by selling on eBay and many others have turned it into a full time business.”
Mina cites the following reasons for eBay’s growing popularity among entrepreneurs who
want to start an online business:
 You can start up quickly and don’t need special skills.
 There is very little risk and investment required to get started.
 The marketplace is huge. There are millions of potential customers waiting to buy what
you’re selling, 24 hours a day, with the click of a button.
 No stress, no boss. Yes, there is work involved, but the work can be done at your own
pace. You are your own boss and you set your own schedule.
 Most importantly, you can follow your passion and do something you love. If you sell
something you enjoy selling, online auctions aren’t just profitable, they’re fun and
exciting, too.
Why It’s Critical To Find Your Niche
Mina recommends creating your eBay business with niche items. According to Mina, the
benefits of targeting a specific niche market include:
Small Business Success Secrets
Copyright © 2005 Tim W. Knox Page 13 of 103
 If you are going to rely on eBay as your primary source of income, it is essential that you
find your niche. If the goal of your eBay business is to earn enough money in your spare
time to make your car payment every month, it is less important, but still highly
recommended.
 If you find a profitable niche, you will become a certified guru of the items you sell you will
ideally be the only one on eBay offering the products.
 Your expertise will make it ten times as easy to spot bargains when you’re shopping for
products to resell. Bargains might be all around you, but if you don’t know anything about
what you’re selling, you won’t know how to spot bargains that are right in front of you.
 You will find different ways to add personal value to your products. These low cost addons
or unique twists to your products will drastically increase your sales and profits by
making your items unique and desirable.
 You will have little or no competition from other sellers, so you can corner your niche
market.
 By dealing with the same type of customer over a long period of time you will get to
intimately understand the mindset of your target customer and what your customer
wants. This will help you sell your products better and allow you to market your products
in ways others haven’t thought of.
 You will be knowledgeable and enthusiastic about what you sell, and you will be attentive
to your customer’s desires. This results in satisfied customers, name recognition, and a
lot of repeat business.
 You’re going to find something you’re passionate about and specialize in it. If you love
what you’re doing, you have a much greater chance of sticking to it and loving it. So it
won’t even fell like work – it’ll be like you’re getting paid to play.
How do you find your niche?
So how do you find your niche? Mina recommends doing an inventory of your hobbies
and interests to help you identify a niche you would enjoy working in.
Ask yourself:
 What are you passionate about?
 What do you collect?
 What do you like to read about?
 What do you do in your spare time?
 So you have a favorite pastime?
 What was your major in college?
 What jobs have you had?
 Are there any other fields in which you have a great amount of knowledge?
 What clubs do you belong to?
Mina also recommends that you spend time on eBay studying the category listings. This
may give you additional ideas for hobbies you can turn into an eBay business. Once you have
defined your hobbies or interests, brainstorm how you can turn them into a business.
 How can you turn your expertise into a product?
 How can you add value to current products related to your interest?
 What product can you sell that may be one of a kind and have little or no competition?
 Can you think of novel ideas that people who share your passion would love?
 Is there anything related to your hobby that you can create yourself? An ebook or a how
to, perhaps?
For more information on how to create your own ebook product see the column on that
topic also found in this book.
Small Business Success Secrets
Copyright © 2005 Tim W. Knox Page 14 of 103
Dropship Your Way To Ebusiness Success
Q: I would like to start my own eBay business, but I really don’t want to invest in a ton of
inventory until I can get a better handle on what might or might not sell. I read another
column you wrote about dropshipping, but I’m still a little fuzzy on how the whole process
works. Do you think using dropshipping is a good way to start an eBay business and if
so, how do I get started?
-- Candace M.
A: Dropshipping is a topic that I first addressed in my column way back in April, 2003, which is
decades ago in Internet years. But with the continuing growth of eBay and it’s positioning of itself
as a viable way for anyone looking to launch an ebusiness, the topic of dropshipping is now hotter
than ever. It is also now more misunderstood than ever.
Dropshipping has been around since Sears first started selling goods from its mail order
catalogs over a hundred years ago. However, the idea of dropshipping still confuses many
people who don’t understand exactly how the process works.
By definition, dropshipping is a method of selling and distributing goods wherein the
distributor or supplier of the product (the dropshipper) ships the product directly to the end user
(your customer) on the retailer’s behalf (that’s you).
The process of dropshipping involves three parties who take a product from
manufacturing to market. They are a manufacturer, a distributor, and a reseller.
Let’s use a blue widget as a sample product to demonstrate the process:
Blue Widget Manufacturing (manufacturer): This is the company that manufactures blue
widgets. Blue Widget Manufacturing does not sell directly to the public or supply the retailers who
ultimately sell the blue widgets to the end user. They prefer to use distributors to handle the task
of taking their blue widgets to market. Blue Widgets sells blue widgets by the truckload to
distributors who pay $5 per blue widget.
A1 Distributing (distributor/dropshipper): A1 Distributing is the company that purchases blue
widgets in bulk from the manufacturer and supplies them to resellers at a cost of $7 each. The
distributor does not ship blue widgets to the reseller, but ships orders directly to the reseller’s
customers as the widgets are sold.
Big Bob’s eBay Widget Store: Big Bob sells blue widgets to the public from his eBay store. Bob
orders the blue widgets from A1 Distributing as he sells them (usually one at a time) and has A1
ship the blue widget directly to his customer. Bob sells blue widgets to the public for $10 each,
which means that for every blue widget sold he nets $3.
How The Process of Dropshipping Works
Here are the seven steps involved in starting a dropship ebusiness:
STEP 1: Choose A Product To Sell
The very first step in any sales process is deciding what product to sell. There are many
factors that should be considered before deciding on a product to sell, but for now let’s say that
you decide to sell CD players on eBay.
STEP 2: Locate A Supplier Who Will Dropship For You
Using a research tool like Google, Thomas Register, or an industry-specific resource like
The Ultimate eBay Dropship Power Pak (see Resources at that back of this book), you search for
and find a company who will dropship CD players for you. The company offers you a 35% mark
Small Business Success Secrets
Copyright © 2005 Tim W. Knox Page 15 of 103
up over cost, which means that they will supply the CD players to you for $100 each and you
should be able to retail them for $135. You make sure that the dropshipper has a good stock of
CD players on hand so you don’t end up selling a product that must be back-ordered.
STEP 3: Set Up An Account With The Dropshipper
You contact the company that can supply the CD players and set up a reseller account
with them. This can often be done online or by phone, but some companies will require that you
complete and return a reseller application to open an account. Some companies may also
require a tax ID and business license.
STEP 4: Advertise The Product For Sale On eBay
Now that you have your supplier lined up and know that the product is in stock, it’s time to
make a sale. You advertise the product using an eBay auction. Since you know what you must
pay the dropshipper for the product, you know what the minimum amount you will take for the
product. In this case you start your auction at $100 since that is your cost. If you are confident
that you can get more than $100 for the product you can start with a lower price, but remember
that if the product goes for less than what it costs you to fill the order, you will lose money. Also
remember that the dropshipper will charge shipping, so you should figure that into your sale.
STEP 5: The Product Sells
Great news: your CD player sells for $135 and your customer pays you with a PayPal
instant payment. I highly recommend that if you are selling on eBay you use PayPal or some
other online processor to accept instant payments. This allows the customer to pay you faster,
which lets you place the order with the dropshipper faster, which gets the product to your
customer faster.
STEP 6: Place The Order With The Dropshipper
After your customer pays you, you should contact the dropshipper immediately to order
the product on your customer’s behalf. The dropshipper then ships the order to your customer
under your company name and address.
STEP 7: Follow Up After The Sale
This is where many new ebusiness people drop the ball. Just because your customer
has paid you and you’ve placed the order with the dropshipper does not mean that you are out of
the loop. Quite the contrary, if there are problems with the order you are the one that will be held
responsible in the eyes of your customer.
Be proactive in your customer relations. Follow up with your customer to let them know
that the item has been shipped. Offer yourself as the personal contact for any issues that may
arise. This is also a great way to sell that customer more products. Invite them to check out your
eBay store or website if you have one.
Many people are afraid to use dropshipping as a method of sales due to the horror
stories that fill the Internet about unscrupulous dropshippers who take the money and don’t fill the
orders, merchandise that is eternally back ordered, unscrupulous middle men posing as
dropshippers, etc. Make no mistake, the dropshipping industry – like most other industries – does
have its share of shady characters who would rob you blind given the chance, but there are also
hundreds of honest dropshippers who can help you build a profitable eBay dropship business.
Dropshipping is a complex topic that can’t be completely addressed here. For that reason I have
written a detailed report on dropshipping that is available to Entrepreneur.com readers for free.
It’s called SPECIAL REPORT: eBay Dropship Profits and you can download your free copy at
the link below:
 http://www.dropshipwholesale.net/bookpopup.php
Small Business Success Secrets
Copyright © 2005 Tim W. Knox Page 16 of 103
The Secret To Real eBay Success
QUESTION:
I hear so much about people who started selling on eBay and eventually turned it into
their full time business. Is it really possible to build a profitable business just selling junk
on eBay? -- Alex K.
ANSWER:
If Fred Sanford were alive today, Alex, I’m sure he’d be earning his ripple money by selling
quality junk on eBay. While it’s also true that one man’s junk is another man’s treasure (I have a
garage full of treasure to prove this point), your chances of building a profitable business selling
“junk” on eBay (or anywhere else, for that matter) are slim to none.
While there is a lot of junk/treasure for sale on eBay, it is typically sold by individuals who
have “I break for yardsales!” bumper stickers on their cars and not serious business people.
For serious entrepreneurs, however, selling on eBay can be a good way to start a new
business if you are willing to put in the time and energy required to make the business a success.
eBay is also a good option for existing businesses to expand their reach by selling online.
Everyone from small used car dealers to giant companies like Dell Computers have
discovered that eBay is an excellent place to hawk their wares simply due to the huge number of
folks who visit the eBay site on a daily basis. Nowhere else on earth will you find such a large
pool of potential customers.
Consider these numbers:
 There are nearly 69 million eBay users who spend $59 million every day.
 Most eBay sellers are home-based businesses that sell everything from porcelain dolls to
locks of Elvis’ hair to $100,000 Mercedes convertibles to $5 million dollar vacation
homes.
 Every minute of every day more than 150 new items are listed for sale, more than 500
bids are placed, and seven new people register to shop on eBay.
 At any given moment, eBay is conducting some 12 million auctions, divided into about
18,000 different categories
 About two million new items are offered for sale every day, and 62 million registered
users scour the site to find them.
 One company is grossing more than $5 million dollars a year selling brand new pool
tables on eBay. Their eBay store is so profitable that they have closed their retail
location and now sell solely online.
That’s right, $5 million dollars from the sale of pool tables: proof that you can sell just about
anything on eBay if you know how to do it.
Small Business Success Secrets
Copyright © 2005 Tim W. Knox Page 17 of 103
Be aware, however, that eBay is no magic bullet. As any eBay Power Seller (a seller who
sells a minimum of $10,000 in goods per month) will tell you, building a profitable eBay business
takes hard work and requires long hours, and often the financial rewards do not make it worth the
effort spent.
When it comes down to the mechanics of it all, running an eBay business is no different than
running a brick and mortar business. You still have the same considerations regarding product
selection, inventory purchasing, product pricing, inventory management, order processing,
fulfillment, customer service, etc.
You must also consider the legal and accounting aspects of the business. Just because
you’re selling online does not mean that Uncle Sam won’t expect his piece of the pie. Revenue
generated by an eBay business is just as reportable and taxable as revenue generated from a
brick and mortar store. And if you sell to customers within your state you may also be
responsible for collecting city, county or state sales tax.
One of the biggest obstacles to building a successful eBay business may be the stiffness of
the competition. Many sellers sell identical items and the price wars often get ugly, but that’s to
be expected in a free market place, which is exactly what eBay is.
You may be the only store in town that’s selling that one of a kind, custom made just for you,
broke the mold after they made it, Dale Earnhart Memorial Bobble Head Action Figure (Earnhart
fans would string me up if I called it a Doll), but do a quick search on eBay and you’ll probably
find a hundred others just like it.
So, can you build a profitable business selling on eBay? Certainly, thousands of people have
done it and so can you. Here are a few tips to help get you started.
Sell Quality Products
Don’t sell junk! Leave the knick-knacks and fake leather jackets to the less informed. You
should offer only quality products at a fair price.
Research The Competition
Once you have your product in mind, don’t invest a dime on inventory until you have spent
some time on eBay to see what the competition is doing. If you want to sell motorcycle helmets,
for example, you should look at current auctions to see how many others are selling similar
helmets and what prices they are charging. This step is vital since you may discover that you
can’t compete with current sellers on price or there is simply no market for what you have to offer.
Start Slowly
Many people believe that the more items they have for sale on eBay the better. They will
invest thousands in inventory and spent hundreds on listing fees (yes, eBay charges you to list
items for sale and collects a final fee if the item sells). Those are the folks that usually end up
with ten thousand Ginsu knives forever in their garage.
Test, Test, Test
A fair portion of eBay auctions result in no sales, so it’s best to test the waters before jumping
in with both feet.
List a few items and see how they sell. If an item doesn’t sell, list it at least twice more.
Some items might not sell the first time, but may the second or third, then sell steadily from then
on. If an item gets no bids the first time, consider adjusting your price or your terms. If an item
sells well, keep it in stock and then experiment with another item.
Small Business Success Secrets
Copyright © 2005 Tim W. Knox Page 18 of 103
Do Your Homework
eBay is too broad a subject to be covered fully here, but there are a multitude of books
available that can help you start an eBay business.
In fact, I bet you’ll find most of them for sale at this very moment at eBay.
What’s my bid…
“