I Think There's Something Wrong With My Business Model

I was out shopping today for one of my special projects when I came upon this pair of beauties at a Barney's outlet near my house -picture courtesy of Net-a-porter.  There are Christian Louboutin Gres Mule 70 sandals in gold.  They were $266 including tax.  I considered buying them to post on eBay for a minute, since they were a pretty popular style in the Spring/Summer line and I was fairly confident I could sell them.  If I had decided to buy them I would have listed them on eBay at first as an auction for a starting bid of  $319, which would have enable me to roughly break even, if not make a couple of bucks.  If I had sold them to client, depending on their budget, I would have sold them for about $315, for a $50 profit.

I decided not to get them because I'm trying to be careful with our cashflow, I have about six projects I'm slowly working through right now, and while I knew I would get paid for them I didn't know WHEN.  However, when I get home I decided to do a little research on them I found out that had I listed them on eBay for the price I mentioned they would have BY FAR been the cheapest pair in this style and color.  Other sellers have them for $499.  Net-a-porter is selling them for over $700.

This isn't the first time this has happened, although it kind of makes me wonder.  Am I SO GOOD at this that I manage to find these items for a much better price than everyone else, OR are other sellers pocketing $150 to $200 per item while I drive 100 miles every weekend and spend HOURS on my computer for a measely $50?

One way or another I have to look into this because I'm clearly under pricing my items, and potentially missing out on a much bigger profit opportunity by doing so.

5 Reasons Why I Don't Quit My Job and Become a Full Time Shopper

1) Stress.  In general, I stress about two things related to running my business.  The first is getting negative feedback and the second is being unable to sell things and winding up more in debt than I started.

2) Money.  At a whopping profit of - MAX - $500 a month (before taxes, and that's if I'm doing the numbers right), my family would starve to death.  It would help if eBay didn't charge such astronomical fees - or if Bonanzle traffic picked up a bit - but that's still only a small faction of what I make doing my full time job.

3) Energy.  I took the day off Thurs and Friday, and yesterday was a public holiday in the U.S., so I had 5 full days of tracking down ridiculously expensive crap for cheap, and as fun as that is, it's exhausting!!

4) Location.  I mentioned in a previous post that I'm here on a work visa.  It's a company-sponsored work visa.  And no, despite the fact that I've been here for a gagillion years and I'm probably as American as they come, I can't get a Green Card.  If I quit my full time job I'd have to pack up my stuff and move to Europe (where I can get hot shoes for cheap, but where supermarkets don't open on Sunday, so no thanks!) or Nicaragua (where I'd throw myself in front of the first oncoming ox-drawn cart I laid my eyes on).

5) Money.  Did I mention money?  My margin on the things I sell is not very high.  Typically I try to make between $15 and $50 on shoes and $10 to $20 on clothes, depending on how good a deal I got and how good a deal I can give the customer.  I don't like selling things that don't allow me to offer at least a 50% discount on retail, so that limits the margin or fee I can keep for myself.

As you can probably tell, after five days of shopping, hanging out online and spending a ton of time with my son, this list is my way of convincing myself becoming a full time retailer is a BAD idea.  I like my full time job, I really do, but I love the independance my side business provides.

Alright folks.  Back to work before my boss catches me blogging on the job.  Hope you all had as nice a weekend as I did!

Evaluating My Progress - 56 Stars Later

It's been a while since I sat down and re-evaluated my progress. When I first started this blog I had a measely 25 stars under my belt, and while I still only have a measely 81 positives, a lot has happened since you and I first met.

Remember my eBay accounting post, where I talked about conversion rates, margins and profit per item?  I was selling $10 items for $8 in profit back then.  My first big profit item was that skirt you see on the right - I made $18!  There was no "secret supplier," no CAMERA, no Facebook page, no Bonanzle and dirty carpeting gallore.  And after all this, where have I landed?  Well, I'm making more revenue, that's true, but what about profits?  And margins?  And conversion rates?

Back of the envelope, I would say my conversion rate has dropped to about 50%.  Half my items sell, but the other half doesn't.  Not surprising, considering not everyone can plunk down $200 on a pair of shoes.  However, my profit per item has increased from $9 to roughly $35, and I'm now selling an average of 15 items per month.  What's interesting though is that I've also started to develop a side business of finding things for people OFF eBay, which combines the two things I enjoy most about this venture - customer service and SHOPPING.

I'm currently working on three projects, with varying degrees of difficulty.  They all involve locating specific types of ladies shoes to sell to friends old and new.  And while I'm never going to become a millionaire in this line of business because I don't yet have the resources to find things cheap enough to add a good mark-up and still offer the people I'm helping a good deal, I can't begin to tell you how satisfying this is for me!  I LOVE the challenge of tracking down exactly that thing that will make my customer happy.  I looooove figuring out how I'm going to do it, where I'm going to find it, what strategy I'm going to use.  It's almost like a riddle, and I've always been obsessed with riddles.

Am I making a ton of money?  Not yet.  Do I have my ups and downs?  Yup.  Do I sometimes feel like this is a wasted effort?  You bet.  And then I make that sale, or find that thing, or get good feedback, or get a new blog visitor, and it makes my day.

Some bloggers celebrate their 100th post.  My 100th post came and went, business as usual, but given how far we've come, I'm thinking we've got to set something up to celebrate my 100th feedback whenever that happens.  After all, who else would I celebrate that milestone with if you not you, who have stuck it out with me since my $9 item days?

Thanks guys. Thanks for your support.

My eBay Business Plan Phase I: Selling Personal Items

I realized this morning that last night I dove into the details of my eBay exploits (or lack thereof) so quickly that I neglected to tell you about my master plan. So, I thought I would dedicate this post to describing how I plan to grow my eBay empire from a source of occasional pocket change into a good complement to my existing income.

First things first, though. Here are my stats.

Success in business is often grounded in your ability to set short and long term goals for yourself, and the same goes for eBay. However, I need to figure out how I'm currently doing so I can set a realistic short term goal for myself. Let's get started.

Income Statement

As of now, my eBay sales grand total is close to $143. I have sold 16 items since January 31st, which means my average selling price per item is just under $9.

Gross Revenue: $142.90

Average Sale Price: $8.90

From that $143, I have also paid $16 in sales fees to eBay and $10.70 to Paypal. Now, assuming I've broken even on shipping (which I haven't, but let's assume for simplicity's sake), that would make my total profit $116.20.

Operating Cost: $26.70

Operating Profit: $116.20

Operating Margin: 81%

Profit per Item: $7.26

So, in the last 45 days I have sold 16 items for an average of $9 per item and made a profit of 81% on each one of those. The other thing I need to tell you is that not every item I list sells. In addition to the 16 items I sold, I have listed 6 other items that did NOT sell, meaning that my conversion rate on listings right now is 72%.

That means that ceteris paribus (hee hee - paribus), if I list roughly sixteen items in a month, I will make $77 that month.

Goals

Given what I've learned and the stats we've just gone through, my goal before I move on to Phase II of my eBay Business Plan (eBay arbitrage) is to increase my eBay profit from $77 per month to $250 per month within the next 4 months.

How am I going to do that you ask? Stay tuned! Now that we have this hygiene out of the way, I promise my entries will get more interesting. Our next installment: Unsold items - the root causes of listing failure.