1004 Commercial Avenue Anacortes, WA 98221 auctions@isomedia.com

VISION-ONE PRESS

www.SkipMcGrath.com

Making Money with an Online Consignment Business

An eBay Consignment Business Operations Manual

ISBN: 0-­9706172-­1-­10

“Make money selling other people’s stuff on Craigslist, Amazon,

and the new eBay”

Making Money with an

Online Consignment Business

Make money selling other people’s stuff on Craigslist, Amazon and the new eBay

Skip McGrath

Second Edition Edition, January 2018

Published in The United States of America: ISBN number 0-­9706172-­0-­7

Copy/Print Shop Notice You are hereby authorized to print one copy of this book for the personal use of the reader. Skip McGrath, sales@skipmcgrath.com

eBay is a registered trademark of the eBay Corporation. EBay does not endorse, nor participate in the content, marketing or distribution of this manual. Published and copyrighted in the United States, 2009-­2018 by Vision-­One Press, a subsidiary of McGrath, Inc., 1004 Commercial Ave., PMB 223, Anacortes, WA 98221. All rights reserved under international copyright conventions. No part of this book (except hypertext html links and html examples) may be reproduced or utilized in any form, or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system without permission in writing from the publisher.

About The Author Skip McGrath has been an eBay power Seller since 1999. He, and his wife Karen, started selling antiques and collectibles from their antique shop in the early days of eBay. After gaining experience from hundreds of successful auctions, Skip wrote his first book in 2000: The eBay Power Seller’s Manual that later became the basis for The Complete eBay Marketing System

Skip has written other titles including:

The Wholesale Buying System

The Complete eBay Marketing System

The Complete Amazon Marketing System

How to Make Money with The Amazon Affiliate Program

Ten eBay Niche Businesses Anyone Can Start

How To Make Good Money Selling Used Books on eBay, Amazon and The Internet

The Virtual Peddler

Available in Bookstores:

Titanium eBay

Three Weeks to eBay Profits

In early 2000 Skip also launched, The Online Seller’s Resource and began publishing The eBay and Amazon Seller’s News, a twice-­monthly newsletter for professional eBay and Amazon sellers.

Prior to working on eBay and Amazon, Skip had a 25-­year career working in International corporate marketing and sales and has owned a variety of both wholesale and retail businesses including a small publishing company and a top-­line antique shop.

Skip, and his wife Karen, live on an island in the Pacific Northwest near the Canadian border where they work together on their eBay and Amazon business. They have two sons, one in the US Navy and the other working as a Captain on a seagoing tugboat in the Pacific Ocean, and a furry dog named Kipling.

Table of Contents Introduction ................................................................................................................... 18

1. Why Start an Online Consignment Business? ..................................................... 22

Are There Successful Consignment Businesses Operating Now? ............................. 22

How Big Can a Consignment Business Grow? .......................................................... 23

2. Getting Started ......................................................................................................... 24

Setting Up Your Business ........................................................................................... 24

Naming Your Business ............................................................................................... 25

Business Types .......................................................................................................... 26

Business Licenses ...................................................................................................... 26

Business Telephone ................................................................................................... 29

Letterhead & Business Cards ..................................................................................... 29

Computer & Software Resources ............................................................................... 29

Insurance .................................................................................................................... 30

Reference Material ..................................................................................................... 31

Taxes .......................................................................................................................... 32

Legal Issues ................................................................................................................ 32

Getting Help ................................................................................................................ 33

3. How Much Should I Charge? .................................................................................. 34

Commission Schedule ................................................................................................ 35

4. How To Find Consignment Customers ................................................................. 39

Advertising .................................................................................................................. 40

Cold Calling ................................................................................................................ 43

Charities ...................................................................................................................... 44

Estate Sales & Garage Sales ..................................................................................... 44

Speaking To Groups ................................................................................................... 44

5. What Sells on eBay? ............................................................................................... 46

Should I Specialize? ................................................................................................... 48

6. Selling Retail Store Closeouts ............................................................................... 50

What Type of Retailers Should I Approach? ............................................................... 50

What Sort of Fee Should I Charge Retailers? ............................................................ 52

7. Raising Money for Non-­Profit Organizations ........................................................ 53

8. Conducting Estate Auctions .................................................................................. 56

Unofficial Estate Sales ................................................................................................ 56

Official Estate Sales .................................................................................................... 57

9. Conducting Bankruptcy Sales ............................................................................... 60

Police & Sheriff’s Auctions .......................................................................................... 61

Distressed Companies and Corporate Downsizing .................................................... 61

10. Corporate Consignment Sales ............................................................................. 62

11. Setting Up For Mass Production .......................................................................... 64

Selling Price ................................................................................................................ 65

Increase the Number of Auctions and/or Decrease the Time to Launch an Auction .. 66

Charge Higher Fees ................................................................................................... 68

Lower Your Costs ....................................................................................................... 68

12. Automation Software, Systems and Services .................................................... 71

Auction Software ......................................................................................................... 72

Auction Management Services ................................................................................... 74

13. Auction Photography & the Photo Studio ........................................................... 77

Taking Good Photos ................................................................................................... 77

Image Management .................................................................................................... 81

14. Setting Up A Consignment Storefront ................................................................. 82

Advantages of a Storefront ......................................................................................... 82

Disadvantages of a Storefront .................................................................................... 83

What Kind of Store Should I Open? ............................................................................ 84

Store Layout ............................................................................................................... 84

How Much Space Will I Need For All of This? ............................................................ 85

Leasing Issues ............................................................................................................ 85

Website ....................................................................................................................... 88

15. Fees & Costs .......................................................................................................... 89

Costs of Doing Business ............................................................................................. 89

Cost Control ................................................................................................................ 90

16. Organization & Record Keeping .......................................................................... 92

17. Writing Your Business Plan ................................................................................. 94

What Business Am I In? ............................................................................................. 94

What is My Market and Marketing Plan? .................................................................... 94

What Resources Will I Need? ..................................................................................... 94

How Much Will I Need to Invest in My Business? ....................................................... 95

What Is My Growth Plan? ........................................................................................... 95

18. Other Consignment Venues and Methods .......................................................... 98

eBay Stores ................................................................................................................ 98

eBay Fixed Price Listing ............................................................................................. 99

Product Website ....................................................................................................... 100

Online Classified Sites .............................................................................................. 100

Craigslist or eBay? .................................................................................................... 104

19. Cost Control -­ Reducing Your eBay Fees ......................................................... 106

eBay Insertion Fee: ................................................................................................... 106

Final Value (selling fees): ......................................................................................... 107

Optional Feature Fees: ............................................................................................. 107

20. Listing and Selling Strategies ............................................................................ 110

Reserve Price Auctions (RPAs) ................................................................................ 110

Strategic Decisions ................................................................................................... 112

21. Research: The Key To Profits ............................................................................ 113

Ask the Seller ............................................................................................................ 113

Searching Online ...................................................................................................... 113

eBay Search Engine ................................................................................................. 114

Searching More Effectively ....................................................................................... 114

Offline Research Tools ............................................................................................. 116

22. Auction Calendar: Best Time to Launch Auctions ........................................... 117

23. Writing Auction Titles ......................................................................................... 119

24. Writing Winning Auction Descriptions .............................................................. 123

Key Words ................................................................................................................ 125

25. The eBay Trading Assistant (TA) Program ............... Error! Bookmark not defined.

Requirements to Become a Trading Assistant: ............ Error! Bookmark not defined.

26. Customer Service ................................................................................................ 126

Consignor Service .................................................................................................... 126

eBay Bidders ............................................................................................................ 128

27. Summing Up ........................................................................................................ 130

Introduction I know you are anxious to get started, but please read this introduction as it contains some really important information.

I originally published How to Start & Run an eBay Consignment Business in 2004. A year later, I was approached by the McGraw-­Hill publishing company to update the book and make it available in bookstores and on Amazon.com. That book sold over 60,000 copies. It is now out of print, but there are still some copies floating around. This new book, The eBay Consignment Business Manual (& later editions) includes everything from the first two versions, fully updated and revised so you only see the most current and up-­to-­date information and techniques (whereas those old books have lots of now-­incorrect data).

I wrote the first book one year after eBay started the Trading Assistant Program, where eBay consignment sellers could list their contact information and solicit consignors right on the eBay site.

Trading Assistants (TAs) were provided with promotional materials and logos they could use to promote their business. Eventually over 65,000 people signed up to become a TA. But the reality was that very few of these people ever made any money as a consignment seller. Then last year, eBay ended the Trading Assistant Program. However, this does not affect consignment sellers. The only difference is you can no longer use the eBay Trading Assistant logos to promote your business. But consignment selling is alive and well on eBay even today.

Consignment sellers don’t fail because it can’t be done—mostly because they didn’t try. People thought you could just become a TA and the world would beat a path to your door. Unfortunately, markets don’t work that way. Consignment selling is like anything else in life—if you want to succeed, you have to work at it.

I am not as active in consignment selling as I used to be, but we still do it occasionally in addition to our regular eBay (and Amazon) business. When I was doing consignment selling on a regular basis we made a lot of money at it because we put the work in.

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The other thing that happened in back in 2004–2006 was a proliferation of franchise opportunities. When we attended eBay Live in 2005, there were five different companies offering eBay Drop Off store franchises. By 2007 there was only one company left www.iSoldit.com (and they are out of business now). What happened? Stated simply the business model didn’t work. Paying $50,000 for a franchise and opening a store in an expensive high-­traffic retail location simply cost too much money given the operating costs and sales potential. But, while these expensive franchises were failing, hundreds of small operators were opening and running successful eBay drop off stores. They were doing it differently—with a combination of low-­overhead operations and aggressive outreach marketing. This is still happening today.

So now, looking back over the history of eBay consignment selling, we now know what the successful business models look like, what works and what doesn’t. eBay has changed dramatically over the past few years too. It used to be a pretty open marketplace with an “anything goes” attitude. Today, eBay is far more structured and has more policies to police sellers and protect buyers.

The other major event was the growth of Amazon, Craigslist and other online selling platforms where people could buy and sell from each other online.

So rather than publish a straight update to my old book I decided to look at the consignment business model in a whole new way and make it relate to the other online selling opportunities and the new eBay

This is not a beginner’s manual. This book was written for people who already have some basic experience selling on eBay and/or Amazon. If you are new to online selling, I suggest you gain some basic experience selling online before trying to start a consignment business. Although we are going to cover other online sites like Craigslist and Amazon, I strongly suggest you start with eBay. Once you master eBay, the others are pretty easy.

When you are ready, the best book for learning to sell on Amazon is my training course, The Complete Amazon Marketing System. If you are already familiar with eBay, or have purchased The Complete eBay Marketing System, I have a cheaper alternative – eBay to Amazon. If you decide you want to also sell on Amazon, I strongly suggest you get one of those books. However, we will be covering mostly eBay and Craigslist in this book. Craigslist is very easy to learn.

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If you don’t yet have any experience selling on eBay, I suggest you purchase our flagship training manual, The Complete eBay Marketing System. Because you purchased this book, you can save $20 off of the cost of any of the books mentioned if you use this coupon to purchase:

CEMS20HSED2

As this edition was going through its final edit, the US was finally emerging from the worst recession in over 50 years. Over 10 million people have lost their jobs and another 6 million have given up looking for work. Those numbers are getting better since the new Tax Bill passed –but the number of people out of work is still very, very high. This unfortunate situation has actually given new life to the online consignment business as people look to raise cash selling the treasures they bought when times were good. If you are one of those who have lost their job, online consignment selling can provide you a way to replace your income until the economy improves—or you might become so successful (as others have done) that when the economy turns around you may decide to stick with eBay as we did.

Some of you may be intimidated by the material. I know this book is a bit longer than the typical eBook, but just take it one step at a time. There is nothing in this book that cannot be mastered by anyone with basic business sense and basic computer skills. Yes, there is a lot to learn but taking the time to learn how to do it correctly will put real money in your pocket.

I am not set up to offer full consulting, but we are happy to offer occasional (stress is on the word occasional), advice or answer a question or two. Please email us at auctions@isomedia.com. We are not that good at arcane technical questions. Our forte is marketing and sales techniques and strategies. So if your questions fit into these areas, we may be able to help.

Some of you may wish to print this book out. It is a PDF file so it should print out on any computer printer. But if you want to take it to a print/copy shop, you will need to show them this notice that gives them permission to reprint copyrighted material:

Copy/Print Shop Notice You are hereby authorized to print one copy of this book for the personal use of

the reader. Skip McGrath, sales@skipmcgrath.com

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We are also pleased to hear any suggestions you may have or any ideas we could incorporate into the book to improve its usefulness to our customers.

Good luck on eBay!

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Chapter 1

Why Start an Online Consignment Business? When I told my friends I was going to write this book, everyone said: “Why would someone pay you to sell their goods on eBay, if they could do it themselves?” Good question. Well it turns out there are a lot of reasons.

For every successful eBay seller, there are a lot of people who can’t figure out how to sell effectively or profitably on eBay. Also, believe it or not, there are still a lot of people who either, do not believe eBay really works, are afraid to try it, and/or, are computer illiterate. There are also plenty of people in this world who just don’t have the time.

On the buying side, there are always people looking for a bargain—often for used and vintage products including antiques, jewelry and collectibles (even small accessories and items of furniture).

Sites like eBay, Craigslist and lately Amazon have been attracting these buyers for years and continue to do so.

Are There Successful Consignment Businesses Operating Now? There are thousands of eBay sellers running consignment businesses—and they are selling on more places than just eBay. They range from small sellers working out of their homes, to full-­time businesses operating out of a retail storefront.

A few weeks before working on the update to this edition, I was contacted by a local gentleman who was selling a vintage Holiday House Travel Trailer. I went to his home, took some photos and interviewed him on the history of the trailer (1-­hour). Then I created a listing on eBay Motors and launched a ten-­day auction. (That took about 45 minutes, as there was a lot of info to write about).

Ten days later, the listing closed at a price of $7,100. I met the buyer at the seller’s home where he inspected the trailer, paid me and took possession. (That took about another 1-­hour). I deducted my commission of 15% ($1,065) and went home. I paid the eBay fees of $39.50, so my profit for 2 hrs. 45 minutes’ work was $1025.50 –or about $375 per hour. That is why I like consignment selling.

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There is a lady in my hometown who used to own a consignment shop. She sold good quality antiques and collectibles on consignment and had a very nice business for several years. Three years ago she tried putting a few of the items in her shop on eBay. After some trial and error, she began doing very well.

Last year, she closed her store and now sells on eBay (and Amazon) full time. She finds goods to sell by placing ads in the local paper, from her previous customers who know her, by putting notices on free community bulletin boards and by word of mouth. Her business is now far more profitable, because she no longer has overhead and an employee and she works far fewer hours.

As you will see in this book, you do need some money (less than $100). This is a business you can start with very little capital and there are very low barriers to entry.

How Big Can a Consignment Business Grow? That really depends on you, what your resources are, and how much time and money you can invest. I firmly believe that anyone who is well skilled at selling online can develop a small business that can realize a gross margin of $1,000 to $3,000 a week. This would require you to launch an average of 20-­50 auctions per week. Many power sellers today routinely launch over 100 auctions a week, so this is not an unrealistic number. Later we will talk about automating some of the common tasks that will allow you to do this.

Many people bought this book because they just want to earn some extra money, while others need to replace their income. Rest assured that both models work.

According to Business Week Magazine, the consignment business is already a $9 billon business in the US. Many of these are stores that also sell on eBay. There are still over 1000 eBay consignment storefronts in the United States and there are thousands of consignment sellers working out of their homes.

You may think the business is already crowded but it’s not. I live in a very small town and there are three other consignment sellers within a 25-­mile radius, yet I get calls all the time from people with things to sell.

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Chapter 2

Getting Started We are going to show you how to sell on other places besides eBay, but I suggest you start with eBay as it is the quickest way to get started and will cost you the least in the long run.

So, first of all you will need experience selling on eBay. If you don’t have any experience, then you should start by selling things around the house or from your garage or attic.

When you go through those, you can sell things for neighbors and friends or even purchase things from garage sales or your local thrift shop. If you think this doesn’t work—think again. There are actually large power sellers who make very good money doing nothing but this.

That said—let us assume that you have the required experience selling on eBay. What is enough experience? I would say you should have listed and sold at least 50 auctions, have a positive feedback rating of at least 25 and a feedback score of at least 99%.

I am not saying you can’t be successful with less experience than this—just that your chance of success will increase, and more importantly you will have some experience to point to when you speak with prospective consignors. The other reason to get this experience is basic fairness. It is not really fair to a consignor (the person who gives you goods to sell) to represent yourself as an expert when you are not. If you screw up, you could sell their goods at far below its value. This is not only unfair;; it could also earn you a bad reputation in the community.

Another requirement is an open personality. You have to like people and enjoy being around them. There are thousands of successful sellers who could not be successful in a consignment business because they don’t have the people skills to succeed. If you are excessively shy and find it difficult to speak with strangers, this may not be the business for you. You won’t need a lot of sales skills, just a friendly personality and be willing to talk with folks. Most importantly you should appear trustworthy.

Setting Up Your Business You will need to look and act like a business if you want prospective consignors to take you seriously. As you will see later in this book, you will not only be dealing with little old ladies that want to sell their collection of ceramic roosters, but you will potentially also be dealing with retail store owners, estate agents, estate and bankruptcy attorneys, and

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other business people. Now that doesn’t mean you have to look or act like a big corporation, but you should be presentable when you contact business owners.

The first step is to name your business, get a business address, phone number, letterhead, business cards, and a business license.

Naming Your Business Be careful naming your business. If you are in one line of business only, then a specific name is good because it gives you credibility as a specialist. Some examples might be: Steve’s Collectibles, Westwood Jewelry Sales, Nautical Antiques & Collectibles, etc.

If you will be selling various types of products, you may wish to use a more general business name. Some examples might be Sell-­It-­Now, Online Consignments, Northwest Marketing, or any general name like that. You can also name the business after your town or your own name. Some examples might be Springfield Consignments or Marcus Wright Online Sales.

If you specifically want to promote your consignment business, you should pick a name such as Consignments Online, or Auction Consignment Service. Note: You cannot use the word “eBay” in your business name, but you can say that you sell on eBay on your letterhead or business card in a sub-­head under the business name.

Here is an example:

Consignments Online The eBay consignment specialists

You can also use the word “eBay” on your business cards and flyers. If you are a registered eBay Trading Assistant, then you can use the eBay logo in your material as well.

Online Auction Specialists, Inc. Earn Top Dollar Selling Your Valuable Goods on eBay 703-­555-­1111

Be careful using the words Inc., Incorporated, Partners, Limited (Ltd.), LLC, as these all have specific legal meaning. It is illegal to call yourself a corporation, if you are not actually incorporated.

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Business Types The most common way to start a business is “Sole Proprietorship.” Even if you are married and jointly own the business, it can still be a Sole Proprietorship.

Another approach is to actually incorporate, which can be done very inexpensively in most states. There are several web sites where you can incorporate for as little as $100.00. I use a company called My Corporation. I have formed two separate corporations (LLCs) with them and they give very good service and their documents are excellent. (Note: I used to recommend Legal Zoom, but as they grew they started having lots of service issues. I had several emails from readers who had a bad experience.)

Once incorporated, you can register an unlimited number of DBA’s (Doing Business As). These are company names controlled by the master corporation.

If you are going to sell on consignment, I strongly recommend you incorporate for liability reasons. If you sell something on consignment and the product injures someone, you could be sued. If you incorporate, and do all of your business through the corporation, then someone can only sue the corporation and those assets. As long as you conduct your business properly through the corporation, they cannot touch your home, your savings, or your retirement plans.1

If you realize over $10,000 a year income from your business there are also some great tax benefits to incorporating. I don’t give tax and legal advice, so this is an area where you should consult a local Certified Public Accountant (CPA). Believe me the money you spend on incorporating will be more than offset by the taxes you save.

The third type of business ownership is a Partnership. I personally would avoid this as it leads to more lawsuits than any other type of business. If you wish to become partners with someone, you should incorporate and decide who gets the controlling (51%) share of stock. Equal partnerships are usually a disaster waiting to happen when it comes to small business.

Business Licenses There are two types of business licenses:

1 There are two types of corporations: Subchapter S and a Limited Liability Corporation (LLC). Both of these will work fine for your consignment business. If you are going to have stockholders other than yourself and your spouse, then a Subchapter S corporation is usually a little easier to work with.

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1. Local business license

2. Sales Tax License, sometime called a Resale number, or a Sales Tax ID number.

A local business license is usually only needed if you are going to open a physical storefront. In most communities you do not need a local (city or county) business license to sell on eBay out of your home. But check with your Chamber of Commerce. If you check with the city, they will always say you do. The other thing you can do is ask other eBay and Amazon sellers who work out of their home.

If you plan to purchase goods from wholesalers, or sell on consignment to people in the state you live in, then you will need a sales tax number for your state2, or a State Business License number, if your state does not have sales tax.

Almost every state has a website that gives information about how to obtain a sales tax number. Most states will let you apply over the web or download the forms to apply. For example, www.wa.gov is the website for Washington State. Substitute the two-­letter abbreviation for your state in this URL to get the government site for your home state (some states don't follow this format, so if it doesn't work, just Google your state abbreviation plus DOL to get to the Department of Licensing for your state). All states charge a fee (usually less than $50). Some states require a deposit based on your annual estimated sales. The minimum deposit is usually $200-­$400 and is often refunded after the first year.

If you live in a state that charges sales tax, you must charge (or pay) sales tax on all transactions shipped to buyers in your state. Not doing so can result in fines and eventually loss of your sales tax license.

One thing you may need to determine is if your state charges sales tax on any fees you charge the buyer. Commissions are tax-­free in most states, but if you are charging a listing fee then you may have to collect tax on that fee.

When you get a sales tax number, ask your state authority for a pamphlet or instructions that specify exactly what products and services are taxable. Many states exempt food, vitamins, commissions, user fees, periodicals, books, etc. from sales tax. If you are selling one of these items, you need to know if they are taxable or not. Don’t get stressed out by

2 In Canada you can register your business on line and get a GST number by visiting the Ministry of Revenue web site at http://www.businessregistration-­inscriptionentreprise.gc.ca

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the sales tax thing. Once you get into it and understand the rules it is very simple to do the paperwork and comply with the rules.

You should also get an IRS Taxpayer Identification Number (EIN number). You can download a form to apply for this from the IRS web site (go to www.irs.gov and search for forms). There is no charge to get an EIN number. This number is assigned to your business instead of using your social security number. Once you have one of these then you can open a separate business bank account.

Power Tip Another benefit of getting a sales tax number is that you can open a

business account at Costco or Sam’s Club. Now you can purchase items there for resale without paying sales tax.

A friend of mine shops at Costco weekly for bargains and sells them on eBay. You can also buy shipping supplies such as boxes, tape, bubble-­pak and so on without paying sales tax. Because you are charging for shipping, the supplies are part of your product cost and therefore free of

sales tax.

If you plan to open a retail location where customers can drop off their merchandise, you may also need a local business license from your city or township. If you live in a small town, just go to city hall for information about getting a business license. If you live in a large city, you can usually find information online or check with the local chamber of commerce for advice.

Some cities require a special license to sell secondhand goods. This enables the police to track stolen merchandise. In some cases, you have to file a list of the items you sell with the police and wait a number of days3 until you can sell the item. If this is the case where you live, it will cause a complication if you have a store. You may want to locate your business in a nearby suburb that does not require a special license to sell second hand goods.

3 This can typically be anywhere from 10 to 15 days.

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Lastly, there are some states that are beginning to regulate eBay consignment sellers. For example, On October 8, 2008, Governor Rendell of Pennsylvania signed a law amending the Auctioneer and Auction Licensing Act to include the Trading Assistant Registration Act, which went into effect December 8, 2008. If your business is located in Pennsylvania, and you are selling personal property on behalf of others as an eBay Trading Assistant, then you must register with the State Board of Auctioneers. This requires a $100 registration fee and a $5,000 surety bond. Surety bonds are not hard to get. For example, you can get one online from BondAbility for about $100 per year or $250 for three years. They are not just in PA. BondAbility sells bonds in all 50 States for various licenses.

Other states that have enacted (or are considering) laws for Trading Assistants and online consignment sellers include Illinois, Kentucky, and a few others.

There are some workarounds for some of the states where you might have an issue. We address this further in your Bonus file numbers 1&2 on Consignment Contracts.

Business Telephone If you are doing business at home, you should have a business telephone number that is separate from your main line. Train your children not to answer it and get voice mail (not an answering machine) from the phone company. Of course today a lot of people just use a cell phone as their business phone which works fine.

Letterhead & Business Cards If you are at all handy with the computer, you can create letterhead and business cards from your word processing program. There are also several inexpensive software programs that will create beautiful letterheads and business cards complete with logos. Office Max and Staples sell several of these for under $15.

A professional looking letterhead and business card are essential to be taken seriously by many businesses. Remember you may be dealing with lawyers and bankers.

Computer & Software Resources You can run an auction or web business from almost any kind of computer. It does help to have a fast computer and a fast modem, DSL or Cable, as you will be spending a fair amount of time surfing the web, sending emails and entering auction descriptions.

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Photography will also become very important to your success. You will need a good digital camera and photo lighting set-­up to take good photos. A dedicated place for photography is a real plus.

You will also need a dedicated shipping station. If your business is successful, you will be doing a lot of shipping. This means you will want to invest in tape guns, paper rolls, and a postage scale. You will also want to open an account with UPS. Stamps.com (www.stamps.com/skipmcgrath) is a great site for time-­saving shipping solutions if you use the post office for shipping. That link will give my readers a discount and some other bonuses.

Microsoft Office is an excellent suite for word processing and email for web-­based businesses because it has pre-­formatted email templates and web page templates.

QuickBooks is an excellent program for keeping your books. Whether you use a program such as QuickBooks or keep your books manually, it is important to keep good records. Good bookkeeping is vital to the success of a consignment business. Really—this issue can make or break your business so don’t scrimp here.

Don’t rush out and buy a new computer and a ton of software right away, (unless someone just gave you a hundred thousand dollars in venture capital) but you should have a plan to buy what you need to run a professional business. Set some money aside each month to purchase what you need and buy it when you can afford it. Do not take on loans or debt to get your business started.

Insurance You will be responsible for the goods you take in from consignors. Therefore, you need to carry adequate fire, theft and damage insurance. Make sure your car insurance covers contents that could be stolen or damaged in an accident.

Find an independent broker to buy your insurance from. Brokers represent several insurance companies and they can shop around to find you the best deal. Tell your insurance agent that you are running a business and you need commercial coverage. This is a little more expensive than your standard home and auto insurance. But, if you have a loss and the insurance company finds out you are using your home or car for business, they can deny the claim if you do not have a business policy.

One problem you will have is that the value of the goods you have in your possession will vary in amount from time to time. Unless you have a commercial space, you probably

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cannot buy a policy with variable limits. You will just have to estimate the value of goods you have at any one time and buy that much insurance.

You can obviously start out small and raise the limit later. I would suggest $10,000 coverage to start with, as this is probably the minimum you can purchase. A policy such as this should cost less than $200 a year. Remember too, the very fact you have an insurance policy you can show to consignors will help you get more business.

You can also purchase a business or personal surety bond that would protect your customers if you just disappeared with their merchandise. These are available from the same company we mentioned above, BondAbility. I know you don’t have any plans to abscond with someone’s goods—but remember they don’t know that. If you meet a prospective client who has a valuable piece of merchandise such as a valuable rare coin or a diamond ring, you can show them the bond that proves they could claim against if you were to simply default or disappear. This can help give them confidence when turning the property over to you to sell.

Later we will talk about your presentation, or “pitch” book. You will want to carry a copy of your business insurance policy and/or your bond with you and show it to people as part of your presentation.

Should you decide to open a retail store, you will also want liability insurance to cover someone getting injured on your property.

Reference Material You will be doing a lot of writing, creating auction ads, emails, etc., so you should have a good dictionary, thesaurus, and style manual handy.

If you will be selling antiques and collectibles, you will want some reference books and price guides.

My most valuable reference tool is a series of three-­ring notebooks I keep next to my computer. It is frustrating and time-­consuming to be working on a document or an email and have to flip back and forth to a web page or other file for information. I find it much easier to open a notebook next to my computer where I have printed out copies of web pages, pages from catalogs, the eBay help files, and information that I tend to refer to often. You may want to print this book out and add it to your binder.

Three Weeks to eBay Profits is a good general reference guide to how eBay works from both the buying and selling side.

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Taxes As a small business owner, you will have to pay taxes on your income. There are thousands of people selling on eBay on a cash basis that never claim the income. I don’t recommend this unless you are only placing a few auctions a month.

If you are ever audited, the IRS will have a look at your bank and credit card records. If they see a lot of charges by eBay and/or a lot of miscellaneous deposits, you will have some explaining to do.

I am not licensed to give tax advice, but I would like to point out that as a small business owner there are dozens of tax breaks and deductions available to you.

You can safely write off an office in the home deduction, automobile expense, costs for computers, software, internet service, telephone, utilities, transportation, meals, entertainment and so on. A really good resource is Diane Kennedy’s web site www.taxloopholes.com. Diane is an exhibitor at eBay Live every year and works with hundreds of eBay sellers.

Instead of paying your kids an “allowance” you can hire them as “casual laborers” and deduct what you now pay them as an allowance. (When our children were younger we used to pay them to clean up our office, wrap packages, deliver mail to the post office, stuff envelopes, etc.)

Legal Issues There are some very important legal issues to be aware of when doing consignment selling. Some states and cities have regulations that require you to hold any consignment goods valued at over $100 for a period of up to 10 days to give the police time to determine if they are stolen merchandise. In these locations, you have to fax the police a description of the merchandise and any serial numbers of computers, Stereos, cameras and so on. If you don’t hear back from them within 7 to 10 days, you can then go ahead and sell the item.

Even if your location does not have any such regulations, you want to be very careful about selling stolen goods. I guarantee as soon as you advertise that you are an eBay consignment seller, or open a consignment storefront, you will be approached by someone attempting to sell stolen goods. If you do not take due diligence and the police determine that you have sold stolen goods you could be in deep trouble.

So, what should you do? It is actually very easy.

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Here is your written sales policy:

Local law enforcement regulations require consignors to provide a valid driver’s license that will be photocopied and kept on file. We pay all proceeds by check mailed to the address on the driver’s license only. Checks will be mailed within 5 days of receiving payment from the buyer.

Now any thief would be crazy to provide you his real name and address. If he is stupid enough to do this, and the goods turn out to be stolen, you simply give the information to the police and you are legally off the hook. If anyone approaches you to sell goods and wants to be paid in cash, simply show them a copy of your written policy and explain that you are sorry, but this is the only way you will do business.

The other issue is that some states require eBay consignment sellers to have an auctioneer’s license. The way around this is to offer your services for a fee instead of taking a commission. If you look in the bonus materials, we have provided an alternate contract for folks that live in those states.

Getting Help Most community colleges offer courses in starting and running a small business and some have free business resource centers that can help with all sorts of things you may run into. If you live in a small town, many chambers of commerce offer free or low-­cost courses on starting a business. And, there are many good books in the library.

A great resource is SCORE. This stands for The Service Core of Retired Executives. SCORE is a government sponsored volunteer organization of retired small business owners who provide free consulting and advice to new start up business owners. These folks are often very well connected in the community and can introduce you to lots of valuable contacts. They can often also be a source of potential investors.

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Chapter 3

How Much Should I Charge? Most consignment sellers use a graduated fee schedule that go down as the selling price of the item increases. Most start at 35% or 40% and, some consignment sellers charge even more—especially drop off stores who have a higher overhead. ShopitLA, one of the largest drop-­off stores in the country, charges 48% with no discount as the price goes up.

When you are setting your fees remember all the things you have to do. You have to advertise, meet with customers, take good photos, write good descriptions, communicate with customers, maintain a good feedback rating and DSR score, and pack and ship the items. That is value delivered to your consignor and you don’t want to devalue your services.

A lot depends on how much you sell and your average selling price. To start, I would not accept any item that you believe would not sell for more than $50, unless the consignor is giving you dozens of items to sell.

Think about this a moment: If you were closing 25 successful auctions a week and charging 25% of the selling price as a commission, what would you gross at different price points?

Here are some examples:

MIN. SALES PRICE 25% COMMISSION GROSS @ 25 AUCTIONS PER WEEK

$10 $2.50 $62.50 $20 $5.00 $125 $30 $7.50 $187.50 $40 $10.00 $250 $50 $12.50 $312.50

Obviously, even at the $50 minimum, you don’t want to do all of this work for $312.50 a week. Remember we are talking about minimums. In reality, if you set your minimum at $50, you will have a lot of sales above this.

Later we are going to talk about selling large-­ticket items that sell for thousands of dollars. On these goods you might only take a 10% or 15% commission, but you could earn

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hundreds, or thousands, of dollars on one sale. However, be careful to charge enough to cover eBay fees and your profits. For example, if you sold an antique 17th century writing desk for someone for $600,000 and charged them 5%, that would equal $30,000 commission. Now you might think that is a great fee. But when you calculate the eBay Final Value fee it comes out to $9,021.31. So now your profit is only $20,987.69. Still not bad, but not what you were expecting. A high end auction house would charge 15% commission, so I would not charge less than 10% for an item even that expensive.

The short answer to the question “how much should I charge?” simply depends on the volume and type of merchandise you can access. If you specialize in higher end merchandise, you can charge less commission and still make more money. If you sell low-­cost items, you will have to charge a higher commission and/or do a huge amount of volume.

Whatever you do, don’t start out with a low commission schedule, because it will be hard to raise it later. Also, don’t think 30% or 35% is too high—this is what most consignment stores charge.

Here is a schedule I use. I charge listing fees plus a commission as listed in the next table. You can adjust this as necessary to fit your business model:

Listing fee: $3.00 for the first item and $1.00 for each additional item

Reserve Fee: 1% of their reserve price up to $50. (optional if the client insists on a reserve)

Optional Promotion fee: $35.00 (This gets a category feature & bold listing. I only recommend this for items that should sell for

over $200.00)

Notice that I charge an up-­front listing fee. This is optional. Some sellers do this and some don’t. Remember, this is just a suggestion. You should set your fees based on your local environment, competition and your business model. If you have the overhead of a drop off store, I would set your fees a little higher to cover your expenses.

Commission Schedule Under $300 35% (or 30% if you charge a listing fee per item)

$301 -­ $1000 35% + 25% of the amount over $300

$1000 -­ $25,000 + 15% of the amount over $1000

Over $25,000 + 10% flat fee

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So what does this mean? If you sold an item for $795.00 what would your commission be?

Listing fee $ 3.00

$300 x 30% = $90.00

$495 x 25% = $123.75

Total Commission: $216.75

How much would you net from this fee schedule? First subtract your eBay listing fees, any special feature fees and the eBay final value fee. If you accepted payment via PayPal or credit card, you would also incur that fee (approx 2.9% or $23.05).

If we assume all of these fees totaled about 7% ($55.65), then you would make $216.75 -­ 55.65 = $160.10.

If you did 10 sales a week at this level, you would net $1,681.00 per week.

Another approach is to charge a flat fee of $5.00 or $10.00 per item whether it sells or not. Even at $10.00 per auction, you would have to launch 50 auctions just to make $500. There is one occasion you may want to use this method. This is when you list something at a fixed price on Amazon or sell in your eBay Store or on Craigslist.

This could happen. If someone gave you 500 of an identical item to sell you could either sell it as a wholesale lot or sell them individually. Selling them individually may net you and the consignor more profit. If the items are small and easy to ship (for example, jewelry, a CD, or a small book) then you could break your $50 rule and sell them individually at a fixed price.

Now you might ask: “Why would someone pay these fees, when they could take their merchandise to a local auctioneer who only charges a ten or fifteen percent selling fee?” This is the heart of your proposition. If you are selling a highly collectible art object and you live in London, Paris, New York, or Los Angeles, then yes—you could take your artwork, antique, or collectible to a big name auction house and get top dollar for it. The consignor would only pay a 15% commission.

But let’s face it. If you are selling a nice piece of art glass and you take it to a small town auction house—or even an auction house in a medium sized city such as Pittsburgh, Seattle or St. Louis—you will not get nearly the national exposure you get on eBay. There are professional dealers who attend auctions in small and medium sized cities. They buy only the finest objects in each auction, take them to New York and sell them at Christie's

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and Sotheby’s for a nice profit. Some of these professionals are now selling on eBay instead of with Christie's or Sotheby’s.

eBay gives you national and even international exposure. Your auctions are exposed to literally millions of potential buyers. eBay currently has over 98 million active users worldwide—and still growing.

Here are some simple examples:

• A local lady tried to sell a hand tooled decorative western saddle at a garage sale for $300. There were no takers, so she gave it to us to list on eBay. We sold the saddle for over $800.

• I recently bought an early Coca-­Cola tray at a Seattle auction house for $190. I put it on eBay where it sold for over $400 to a collector in Germany.

• I recently sold an early Bronica Twin-­lens camera for a neighbor that he had tried to sell at a garage sale for $50. He knew I sold on eBay and checked with me first. It went for over $400 on eBay. (He didn’t mind paying the 30% commission).

• A lady recently approached me to sell some quality ladies clothing. The mixed lot consisted of expensive name-­brand silk blouses, good wool suits, blazers and slacks. They were all size 10, which is a very popular size. I sold the suits and blazers separately and the rest as a lot. The total came to over $900 on eBay. She was about to donate them to the local Rotary Thrift shop before a friend recommended her to me.

• Last year I had my car fixed at an auto-­body shop. While I was there I was chatting with the owner and told him what I do. He said he had a back room full of auto parts that were still new but never used. He usually sold them at a swap meet once a year. He gave me a few to try and we sold them for top dollar on eBay. So every few months I go up there and he gives me about a dozen parts. They usually go for a couple of thousand dollars and I get 25%.

There is a leading auction house where I live in Seattle that routinely auctions off high-­end art, antiques and collectibles—mostly from local estates and dot.com millionaires who have fallen on hard times.

Every three or four months, I attend with a friend of mine. I am an expert on old woodworking tools and he buys nautical antiques and early instruments. Very few of the things he buys ever come up at auction. But when they do, he buys them and sells them on eBay for a 200% to 300% profit. The last time we went, he bought an old working

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thermometer & barometer from the late 1800’s. The bidding was very fierce and he eventually won the item for just over $900. He sold it on eBay a week later for over $2,000.

In Seattle the antique barometer was exposed to perhaps a dozen or so knowledgeable dealers or collectors. On eBay, it was exposed to thousands.

From my experience I can honestly say that almost any top quality artwork, antique or collectible you buy at a small town or regional auction, can be sold on eBay for profits upwards of 100%.

If you were the executor of an estate, and I approached you with these facts and said: “Look, you can give your goods to a local auctioneer who will charge you 10% and net $50,000 for the estate you are trying to sell. Or, you can give it to me. I will net you closer to $150,000 and charge you an average commission of 25%. Do the math. Which would you pick?”

Let’s go back to the commission schedule. There is another way to look at this. In the example, we were calculating the commission if someone gave you one object to sell. If someone is willing to bring you a large amount of merchandise to sell (such as an estate), then you could make a deal based on the total value of the estate or the amount that sold each week. Calculate the total goods sold in one week’s auctions and calculate the commission. If someone gave you merchandise to sell that went for a total of $50,000, then the commission could be lower than 25% and you would still make a nice profit.

You may also run into the opportunity to sell real estate, aircraft, boats, cars4, trucks, industrial equipment or large wholesale lots when the selling price of one item is in the thousands of dollars. In general, I would not work for less than 10% to 15% although this is really up to you and your cost structure. If I had a chance to sell a jet aircraft for $2.2 million, then yes—I would probably negotiate a lower fee.

4 Note: In most states you may need to be licensed to sell real estate or automobiles for someone else on commission. You don’t need a license to sell something you own. Therefore, one way to handle this is to have the seller open an eBay account and you do the work for them under their username.

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Chapter 4

How to Find Consignment Customers Let’s get some legal terminology out of the way before discussing this topic. A person who brings you something to sell is called the consignor. You, as the seller, are called the consignee. The person who purchases the item is called the buyer. This chapter is about finding consignors.

If you already know how to sell on eBay and/or Amazon, this chapter is probably the most important. If you can find people who are willing to give you something to sell without paying for it unless it sells, then you have created an unstoppable money machine. When you sell on consignment you get the inventory in your hand before you sell it—but your inventory is free.

Think about this a moment: What is the biggest problem eBay sellers face? It’s finding goods to sell on eBay that they can buy at a low enough cost to make a profit.

A lot of eBayers try drop shipping. This is where you list an item on eBay and if it sells, you send your money to a wholesaler who agrees to ship the item directly to your customer. The problem with this is the drop ship company must charge for this service—meaning you end up paying more for the item than if you bought a case of the item outright. You have to sell an awful lot of stuff using the drop ship technique to make a good living on eBay. An additional hazard is that the drop shipper isn’t responsible to the buyer. If they ship late, use a different shipping service than you specified, or ship the wrong item—then it’s your seller rating that suffers.

The other alternative is the seller who buys a large quantity of items at wholesale. He or she gets a great price, but has the risk of selling them. If the items they purchased don’t sell, then they’re stuck with the merchandise.

What could be better than the consignment business? There is no investment in merchandise. If an item sells, you make a profit with little or no investment—or risk. If it doesn’t sell, you simply call the consignor up and ask them to come and pick up their goods.

So, simply put—if you can find enough good merchandise to sell, this is a win-­win business. The consignor ends up getting more for their merchandise than they could get from a garage sale or by selling it in a local auction. And, you make a commission if it

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sells with little or no risk to you beyond a small listing fee—and even that will often be covered by the consignor.

Assuming you know how to sell on eBay, Amazon, or Craigslist, and you can handle the administrative and bookkeeping side of this business, you really can’t lose as long as you find a steady supply of people with merchandise to sell. Let’s explore the ways to do this.

Advertising Advertising is probably the easiest way to build a clientele. Advertising takes many forms and has a wide variety of costs depending on the reach and frequency of the advertising you do. The great thing about advertising is that you can start small, reinvest your earnings and grow with very little financial risk. Avoid the temptation to jump in and commit to an expensive program. Test your ads first in small papers and journals before spending greater sums to advertise in larger publications.

Print Advertising Starting out, local advertising is probably your best source of merchandise. Notice I underlined the word “local.” This is a relevant term. If you live in a small town (under 100,000 population) you can take out a classified ad for very little money (usually under $15). If you live in New York City or Los Angeles, a classified ad in the major newspapers can cost over $50. If I lived in New York City and was starting out on a small budget, I would forgo the New York Times and place an ad in one of the neighborhood journals, such as the West Side Journal. On the other hand, in a small town I could afford to advertise in the largest newspaper.

There are also plenty of small publications such as the AdServer, Little Nickel and so on. These are very inexpensive to advertise in.

If you take your business to a higher level with employees and/or a storefront, then you will be able to afford advertising in the major newspapers.

Here is an example of a classified ad that I have used with success:

Make money selling your valuable goods on eBay. ConsignOnLine does all the work for you. We photograph the items, list and launch the auctions, collect the money and ship the goods. We sell art, antiques, collectibles, computers, small electronics and good quality clothing, jewelry and accessories. Call 206-­555-­7777

Here are some shorter ads that also work:

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I will sell your items on eBay. Low fees. Call Skip at 306-­555-­5555

Professional eBay Seller will get top dollar for your valuable goods. Low fees, quick payment 703-­555-­5555

eBay Seller works for you. Get top dollar for your antiques and collectibles. 212-­444-­4444

Online Classified Ads There are several online classified ad sites and most of them are free. The most well known is Craigslist which is partly owned by eBay. The other big service is now eBay Classifieds. You can use Craigslist and eBay Classifieds to sell your goods but you can also use it to advertise your consignment services. Just use the longer ad above.

Many cities and towns now have local online classified services too. Some are free and some require small fees, but you should look into those as well.

Yellow Pages Yellow Page advertising works well, but is also very expensive. A small ad in a small town yellow page book can run $25 to $50 per month. The same ad in a major city would cost over $200-­$500 per month. This is something that should wait until you grow your business or until you open a storefront. When you place an ad in your local Yellow Pages, this usually includes a listing in the online version of the Yellow Pages also.

Radio Advertising Local radio stations can also be very inexpensive and effective. Small local radio stations sell 30 second spots very cheaply. For example, I once purchased 25 spots for $300. Half of the spots ran in prime time. I received over 70 calls from the spots. Most of the calls were a waste of time, but about 10 of the calls resulted in acquiring merchandise to sell on eBay. Those sales netted over $6,000 in commissions. More importantly, a few of the people I dealt with are still in touch with me and bring me merchandise on a regular basis.

Bulletin Boards and Posters A good source of free advertising is local bulletin boards in supermarkets, Laundromats, senior centers, neighborhood kiosks, and so on. Yes, people actually read these.

Post as many as you can and check them on a regular basis. You can also put those little tabs with phone numbers on the bottom that people can tear off. With this type of

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advertising you have the room to be very specific and you should be. For example, list specific types of merchandise you are looking for.

Here is the card our local eBay consignment shop uses (I have changed the phone number at her request):

CONSIGN IT

eBay Auction Service We get “Roadshow” prices for quality antiques & collectibles.

Glassware, Pottery, Paintings, Prints, Sterling Silver, Art Glass, Antiques, Collectibles, Old Books, Old lamps, Vintage jewelry & other unique items.

Sliding Scale Commission Rates Call Angelina at 360-­555-­1111

She has been using this same card for over five years and it continues to bring her a steady stream of customers. More importantly, she has developed a good reputation and today most of her business comes via word of mouth.

Here is a sign I saw in downtown Seattle. It was an 8” x 10” poster similar to the concert posters that are pasted on lampposts all over town. I called the seller and interviewed her. She claims the signs bring her anywhere from 10 to 15 calls a week. She is very selective in the merchandise she accepts, so she may only take merchandise from four or five of the people who call, but many of them have more than one thing to sell.

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STOP SELLING YOUR TREASURES AT GARAGE SALE PRICES I CAN GET YOU TOP DOLLAR ON EBAY

I ALSO PAY IMMEDIATE CASH FOR THE RIGHT MERCHANDISE

Electronics

Small Appliances

Antiques

Collectibles

Jewelry

Watches

Consign-­It-­Now: 206-­555-­5555

Most of her business is consignment, but she also pays cash for merchandise that she knows will sell. But when she pays cash she is paying far less than she thinks the item will sell for on eBay.

This woman also advertises in small neighborhood papers. An investment of $20 per week usually brings in several pieces of good merchandise. One seller gave her over 100 vintage movie posters to sell. She sold all of them individually over a six-­week period and grossed over $30,000. She charged the consignor 25%.

Cold Calling Lots of people sell things at garage sales that they could sell for much more money on eBay. There are hundreds of eBay PowerSellers who cruise garage sales, tag sales, and estate sales buying up good used items they can sell on eBay for three or four times the cost. If you want to sell on consignment, however, getting to the sale when it opens is too late.

Instead, try this: On Wednesday or Thursday, get a list of sales from your local paper. Go to the house and knock on the door and explain what you do and offer to look at what

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they are selling to see if you could get more money for them on eBay. If you are too shy to do this, you could also just prepare a short note or a flyer explaining what you do and either drop it off on their door, or send it in the mail timed to arrive a couple of days before the sale.

Another source of cold calling is calling on small antiques and collectible stores. Today a lot of dealers are already selling on eBay themselves. But, I know a few dealers who want to sell more on eBay, but they just don’t have the time. There are other, old fashion dealers, who have never tried eBay and probably never will. These people are very approachable. eBay has been cutting into their sales and many small antique dealers are struggling. Your efforts can really help some of these small town dealers stay in business.

You can do this with any business, but the advantage of antiques and collectibles is they are usually higher priced than most used goods.

Charities Local charities are always looking to raise money. You should approach them and offer to sell goods on eBay that are donated by their members.

You can also approach the local non-­profit thrift shops and explain that eBay sellers come into thrift shops every day and buy stuff cheaply that they turn around and sell on eBay for a nice profit.5 Instead you could offer to sell their better merchandise for them directly on eBay.

Estate Sales & Garage Sales Another technique is to visit estate sales and garage sales at the end of the day just before they close. Sometimes people have things that wouldn’t sell either because there is no local market or they priced them too high for a garage sale. Often you can sell these items at a higher price on eBay.

Speaking to Groups You should volunteer to speak before community groups such as Lions Club, Rotary, the senior center, chamber meetings and so on. Give a talk about “How to sell on eBay.” This will help get your name out in the community. Your talk should not be a sales pitch for

5 Just a few weeks before this book went to print, I bought a reel-­to-­reel tape deck and a Harmon-­Kardon Amplifier at our local Rotary thrift shop for $25 each. I sold them on eBay for over $100 each.

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your services—but you can mention what you do at the end of your talk and you can certainly hand out cards and flyers.

Presenting Yourself As you will see later, you will be dealing with various types of business people, attorneys, storeowners and other business owners. You will need to look presentable. This doesn’t mean you have to wear a suit. The Corporate Casual look is very acceptable. Nice slacks or a skirt, a shirt (or blouse) and perhaps a blazer if you are speaking to a group, or meeting a business owner, will work fine. Having said this, I often just wear nice slacks and a polo shirt and leave the jacket at home unless the group is somewhat formal.

Create a Presentation Book Prepare and carry a presentation book (or a “pitch book” as it's called by salespeople). Buy a three-­ring notebook and plastic sleeves that hold an 8 x 10 sheet of paper. Prepare inserts as follows:

• Facts about eBay

• Facts about You (feedback status, power seller status, years of eBay experience and so on)

• A screen shot of your feedback profile with comments

• Examples of common items selling on eBay

• Some screen shots of successful auctions you have completed

• Your fee schedule

• A list of local references

• A copy of your bond and/or insurance policy

You should also carry extra copies of your fee schedule, your flyer or card, and a consignment contract to leave at the end of the meeting. (We will cover contracts later in this book).

Practice giving your presentation until you can give a concise “pitch” in about 10 minutes. You will be reading upside down (people seldom sit side by side in a business meeting), so you will need to memorize what you want to say about each page.

Your presentation should be concise, informative and to the point. Don’t forget to ask for the business.

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Chapter 5

What Sells on eBay? One of the keys to your success is knowing what sells—and what doesn’t sell—on eBay. My wife, Karen and I spent years in the antiques business. People would walk into our store all the time with all sorts of old items that they were sure were valuable. When we first started out we used to buy almost anything. Boy, did we get stuck with a lot of stuff. Over time we learned to discriminate.

In the consignment business your challenge will be even greater because you will be offered all types of merchandise. You will see many things that you just don’t know anything about. You will have to be very careful what you accept or you will be re-­listing auctions and filling up your garage with useless junk.

Power Tip The fastest way for a consignment seller to lose money is to accept merchandise to sell that there is no market for. Make sure something

will sell on eBay before you agree to take it.

What sells on eBay? Well almost anything. The key word in that sentence is “almost.” If you are going to be successful with an eBay consignment business you will have to spend a lot of time on eBay learning what sells and learning how to search for an item to see if any have actually sold—and at what price.

It does very little good to search ongoing auctions. Until the auction ends you just won’t know if the item sold, if it hit its reserve, and what the final price was.

The best way to find relevant completed listings is to start with a search of all active auctions. From the search results page, use the Refine Search options on the left to get only results that are a match to your item. Now, look to the Preferences section (below the Refine Search box on the left sidebar). Check the box next to "Completed listings." Here is a screenshot of a Completed listing search.

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The items with prices in green are the ones that successfully sold (they also have a "sold" icon beneath the number of bids). This shows you what a given item is worth on eBay rather than what the ongoing auctions are currently at.

Another great research tool is available from Terapeak. Click on the Research Tab at the top of the page. This will bring up a box where you enter the product name. Terapeak’s search engine will then bring up the last five to ten items matching your search that actually sold. The info will also tell you the best day to end an auction for what you are selling, and the best category to list it in.

This is what a completed listings search looks like

So back to the question: what sells on eBay? Obviously there is a ready market for most popular antiques and virtually every type of collectible. But there is also a market for a wide variety of used goods.

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A PowerSeller I met last year at eBay Live sells nothing by used hi-­fi and stereo equipment. He describes it as “vintage stereo.” He gets almost all of his supply at garage sales, thrift stores, and pawnshops. He sells over $5,000 a month.

Plenty of people sell new and used clothing on eBay. Specialized items, such as plus-­sized clothing, western clothing, and vintage clothing are really big sellers. One buyer specializes in selling “lots” of clothing of the same size. For example, instead of selling individual dresses and jackets, she will assemble a lot of size 8 dresses, jackets and blouses and sell them all in one auction. This way she has to launch fewer auctions, has less work to ship, less bookkeeping and a higher average sale. Many of these lots are purchased for less than $25, but can sell for over $100 and more.

Another great category is used sporting goods. Plenty of people buy used skis, helmets, hockey sticks, golf clubs, baseball gloves, tents, fishing gear and so on. Again, you don’t want to get into selling low-­value individual items. But keep your eyes open for more expensive items that would bring far more on eBay than at a local tag sale. Sets of golf clubs are ideal.

All types of computers, accessories, consumer electronics, small appliances, and general consumer goods do very well on eBay. You can sell both new and used. You would be amazed at the number of people with an espresso machine or a pasta machine that have only been used once and are still in the original box with instructions. Right after Christmas is a great time to find these types of goods.

Should I Specialize? In general, the answer to this is yes, if you live in an area where there is a good supply of whatever it is you specialize in. If you want to specialize in glass collectibles and you live in a small Midwest town you may not find enough people to supply you with consignment goods. If you specialize in the area of antiques and collectibles, you can find something to sell almost anywhere in the country, or the world for that matter. But if you live near or in a large city, then your opportunity to specialize is pretty good. However, in rural areas you can often still specialize, just with a different product. For example, I have seen sellers who specialize in farm equipment. Out west I know sellers who specialize in cowboy clothing, belt buckles and boots.

If you are a regular eBay seller buying and selling for your own account, then I strongly recommend you specialize in one area you can become knowledgeable in. However, this may not be true of the consignment business.

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In a sense, the fact that you are a consignment dealer is a specialized occupation. Most people buying this book are just learning the basics of consignment selling. I would suggest at first that you agree to sell anything you think will sell, and make the decision to specialize after you have some experience. The first priority is to generate steady cash flow and build a client base.

Always Go for Quality At first you will be excited to find people who want you to sell things and you may just jump at anything. Resist this temptation. Only sell quality goods. Don’t sell a piece of junk even if it could command over $50. Remember it is your feedback—not the consignor’s that is on the line.

Other Considerations Be aware of large items, or items that are difficult to ship. As I don’t like to hassle with shipping, when I get a large item I typically sell it on Craigslist. If you grow this into a large business with employees to help you, then you can jump into larger items. I would concentrate on items that weigh less than 25 pounds and can fit into a standard sized shipping box.

As you gain experience, you may wish to sell larger industrial items, and other large products that require specialized shipping. We will deal with this in a later chapter.

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Chapter 6

Selling Retail Store Closeouts Have you ever noticed how often retail stores have sales? In fact, even when they are not having a storewide sale, there is often a sale table or a sale rack.

Cash flow and inventory turn are the mantras of every retail storeowner. Their fixed costs are so high (rent, utilities, employees, etc.) that they must move slow moving inventory, even if doing so means selling at cost or a small loss.

After a retail store has a sale, anything left is usually offered to a closeout dealer or liquidator. Closeout dealers will usually give a retail store 10% to 15% on the dollar for most merchandise. They turn around and sell the goods to you for 25% on the dollar and you put in on eBay where it sells for about 50% of the original retail price.

You can approach a retailer and offer to sell their slow moving merchandise on eBay. They will get more money than they would from a closeout dealer, and you will earn a commission.

What Type of Retailers Should I Approach? Typical retail stores that have sales such as gift stores, clothing stores, electronics and camera stores, kitchen stores, hardware and tool stores, and all sources of merchandise.

Virtually any retail store is a candidate—but remember you don’t want to get into launching hundreds of small auctions for low-­dollar items. If you visit a clothing store, explain to the owner that you can move their higher cost items. Alternatively, if a storeowner has hundreds of low-­cost items, you could make up a “lot” or break them into sub-­lots of 10 or 20 items and sell them in eBay’s wholesale section.

Clothing stores are prime candidates for your business because their business is very seasonal. Look for stores that sell brand names. Shoe stores are also good candidates—but stick with the more expensive brands.

Another great source for consignment goods are car repair and auto body shops. Auto parts are big sellers on eBay Motors and car repair places always have new unused parts they ordered and cannot use or return. This is actually very easy business to find. My neighbor sell occasionally on eBay, but he is not a professional seller. One day he was in the local Harley Davidson dealership getting his motorcycle serviced. He was chatting up

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the service manager and they started talking about eBay. He ended up getting about fifty Harley parts and accessories to sell on eBay. They offered him a 50 percent split on anything he sold. It took him a few weeks but he ended up making about $3,000 when everything was sold and he paid his eBay and PayPal fees. Best of all the Harley store handled all the shipping when something was sold.

Here is another example of how simple this can be: We have an outlet mall nearby with a Van Heusen store. Once they were closing out a line of very nice dress shirts. These normally retailed for $29.95. They were selling them for $14.95 and you got one free shirt for every two you bought. As a lark, I bought four shirts (which got me six), all in the same size but different colors. My total cost was $59.80. I sold them as a single lot on eBay for just over $90 in a single weekend auction.

I went back the following Monday to buy more. When I got there the store manager told me the sale was over. I asked him what happened to the shirts. He said they had about 40 shirts left and they just donated them to a local clothing bank. I told him about my selling the shirts on eBay and he said he wasn’t authorized to do consignment business, but he would have sold me the shirts for $5.00 each if I had been willing to take the whole lot when the sale was finished. That is an example of the occasion when the consignment business doesn’t work, but you can still turn it into an opportunity to make money.

Power Tip It can be OK to violate your $50 rule if you have a substantial volume and the retailer is someone you can work with over and over. If you have enough merchandise to move, it might pay to hire someone to help you place the auctions and pack

and ship the goods.

This brings up another issue. Sometimes you will run into opportunities to purchase goods at a great price even though the person is not willing to sell on consignment. Is it OK to do this? The answer is yes if two conditions are met:

1. Can you afford it? In other words don’t get into a situation where you would have to borrow money to buy the items.

2. Are you absolutely positive you can sell the goods on eBay at a profit?

When your business is small you cannot tolerate a lot of risk. The whole point of a consignment business is to make money with a minimal investment on your part. When

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you are selling on consignment, you are essentially using other people’s money. They own the goods until you sell them.

What Sort of Fee Should I Charge Retailers? We have already covered commissions, but you may need to adjust your schedule to deal with retailers. A large portion of your time and money will be spent searching out people to give you goods to sell on consignment. If you connect with a retailer who can give you a steady supply of merchandise, then your cost structure is reduced. You can reduce your commissions and make up the difference in volume. Just don’t reduce them too much. If you charge a retailer 20% to sell 100 items at $25 each, you will gross $500. Now subtract your eBay and PayPal fees ($3.37 per item = $337) and shipping supplies to ship 100 items (at $1/item = $100) and you are left with $63 ($500 -­ 337 -­ 100 =$63). Launching and shipping 100 items is a lot of work for $66.

This is why you should stick to more expensive items, or sell the retail closeout items in lots. In the above example, if you sold 10 lots at $250 each, you would make more money with much less work.

This is because eBay and PayPal both have a per-­transaction fee. Although this is low, it adds up. The total eBay and PayPal fees for 10 lots selling at $250 each works out to $177.70 instead of the $337 it would cost to sell all 100 individually. Plus, the shipping materials will be cheaper. Even if it costs $3 per box, that's still only $30 instead of $100 in packing materials. Your take-­away would be $292. 30 ($500 -­ $177.70 -­ $30 = $292.30). That's over four times as much as you would have received had you sold each item individually. Plus, the time involved in 10 "lot" auctions is far lower than 100 individual-­item auctions.

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Chapter 7

Raising Money for Non-­Profit Organizations This can be a very lucrative area for a consignment seller. It has the added advantage that you get to help local churches, hospitals, charities and non-­profit organizations raise money to fund their good works. You help the community and make a profit at the same time.

How many times have you seen a local church or senior center holding a weekend flea market, auction, or tag sale to raise money? Typically, the members of the organization donate goods that are sold at one of the events and the organization keeps the profits.

Most of the merchandise at these events is junk that would never sell on eBay—but often there is some really good stuff that could bring the charity good money if it were exposed to eBay’s national and international audience.

For example, at a recent auction held to benefit a local private school for disabled children, a very nice original signed Calder drawing went for the ridiculous sum of $90. This drawing would have brought over $200 on eBay. I also saw an old Zenith radio in good working condition go for $12. These old radios are highly collectible and would have brought anywhere from $75 to $100 on eBay.

How do you get into this business? Start by contacting the local churches, charities, and non-­profits organizations in your area by mail (we have included a sample letter in your bonus file) followed up with a phone call.

Explain the concept in a simple straightforward way, much the same you would do to an estate attorney or small business owner. Explain that instead of holding a flea market or local auction, you would sell the donated merchandise for them on eBay and take out your fees. Because they are a non-­profit, you may want to give them a small discount from your normal fee. You could also waive your normal listing fees (if you charge them), as this would make it more attractive to them if they don’t have to invest any money up front.

Now here is the trick to making this really successful. You need to explain that a lot of people could donate stuff that may not sell on eBay. After all, you are the expert and you don’t want you or the organization to be stuck with a lot of junk you have to return or dispose of. Therefore, you will draft a letter (or a flyer) that the organization sends out describing the kind of goods you are looking for.

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There are two advantages to this approach. Firstly, you will get mostly saleable merchandise and this will result in a much more successful sale. Secondly, your letter will give people ideas that they may not have thought of. For example, your letter says you are looking for good quality books on sports, art, antiques, photography, etc. Someone seeing this may say, “Oh my, I have that nice set of Ansell Adams photography books I haven’t opened in years.”

You should do your own research, but here is a list of items that regularly sell well on eBay:

• Collectibles such as china, glassware, celebrity (Elvis, Madonna, Beatles, etc.) and licensed sports items.

• Non-­fiction books in good condition on history, local events, art, photography, sports, cars, motorcycles, etc.

• Small appliances such as pasta machines, espresso machines, mixers, dehydrators, etc. (in working condition only)

• Film cameras and lenses

• Art and photography by recognized artists (preferably signed and/or numbered).

• Power tools in good condition.

• Baby strollers

• Outdoor sporting gear especially fishing and hunting equipment

• Designer brand name clothing and accessories (make sure purses and other designer accessories are definitely genuine before listing them).

• Vintage Tube radios

• Pre 1980 computers that still work (Macs are the most in demand)

• Pre-­1980 Hi-­fi and stereo equipment (amplifiers, turntables, tape decks, 8-­track tapes and decks, etc.)

• CDs by well-­known artists.

This is just a sample list to start from—but you get the idea.

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Power Tip Designer handbags, sunglasses, etc. are a big counterfeit market. The previous owner might not even know it's a knock-­off. The only way to be sure is to take it to your local store for that brand and have them identify it. Most of the time fakes can be identified quite easily by a trained eye. It might be the stitching, the serial number, etc. Just because a purse comes with a certificate of authenticity doesn't mean it is genuine. The last thing you need is to ruin your feedback and reputation by selling a fake that you thought was

real. Not only that, eBay has been suspending seller accounts that sell fakes.

An ideal situation is if the charity invites you to a meeting where you can explain what you are looking for (I would still hand out the list) and answer questions. At that time, you can also mention that you are happy to sell goods on consignment privately if anyone has any valuable goods they want to get rid of.

As mentioned above, I would start with small local charities. Once you have some experience, and some letters of reference, then it is time to contact the large charities in your nearest large city. These non-­profits such as museums, hospitals, ballets, operas and so on, usually have wealthy donors. These are the kind of people who can donate that Chanel dress they wore once and can’t be seen in again, or that Picasso drawing the ex-­husband bought that reminds her of him every time she sees it.

Typically, there are also corporate donors that donate airline tickets or gift certificates to theaters and restaurants. I attended a charity auction for Seattle Children’s Hospital a few years ago where over $90,000 worth of goods were auctioned off in an evening. One of the items was a Coco Channel party dress that had been worn once (Original cost $900). It went for only $140. That dress would have brought much more on eBay.

This is a field where you can use your imagination to come up with all sorts of ideas.

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Chapter 8

Conducting Estate Auctions This can be an enormously profitable area for an eBay consignment seller. I attended a recent estate auction in a small town near Seattle where the total value of the goods sold was over $40,000. Some of the goods were not appropriate for eBay—but most of them would have sold on eBay for much-­much more than they brought.

There are two types of estate sales: I call them “unofficial” and “official.”

Unofficial Estate Sales Whenever someone dies, there are usually goods to be gotten rid of. Sometimes a husband or wife dies leaving a surviving spouse. In this case the surviving spouse is not forced to sell her husband’s possessions because in most states the possessions are community property.

Nevertheless, after giving Mom or Dad’s stuff away to the kids there are usually a lot of things left over that no one in the family wants or needs. In some cases the surviving spouse may need money or may be moving into a smaller house or apartment and will need to get rid of things.

Rather than force these people to have a tag sale or an estate sale in their house, you can offer to sell the goods on eBay for them. This protects their privacy and dignity at a very difficult time and can raise far more cash than they would realize in a private garage sale or tag sale.

How Do I Contact These People? One way is to introduce yourself to all of the funeral directors and lawyers in your town. They are in a position to know who could use your service. This can also be a word-­of-­mouth proposal. As you grow your business you will be meeting and speaking to a lot of people. Let them know you can handle this type of situation. Also, you can put the words “estate sales” on your business cards. You can also get to know the folks at your local senior center. Perhaps you could volunteer –or do as I do. I teach the occasional class on How to Sell on eBay. I always get a crowd at the class and then at the end, several of them contact me and ask me to sell their stuff once they see what is involved.

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Official Estate Sales When someone dies in a situation that an estate has to be distributed among the heirs or sold to satisfy creditors, someone is appointed as the executor of the estate. This person is often, but not always, an attorney. If the executor is not an attorney, they will usually hire one to assist them.

Attorneys are accustomed to dealing with local auction houses. In fact, professional auctioneers market their services to estate and probate attorneys. These attorneys are appointed by the court and directed to hold an auction on behalf of the estate. It is their legal and ethical obligation to get the highest dollar value for the estate within reason.

How Do I Contact Estate Attorneys? Estate attorneys are listed in the yellow pages. A more important question, is what do I say to them when I contact them? First of all I would recommend writing them a short business letter setting out your proposition. The letter should cover your experience and qualifications and give them examples of the difference in prices realized on eBay versus having an estate sale or taking the goods to a local auctioneer.

Visit a local auction house and keep notes of popular items that sell and how much they sold for. Next research these items on eBay and see what they sold for. You should create a list of at least twenty items. List these on single sheet of paper that you include with the letter.6

All types of property are sold at auction—so don’t just list antiques and collectibles. Be sure to show prices for a variety of things such as tools, industrial goods, clothing items, books, artworks, coins, jewelry, and musical instruments and so on.

You letter should end with a call to action. You can state at the end of the letter that you will call him or her the following week. In the meantime if he or she has any questions, you should invite them to call you. You could even offer them a free “eBay fact sheet” if they call you. This could be a four or five page document containing information about eBay—how many auctions are held each day, how many members they have, a list of the categories, examples of items that routinely sell on eBay.

6 Please see the Bonus Files for sample letters to attorneys and a list of popular items sold at a local auction and what the same items sold for on eBay.

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I have spoken with a number of attorneys who didn’t have a clue about eBay. They thought eBay was a hobby site where people traded fad products and Baseball cards. They are amazed when I tell them that you can buy computers, office equipment, industrial machinery, cars, boats, planes, and real estate on eBay. Remember, although eBay has over 88 million active users, the population of the United States alone is over 300 million. There are still plenty of people who have no idea what eBay is all about.

Dealing With Attorneys I am reluctantly going to forgo several attorney jokes at this point so we can focus on the topic at hand.7 Attorneys prefer to deal with other professionals. When you speak to them on the phone, be polite and businesslike. Don’t address them by their first name unless they invite you to do so. If you get an appointment, dress in business attire and be prepared to give a professional presentation with lots of facts and data.

If you are just starting out in the consignment business, you might want to wait until you have some experience to cite, a high feedback rating and perhaps even a professional office or retail storefront. If you live in a small town, you may find it easier dealing with local attorneys than the big-­city attorneys. This would be a logical place to start.

Be sure to use your presentation book when dealing with an attorney. It will help establish credibility and keep you focused on the discussion and what you are there for.

Estate and probate attorneys are used to dealing with established auction houses and estate sale agents. If they are hesitant to turn an entire estate over to you, you might suggest they give you a few items to sell to see how you do and that you are professional and reliable.

7 OK. I couldn’t resist. Here goes:

In a murder trial, the defense attorney was cross-­examining the coroner: Attorney: Before you signed the death certificate, had you taken the pulse? Coroner: No. Attorney: Did you listen to the heart? Coroner: No. Attorney: Did you check for breathing? Coroner: No. Attorney: So, when you signed the death certificate, you weren't sure the man was dead, were you? Coroner: Well, let me put it this way. The man's brain was sitting in a jar on my desk. But I guess it's possible he could be out there practicing law somewhere.

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As a final word on this subject, you will need to provide a complete and detailed accounting at the end of the sale. Furthermore, some attorneys may require payment by certified check so they can access any monies immediately.

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Chapter 9

Conducting Bankruptcy Sales Whenever a person or a business with substantial assets goes bankrupt the bankruptcy court appoints an agent to conduct a sale of the assets. These are almost always sold at auction.

Conducting a bankruptcy auction is much like an estate auction discussed in the previous chapter. You will be dealing with bankruptcy lawyers and court personnel. The local auction houses are your competition.

This can be a tougher business to break into. For one thing this area is fraught with corruption. The local auction houses court the Court personnel, so to speak. It is not uncommon for cash or favors to change hands. In smaller towns and counties, it can sometimes be as simple as the local auctioneer dated, or went to high school with the clerk of the bankruptcy court—or there can be other ties. Nevertheless, you should still try to work this angle. (After all, not everyplace is corrupt or overly politicized. If, however, you have any political connections, this might be a good place to use them.)

Contact all the bankruptcy attorneys, visit the clerk of the court and learn the procedures to apply for a sale. One problem you may occasionally run into is laws that require you to be a licensed auctioneer. In some states this is very easy—and in others you must attend a school, take a test, and perhaps even have experience qualifications.

Another problem you may run into is the insistence that you take everything for sale even if you know some of it will not sell on eBay. About the only thing you can hope to do here is partner with a local auction company to sell those things. A local auction company is unlikely to do this, but an out of town auctioneer may come in to do the sale, or the goods could be trucked to their facility.

In addition to handling actual bankruptcies, attorneys often know who is in danger of going bankrupt. Often these people need to raise immediate cash and will want to sell assets quickly and quietly. So even if you never get to hold a bankruptcy auction, these contacts can still be valuable.

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Police & Sheriff’s Auctions This is probably harder to do, but once you are well set up in business, it would pay to contact local police headquarters and county sheriff’s offices to see if they would agree to let you sell their sized goods on eBay.

Distressed Companies and Corporate Downsizing Another source of consignment goods is distressed companies. Although not bankrupt, a lot of companies fall on hard times. If you read about a local company laying off staff or closing facilities, approach them about selling off the office equipment and furniture. Companies usually sell this type of goods to a local used furniture dealer who seldom pays more than 10 cents on the dollar.

I have seen complete offices selling on eBay including the cubicles8, telephones, computers, file cabinets and so on. Some of these sales can net thousands of dollars. It can be a lot of work to get it shipped. You will have to use a professional moving company, but the buyer pays this anyway. All you have to do is make the arrangements.

8 A friend of mine bought 30 Herman Miller office cubicles from a distressed company for $5,000. He used one-­half of them in his own business and sold the other half on eBay for $17,000.

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Chapter 10

Corporate Consignment Sales Another great method to find consignment goods is to call on local businesses, contractors, and medical/dental professionals. Businesses are often upgrading their computers, copy machines, and telephone systems. Doctors and dentists frequently buy new equipment, but the old equipment they are replacing can still be worth a lot of money. These products sell very well on eBay.

The Business & Industrial category on eBay is one of the hottest, fastest growing categories.

Just look at the categories to get an idea of the kind of goods you can sell—everything from farm equipment, building materials, and industrial supply gear, to websites, office furniture and shipping supplies. Notice that many of these items are very high value—this is an incredible area of opportunity for eBay consignment selling.

One of the advantages of selling in the Business & Industrial Equipment category is the low fees. Listing fees in this category are a flat $20 and the final value fee is only 1%. 9

Contractors like to buy new tools every few years. Some companies even want to sell high-­value industrial equipment, trucks, cubical systems and so on. Farmers and landscapers are another great source of goods. Take a look at the high-­priced farm and garden equipment that sells on eBay.

You can get a farmer far more money for a used tractor on eBay, than he can get trading it in on a new tractor at the dealership.

Doctors, Dentists, Opticians, and laboratories are often upgrading their equipment. Getting rid of the old equipment is always a chore—but this stuff sells very well on eBay. Some of it sells to new doctors just setting up their office and some of it goes overseas to countries where this old equipment is considered “new” in their country. (India is a huge

*Includes the following capital equipment categories and the related subcategories: Agriculture & Forestry > Antique Tractors & Equipment > Tractors;; Agriculture & Forestry > Tractors & Farm Machinery;; Construction > Heavy Equipment, Trailers;; Restaurant & Catering > Concession Trailers & Carts;; Healthcare, Lab & Life Science > Imaging & Aesthetics Equipment;; Industrial Supply, MRO > Forklifts & Other Lifts;; Manufacturing & Metalworking > Manufacturing Equipment;; Manufacturing & Metalworking > Metalworking Equipment;; Office, Printing & Shipping > Commercial Printing Presses.

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buyer of used medical and dental equipment.) For example, our local Doc-­in-­a-­box purchased almost everything they needed to open their office in our town.

One thought to keep in mind—a lot of used equipment really looks “used.” It can really pay to take the time to clean the equipment up before taking the photos. If the equipment looks good it will sell at a higher price. When you are selling goods worth thousands of dollars it pays to do anything that will raise the final bid by a few percent.

Using the category and subcategory list, look in your yellow pages for companies that would use this kind of equipment. You can call, write, or visit them in person. I would suggest a targeted letter campaign using one of the sales letters in the bonus files that came with your purchase. Just modify them to mention the specific products you are looking for. Then I would follow the letter up with a phone call a week later. When you get an appointment, but sure and bring the pitch book so you can give a professional organized presentation.

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Chapter 11

Setting Up for Mass Production Take some time to think about and study the economics of this business. If you launched 50 auctions a week and 75 percent of them sold with an average final value of $95, what sort of income would this produce?

50 x 75% = 38 auctions x $95.00 = $3,610.00

Use an average commission of 25%. This equals $902.50 income a week less eBay and PayPal fees of about $8 per item (totaling $304 = $598.50. We will assume you broke even on shipping. If you charged listing fees up front you would have more money.

Therefore you have a gross income of $598 per week or about $2394 per month. Not counting the time you spent finding consignors, talking to them and picking up the merchandise, the average time needed to take and upload the photos, launch the auctions, and ship the goods is about 30 minutes per auction if you automate some of the tasks.10 (We will cover this later). Let us add in two hours for administration. This works out to 27 hours total.

You worked 27 hours for a weekly income of $598.50. That works out to $22.17 per hour. That is not a fortune, but is considered a respectable income by many people. If you worked 40 hours a week at this wage you would earn $46,114 per year. That puts you in the top 20 percent of all income earners in the United States.

Almost anyone can handle running 50 auctions a week. Thousands of eBay sellers do this routinely. What if you doubled or tripled this effort? Well, you would be working a lot more hours a week, but many small business owners and professionals do this already. In fact there are a lot of “Moms” on eBay who launch 50 or more auctions a week and still find time to raise their children.

I suspect that a lot of people who purchased this book would be delighted to earn $46,000 a year, but most of you invested in this book hoping to find a way to earn much more. This is the point where you have to ask yourself which category you fall into: Are you just

10 Later we will show you how to launch dozens of auctions per hour to dramatically increase your income.

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looking for a way to make some extra money—or are you an entrepreneur with a desire to run a full-­time eBay consignment business that can earn a six-­figure income?

As you have seen by reading this far, there is room in this business for both kinds of people. If you are approaching this as a hobby business or something to make a few extra dollars, then great—there is plenty of information in this book to help you. But, some of the information I will cover will only apply to those who want to develop this business to its full potential.

If you plan to grow your business beyond 20 or 30 auctions a week, you will need to dramatically automate and streamline your procedures and processes. You will need an efficient space to work in. For example, you can take photographs a lot faster if you have a permanent studio set up with lights, tripod and a shooting table. If you have to move furniture, set up lights and move equipment every time you need to take auction photographs, this will be very time consuming.

The same goes for shipping. If you have a permanent table in your garage or workshop with all your shipping supplies lined up and accessible, this process will go much faster.

There are a several ways to increase your income:

• Increase your average selling price

• Increase the number of auctions you launch

• Decrease the time it takes you to launch an auction (allowing you to launch more auctions in the time you have)

• Charge higher fees

• Lower your costs

• A combination of all of the above

A smart business owner will do most or all of these steps. The secret to success and earning a large income is to constantly promote your business, and innovate and improve your processes. Let’s look at each of these strategies in detail:

Selling Price To increase your average selling price you will have to locate consigned items that will sell at a higher price. This could include jewelry, antiques, computers, medical and business & industrial equipment and so on.

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Over time as you develop your business you will find yourself in a position to be selective. Once you have a good reputation in the community and with business owners, you will start to get referrals. Eventually you will be offered so many goods that you will have a choice. You can either turn down those items that sell for lower dollar values and concentrate on the higher priced items, or you can hire someone to work for you to handle the day-­to-­day small stuff.

Increase the Number of Auctions and/or Decrease the Time to Launch an Auction Anything you do to decrease the time spent on each auction gives you time to launch more auctions. The more auctions you launch—the more money you make. Also, the more time you save, the more time you can spend finding higher-­value goods to sell. Yes, “time” really is money. This means you need to automate—use systems and equipment to decrease the time taking photos and launching your auctions. In the example above we talked of a complete auction cycle taking 30 minutes. The complete auction cycle consists of:

• Taking and uploading the photos

• Writing the auction title/description

• Launching the auction

• Communicating with the successful bidder

• Receiving payment

• Shipping the item

• Leaving feedback for the buyer

Anything you can do to reduce the time spent on these tasks will drive profits to your bottom line, because you will be able to launch and manage more auctions. Fortunately, there is a whole industry devoted to helping eBay sellers manage and improve automation of auctions. We will cover these in greater detail later.

At what point would hiring help be a good investment? Fortunately I am married and my wife and I are both active in the business. Karen works full time every day answering emails, shipping products, answering the phone, and doing the myriad little tasks inherent in an eBay business. I take the photos, launch the auctions, work on the web site, and look for goods to sell.

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You may not have that advantage. If you are single, or if your spouse works a full time job, then you will need to hire some help. At first this may be as simple as hiring a local teenager to help package and ship your sales. Later you may want someone more sophisticated who can answer the phone, field questions, do simple bookkeeping and eventually even launch auctions.

You will have to work out the economics. If you hired someone for $10 an hour and it frees up your time so you can make $30 an hour (or more), then this is a good investment. Take this to its logical conclusion. If you have the ability find a continuous supply of people giving you merchandise to sell on eBay, wouldn’t it make sense to hire as many people as you need to launch the auctions. If you can pay someone $10 hour to make you $30 or $40 or more per hour, then you should hire all the people you need—as long as you can keep them busy.

Your primary job, and where you make most of your money, is finding people to give you goods to sell. Once you know how to launch an auction, the products will either sell or they will not. If they don’t sell, your only loss is the eBay listing fees (unless you charge them to the customer). The key is having a steady supply of goods to sell.

Let’s do the math at the beginning of the chapter again. Only this time we will assume you are launching 100 auctions a week. Using the same numbers, that would work out to a gross income of $1,594 per week. To do that you would probably have to pay about $300 in wages. This leaves you a net of $1,294.50 or $67,314 per year. If you double this, then you are looking at an income of $134,628 per year.

Now at this point you would probably have some other costs such as rent, utilities, and so on—but conservatively you could make about $120,000 to $150,000 with a few employees and a storefront. If you are very good at finding merchandise that will sell for higher values than an average of $95, then your income would be that much greater. Once you start working with businesses and selling office equipment, medical equipment and industrial merchandise, this becomes a very real possibility. You could also reach this level of income selling expensive art, antiques, and collectibles.

Your first priority should be to automate and streamline the processes you have: photography, uploading images, launching auctions, emailing buyers, and shipping and packing. The next step is to get help doing those things that are low-­value to your time. Is your time better spent prospecting for new consignors, writing auction descriptions or wrapping a cookie jar in bubble pack and standing in line at the post office?

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Now don’t go out and rent a storefront next week. Remember, you want to start slow and avoid risk. The point we are making here is that this is a business you can grow to almost any size you want. It is all a function of how much merchandise you can find. Ultimately, it’s your ability to find merchandise to sell that will allow you to reinvest in growing your business.

Charge Higher Fees Another way to increase your income is to increase your fees. This is probably the most difficult strategy to achieve, but it can be done. The secret here is to be so good at what you do, that you can command a higher price for your services. This will take time and very good references—but is a goal you should strive for.

Lower Your Costs Cost control is something you should constantly strive for. Here is where good record keeping comes in. If you have set up your business with QuickBooks can constantly analyze your costs. Once you know where you spend your money, you can spot areas for cost reduction. Shipping is a good example. As your business volume increases, you can negotiate better shipping rates with UPS and their competitors. UPS rates for high-­volume shippers are up to 50% less than people who only ship a few packages a week. You can also save money by purchasing your shipping supplies in larger quantities.

A major cost center is non-­performing merchandise. Every auction that doesn’t sell, or sells for a very low price, lowers your profit. Keep very good records of the merchandise that sold versus items that didn’t. Over time, you will see patterns and learn which merchandise to avoid accepting on consignment. Anything you can do to increase your conversion rate (the percentage of auctions that sell) will lower your costs and put money in your pocket.

Business Metrics The key to understanding your business and controlling your costs is to understand, track, and manage your important business metrics.

Here are the important metrics every eBay seller should track to properly manage their business and their costs:

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Average Selling Price (ASP) Your ASP is the average final value of all the items that sell. Do not calculate items that did not sell into your ASP

Conversion Rate (CR) also called Sell Through Rate (STR). Both mean the same thing.

The percentage of auctions launched versus the number that close successfully. If you launch 100 auctions and 62 of them result in a sale, then your conversion rate is 62%. Any CR over 60 is considered good on eBay. The top pros aim for 70 or better.

Gross Merchandise Sales (GMS)

GMS is simply your total sales for the period (week, month, quarter, etc.)

Non-­Paying Bidder Rate (NPB)

The percentage of your GMS that is not paid for by the winning bidders. NPB rates of 2-­5% are common on eBay. Anything higher than 5% should be cause for concern.

Average Commission Rate (ACR)

Because commissions vary with the final value of an item and discounts offered to repeat consignors, it is important to track your average commissions over time. Enter every commission paid into an Excel document or QuickBooks. Total up these commissions at the end of each month and divide them by your GMS to get your ACR. It pays to track this number very closely watching for any up or down movements or trends.

Fee To Sales Rate (FTS)

PayPal fees and credit card fees are relatively constant, but eBay fees can vary widely based on your starting price, special features, length of auctions you select and how often you use reserves. Calculate your FTS by dividing your total eBay fees for the month by your GMS for the same period. If you sold $8,500 in merchandise over the month and your total eBay fees were $942 then your FTS is 11%.

Profit and Loss Besides tracking business metrics, you need to understand the elements that make up your total profit and loss. The two most important values here are your Gross Margin and

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your Net Margin. A traditional eBay seller who purchases merchandise for sale would calculate their gross margin as follows:

Gross Merchandise Sales (GMS): $22,000

Less Cost of Goods Sold: -­ $9,200

Less eBay and PayPal fees: -­ $1,156

Gross Margin: $11,644

Your gross margin is your total sales less your direct selling costs. (The GMS should include any income from shipping costs charged to buyers, and your actual cost of shipping should be another item to subtract. For the sake of this example, I have not included shipping in either location.)

As a consignment seller, your model is a little different. Your gross income is determined by the commissions you charge. In a sense you do not have any cost of goods sold. Your gross margin calculation would look like this:

Commissions & Fee Income: $12,400

Less eBay & PayPal Fees: -­ $1,042

Gross Margin: $11,358

Gross Margin is the total income before you deduct costs related to your sales. Net Margin is your gross margin less the costs of running your business. These would include rent, utilities, salaries, employment taxes, insurance, advertising, travel expenses, and everything else except the income tax on the business’ profits. By deducting income tax from the Net Margin, you get your Net Profit. Net Margin is your operating profit and Net Profit is what is left after you pay income taxes on your business income.

Calculating your business metrics and your margins may seem like a lot of work but it really isn’t. All of the information to calculate your critical metrics is available on your My eBay page and in your monthly eBay Sales Reports. eBay calculates some of it for you and even presents it in graphical format. All you have to do is transfer the information to a spread sheet to perform your calculations and keep a record that you can compare from month-­to-­month.

Calculating your Gross and Net Margins is an automatic feature of several accounting programs, such as QuickBooks. As long as you set the program up correctly to track your expenses, and you always use the business checking account associated with your business, you can print very detailed reports at the end of the week, month, or quarter that will calculate and show all of your margins and more.

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Chapter 12

Automation Software, Systems and Services If you plan to make any serious amount of money selling on eBay, you will have to automate some or all of your routine tasks.

Once you have more than 20-­30 active auction listings at a time, you will need to develop an effective system for keeping track of them. Simply listing the items and sending a confirmation email to the winners is not enough. For example, a customer may want to know when the item was shipped or have other questions pertaining to auctions they won in the past. Consignors will want reports on their ongoing and completed auctions.

If you use a manual method now, you need to automate as soon as possible. Selling the merchandise is only half the battle—you must keep track of multiple aspects of your business or you will quickly find yourself lost and confused.

There are several areas of the auction process that can benefit from automation:

• Auction image management

• Scheduling listings to launch at the best time

• Tracking inventory

• Writing descriptions

• Communicating with successful bidders

• Getting paid

• Shipping & postage

• Posting feedback

Each of these tasks can be automated to some degree. You can’t actually automate the taking of photos, but you can save time by using an advanced photo editing and uploading software program. You can also automate the storage and retrieval of the images used in your auctions with online auction management systems and offline software programs. These services fall into two major categories: Auction Software and Auction Management Systems.

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Auction Software Auction automation software resides on your computer and communicates with eBay when you go online to launch auctions. If you are a do-­it-­yourself type of person there are several auction management software programs you can buy.

There are over 25 different companies offering eBay management software. Two of the most popular come from eBay themselves. Here are some of the more popular ones available today:

• Auction Tamer www.auctiontamer.com

• Auction Wizard www.auctionwizard2000.com

• eBay Turbo Lister http://pages.ebay.com/turbo_lister/index.html

eBay Turbo Lister is being replaced by free functions linked from Seller Hub

There is only one off-­line software product specifically designed for eBay consignment sellers. It is called the Liberty 4 Consignment Program and is available from www.resaleworld.com.

The program is quite is quite expensive at around $1000 but, as some would say, you get what you pay for. Ed DiRuzza, the owner of Resaleworld has been producing consignment store software for over 15 years and probably knows more about the industry than anyone else. If you are going to do high volume and/or operate from a storefront, then this system probably makes sense for you.

Liberty 4 features fast & consistent auction creation as well as the ability to track your consignors and pay commissions. Here are some of the standard features:

• User-­defined screen layout

• Automatic title creation

• Built-­in HTML editor

• Assign up to 20 photos per auction

• Edit and manipulate photos

• Set duration of auction, starting bid & reserve

• Customize eBay features for auctions

• Over 20 pre-­defined templates or create your own

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• Preview auctions before launching

• Supports flat-­rate or calculated shipping

• Supports delayed launching of auctions

• Supports eBay Motors categories

• Supports eBay Store

It also tracks consignment information:

• Unlimited mailing addresses

• Unlimited email addresses

• Default auction account

• Default splits/fees

• Create custom fields

• Unlimited notes and messages

• Displays transaction history

• Displays check/payout history

• Monitors auction status

Finally, it also features direct integration to eBay:

• Supports eBay or eBay Motors

• Unlimited auction accounts

• Unlimited auction postings

• Posts auctions directly to eBay

• Sets a default duration

• Sets a default starting bid

• Keeps track of eBay category changes

A cheaper solution may be a shareware application called eBay Application Tracking Software. While it is not a web-­based application (this is a software program you download to your computer), it does integrate consignment information with eBay auctions. Some of the features include:

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• Print invoices, mailings, price bar-­code, address labels, and checks

• Over 300 reports

• Cost-­of-­sales calculations including listing, final value and payment-­processor fees, postage and packaging expenses

• Before Auction—Close Time left, bidders and bidder information

• After Auction—Close final selling price and buyer information. eBay final percentage is computed automatically and added to the cost

• Auto-­update all records -­ Sales Document, Inventory Record, Consignor Balance, eBay Fees and Cost of Sales.

The software sells for $99. You can download it here.

I want to be upfront with you—I have not tried this application, but I know that it is being used by a number of eBay consignment sellers.

There is another downloadable application available from Softforall called eBay Consignment Auction Software 4.4.270. You can download a trial copy using this link, Unfortunately, I don’t know anything about this application and was not able to find any users who did.

Auction Management Services An auction management service is an entirely web-­based application. It does not reside on your computer like auction management software. Personally, I prefer the online version, but I must admit that Liberty 4 will do almost everything the online companies do.

Here is a list of some services provided by a typical auction management company:

• Pre-­designed templates so your auctions look very professional.

• HTML editor. (You type the text into a box and the system generates the html code for bold, or underline or tables, bullets, etc.)

• Host hundreds of images and manage them with folders.

• Pre-­written emails that are automatically sent out to your winning bidders at the end of the auction.

• Schedule your listings to start at a specific time and date.

• Create templates that you can use again and again.

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• Online inventory tracking and control.

• Spell checkers.

• Preview the listing before you submit it (always a good idea).

• Inventory management and tracking (very important).

• Print shipping labels.

• Hit counters.

• Automatically post feedback for transactions.

• Reports to help you analyze your business.

• A web based store similar to eBay stores where your customers are directed after completing the sale.

Here are some popular online auction management services:

Vendio

Auctiva

Kyozou

Channel Advisor

There are dozens of other auction management companies, I have listed only the most popular. All of these companies provide a complete suite of services that will automate almost all of the functions related to launching an auction and communicating with the buyers. All of them also include integrated shipping cost calculation and label printing.

According to Amy at ShopitLA, a large very successful eBay drop off store in Los Angeles, Kyozou provides an excellent solution. Although they might be a little pricy for a small in-­the-­home operator.

ChannelAdvisor does have an application that integrates the consignment side of your business into your auction management system but, like Resale World, Channel Advisor is very expensive. If you are going to be a large volume seller or have a storefront, then the cost may work for you, but their rates are out of reach for most small sellers.

Auction management companies have a personality—and I believe the choice is personal. One system I like, you may hate. Fortunately, most auction management and software companies offer a free trial or a money back refund on the first month’s service

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if you don’t like them. If you are not comfortable using a system, don’t hesitate to try another.

I know this topic can be a bit confusing and there are a lot of choices. Bottom line, you should use some level of automation to save you time. If you are a small seller, start with an inexpensive system such as Auctiva. If you grow and it looks like you will be launching hundreds of auctions per month, then you may want to upgrade to a more robust system such as Vendio. If you decide to open a drop off store, then you will definitely want to explore solutions such as ResaleWorld or Kyouzo. Yes, they are expensive, but you will need that level of service if you want to be successful.

As for keeping track of your consignors, again I would not worry about that until you are doing high volume. If you are a small or occasional seller, you can probably manage everything you need with an Excel spreadsheet.

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Chapter 13

Auction Photography & the Photo Studio Reasonably good photography is essential to success on eBay. You don’t have to be a professional—but in focus groups of eBay buyers, bad photos were the second highest complaint after poor packaging and shipping problems.

If you are going to be successful on eBay, it is imperative that you develop the ability to take good photographs without taking hours over each one. This will require an elementary photo studio consisting of a tripod, a neutral backdrop, and a few lights.

The only way to make money in the consignment business is with volume. This means you will be taking a lot of photographs. If you have the room, I strongly suggest you set up a permanent photo studio in your garage, basement or any spare space in your home. Otherwise you will find it very time consuming and cumbersome to set up and take down your equipment several times a week.

Taking Good Photos Here are some simple tips to improve your auction photographs. Don’t overlook these, as they are very important to your success.

Camera Selection I am often asked, “Which digital camera should I buy?” In The Complete eBay Marketing System, I attempted to recommend specific cameras and it brought nothing but grief. I was constantly answering email from people with differing opinions. So, I set up a website with some camera recommendations

Olympus, Sony, Canon, Fuji, Nikon Kodak and others all have good cameras. Just make sure your camera has a viewfinder and a decent sized preview screen as there are times you will need both. A Macro (close-­up) feature is also important, as is the ability to turn off the flash. Lastly, make sure there is a convenient way to upload your photos and some elementary software that allows you to crop photos, adjust brightness and contrast and remove red eye. You shouldn’t have to invest in an expensive software program to use a camera for auctions. There are some great inexpensive and even free downloadable programs that will help you crop and fix your images. I use Adobe Photoshop Elements. Just Google photo editing programs and you will find dozens of cheap and even free solutions including one from Google called Picasa.

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Take Sharp Photos The very first thing you should purchase is a tripod. Unless you are shooting in bright sunlight, digital cameras are biased to shoot at fairly slow shutter speeds. This means that any unsteadiness on your part will slightly blur your photos. 11

A tripod provides a steady platform and results in much sharper photographs. You will need a small tabletop tripod for close ups and small objects, and a larger tripod for larger items. If you must shoot without a tripod, try to brace your hands or elbows on something steady.

Many newer models are offering "Image Stabilization" or "Anti-­Shake" features. These are useful in everyday photography, but where you need a really crisp photograph (such as online photography) there is no substitute for a tripod.

Composition Eliminate distracting backgrounds and unrelated objects from your photographs. If you are shooting an object in its natural setting, such as a computer sitting on a desk, clean up the area around the item to remove distracting objects. Hide wires or bundle them up so they show neatly. When you are about to shoot, look through the viewfinder past the subject at the background and see if there is anything that could distract from the photo.

A good way to eliminate distraction is with a neutral backdrop. A backdrop is nothing more than a curved piece of poster board, carpeting or cloth that you place objects on to

11 You can find free digital photo tips at http://www.ezauctiontools.com/photo-­tools/digital-­photography-­tips/

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photograph. The curve of the backdrop is important because it disperses the light and therefore the shadows (as you can see in the second picture below).

Above is an example of a simple table top studio made from a curved sheet of white paper (use matt—not shiny paper), a couple of lights, and some tape to hold it in place.

The lights shown here are studio lights you can get from a camera store, but you can get cheaper ones from any hardware store. Just get a pair of Student Gooseneck lamps. But be sure and use a tripod to prevent camera shake.

A less complicated solution is the light tent. Below is an example of a professional light tent that is very affordable.

This system is available from one of my websites, www.ezauctiontools.com. Light tents are inexpensive and very popular with eBay sellers. They even offer a complete set for consignment sellers that includes six different lights and several sizes of tents so you can handle a large variety of objects. You can also purchase just the tents if you have your

own lights.

Get Close to your Subject The subject should fill most of the frame. Most digital cameras have an optical zoom lens that will allow you to fill the frame without getting too close. In addition to the overall view of the subject, you should use the macro setting to show close-­up details that may be important. If you can’t get close, you can also crop your photo in your photo editing software.

Lighting Digital cameras prefer static light as opposed to flash. Shooting outside on a cloudy day or in open shade on a bright day works fairly well—but you can’t always control the weather or the time of day you have available to shoot. Therefore you will need to purchase some artificial lighting.

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You don’t really need fancy professional lighting equipment. For small objects, a couple of gooseneck student lamps with at least a 75-­watt bulb (100 watts is better) will work fine. However these can be hot, so you can also use the new compact florescent energy saving bulbs. They are not as bright but are much cooler and you can get them in a daylight balanced model.

For larger items, you can buy the cheap clamp lights that will clamp onto practically any nearby object.

The reason you need two lights is to fill in shadows that can be very distracting. Another way to fill in shadows is with a reflector. This is nothing more than a piece of white cardboard or foam-­core that you place on the opposite side of your object to bounce some light into any dark areas.

You can also take very nice photographs using a north-­facing window. Simply place your objects on the backdrop and photograph them using this soft natural light. Be sure to use a tripod for this light to get a sharp photo.

White Balance There is a setting on your camera called white balance. White balance refers to the color of the light or the light temperature you are using. If you are using regular indoor incandescent bulbs and don’t change the setting, all of your shots will have a yellow colored tint to them. If you are using any kind of artificial lighting, just check your camera’s manual for instructions on setting the white balance.

One of your free bonuses with this book is my best-­selling eBook, Online Auction Photos. There are many more tips and techniques listed in there and it is a quick easy read—nothing too technical.

Your Studio Give some thoughts to props. If, for example you are selling clothing, it might be a good investment to buy a store window manikin or a seamstress’s dummy (also called a dress form) to display the clothing on (unless your wife or daughter, or you yourself can model the clothes).

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This seamstress dummy comes in male and female models and costs about $30.

If you will be selling art or antiques, you might want to set up a larger backdrop of textured wallpaper to highlight the objects or use a small Persian rug to place the objects on. You will also need some dark cloth to highlight bright objects made of gold, brass or silver.

Many items have difficult shapes to work with, or can’t stand up on their own. You will need supplies such as tape,

fishing line, wax clothespins and other paraphernalia to help you mount or stand the object up. There is a great product sold to help objects stand up called Clear Quakehold Gel. It is clear and one $15 jar will last for years.

Image Management The other important consideration is production throughput. You will need a system where you take the photos, upload them to a file that is tied to the auctions you plan to launch. For this you will need a good image management software program or an auction management service (such as Auctiva) where you can upload images and store them in specific folders you can create. (See the chapter on auction management systems.)

The main point to this section is: however you do it, you will need the ability to efficiently take, store, upload and manage lots of photographs in a professional, organized and time-­efficient manner.

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Chapter 14

Setting Up A Consignment Storefront This is a very big step, and one that I would not take until you have already proved your ability to be successful and generate a steady stream of cash flow. On the other hand, once you have a proven business model, this is the step that could catapult your business into the big time.

Advantages of a Storefront The leading advantage is instant credibility with your consignors. A storefront sends a message that you are a “real” business. When you visit a prospective consignor, you can show a photograph of your store in your presentation book—this will assure the person you are speaking with that you are a business that means business. Other business owners know the costs of rent, employees, and so on that come with a commercial location. When you have a storefront, you become one of them.

Another advantage is a location where prospective consignors can drop off merchandise—instead of you having to travel to them and pick it up. It also gives you the space to store merchandise until it sells, room for a photo studio, and a professional shipping set-­up. If you consider the cost of gas and the time spent going to people’s houses or businesses to look at merchandise, a low-­cost storefront operation may actually be a bargain in the long run.

Another huge advantage is visibility. If your store is in a good location, lots of people will walk by it, see your sign, and possibly drop in to see what you do. Others will see your store and tell their friends. You also have a location where you can advertise, receive mail, and get UPS pick-­up and deliveries. However, as I will discuss later, do not pay for premium retail space in a high-­traffic location, as the economics tend not to work. This is one business where you definitely need to pay low rent.

Another significant advantage of having a storefront or a building in a commercial location is the ability to get insurance. In some states, insurance can be very difficult to find if you are running a business out of your home. But, once you have a commercial location (even if it is just a warehouse), you will find it much easier and less costly to obtain insurance.

A final advantage is that you get the business out of your home. I am not comfortable having employees come to my home to work. Besides a burgeoning eBay business can

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really eat up a lot of space. Wouldn’t it be nice to turn that extra room back into a guest room?

Disadvantages of a Storefront The first is cost. If you are in a high-­traffic retail location, it could be very expensive and you will probably have to sign a long-­term lease. Now that you are a “real” business you will also have to deal with local and state governments. You will need a business license. You will have to pay employees a wage and this means you will also have to pay for matching FICA taxes, workers compensation insurance, liability insurance, state disability insurance, and more. Every little government agency in the town, county and state will be at your door looking for some kind of fee or another they can wring out of you.

A few days after you open your doors, the Fire Marshall will show up and inspect your location for first aid kits, fire extinguishers, and smoke detectors. You will undoubtedly fail this inspection. About an hour after the fire marshal leaves, you will get a visit from a company selling everything the fire marshal says you need. (For some reason I don’t understand, these companies are almost always owned by the Fire Marshal’s

brother-­in-­law, or someone that sends the fire department free donuts every Monday morning).

Another disadvantage to owning a store is you will need at least one very honest and very loyal employee who can run things in your absence. Finding, training, and retaining such a person can be very difficult. Until you do, you don’t want to get the flu or go on vacation.

There is also some risk. You will have to sign a lease for a minimum of one or two years and then invest in signs, decorations, shelves, counters, furniture, and so on. This can be very expensive.

Owning a business with a retail store location has its plusses and minuses and that is a decision you need to make. Ask yourself: is the cost and risk worth the extra potential income? If the answer is yes, and it may be, then you need to do it right.

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What Kind of Store Should I Open? As realtors say: “location is everything.” The location will determine the rent. The more traffic that walks by the store, and the better the commercial environment around the store, the higher the rent will be.

Depending on the nature of your business you probably do not need a storefront in a retail area. If the eBay franchise store failures prove anything, they prove that you cannot depend on walk-­in traffic to make a profit. So there is no point paying premium rents for prime retail space. A cheaper space in a commercial area, but off of the main business street will work just fine and the rent will be up to 75% cheaper.

Some storeowners even rent space in an industrial park. This will not get you any walk-­in traffic, but people can still easily find you and the rents are even cheaper. Remember, the reasons for having a storefront have little to do with walk-­in traffic. You learned earlier that you have to market your business, so there is little point in paying high rents for retail exposure.

Store Layout You need a counter near the front door, where you can deal with the walk-­in public. This counter should separate the customers from the rest of the store. Remember, you are storing other peoples’ goods and you are responsible for them. You need to prevent people coming in and browsing through the merchandise you have at auction. One shoplifting event can ruin your feedback if the item sells before you realize it is missing. Besides the counter, you may want to install a locking gate so someone can’t just walk behind the counter if you are distracted or working in the back room when someone comes in.

You may also want to install a security system. Besides helping protect your computers, cameras and merchandise, the savings in insurance will often pay for the system.

Next, you should construct shelves to organize and store merchandise until you ship it. The size and type of shelves will depend on what you are selling. (Stores such as Lowe’s, Costco, and Home Depot sell various low cost pre-­fabricated shelves that you can install yourself.)

Since you will probably have an employee to help you, he or she will need a computer and workspace. This should be near the front counter so customers are seen when they walk in. You will also need a workstation for yourself. The best stores have a computer

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on the front counter with a swivel, so you can turn the monitor around to let customers see the eBay listings on the screen.

Lastly, you need enough room to set up your permanent photo studio and shipping table.

How Much Space Will I Need For All of This? This depends on how large you want to grow your business. If it will be just yourself and one employee, you will need a minimum of about 400 square feet. Personally, I would go for something about 600-­800 square feet to give room for growth. Remember, if your business booms and you are stuck in a two-­year lease, you will have to wait until it expires before you can expand.

Leasing Issues Commercial leases can be very involved—but if you break everything down into simple parts, they are fairly easy to understand. Here is a commercial lease checklist that addresses some of the most common issues that occur when a store or commercial property lease is being negotiated.

After reviewing it, you should be in good position to understand what to look for in a property lease. Of course, before signing any property lease, have it reviewed by a competent real estate attorney. The landlord is the “lessor” and you (the tenant) would be the “lessee.” Using the checklist to anticipate problems and having the lease reviewed by your attorney will hopefully keep you from becoming the “screwee.”

q Nature and duration of the lease. Determine the term of the lease, and when the tenant is entitled to possession. Is the lease to be a net lease? What are the duties of the landlord?

q Rent. In the contract, make sure that the amount of rent is stated and when and how it is payable. If you stay beyond the term of the lease,, what is the rent for this period?

q Escalation clause. Since most commercial leases contain a rent escalation clause, determine whether the escalation is keyed to actual increases in operating costs or if it is keyed to some index.

q Competition. If the landlord owns other nearby space (such as other units in a strip mall) you may want to insert a clause that he will not lease to another directly competitive store (such as a UPS Store or MailBox Store that does eBay sales).

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q Renewal. Is there an option to renew, and what is the term of each option? What is the rent for each renewal period? How must the option to renew be exercised?

q Subletting. Is the tenant entitled to sublease the property or to assign the lease? What is required before the tenant may sublease? This could be important if your business doesn’t survive—you can sublet the space to mitigate the remaining time on your lease. On the other hand, if your business explodes, you may want to sublet so you can move up to a larger space. Personally I would not sign a long-­term lease (over one year) without a subletting clause.

q Space. What the landlord considers rentable square feet and what you get in usable square feet space can vastly differ. The location of a building's columns, doors, and windows can affect a tenant's total space requirements. Determine whether the lease provides an option for additional space. Are you given a right of first refusal when additional space becomes available? Can other tenants be moved when additional space becomes available so that your areas are contiguous?

q Taxes and expenses. Determine who is responsible for the property taxes. If the tenant is agreeing to pay only for increases, is there a stated maximum? Who pays for general maintenance and services? If it's the tenant, is the tenant free to contract with whomever they want for these services, or must they be obtained from or through the landlord? Who is responsible for extraordinary or structural repairs or alterations?

q Construction. Does the landlord warrant that the building conforms to all local laws and codes, and will the landlord reimburse the tenant for correcting any code violations? Does tenant have right to inspect before execution of lease and before taking possession? Are there adequate parking facilities and other transportation facilities?

q Work Agreement. Space is rarely taken by tenants in "as is'' condition, whether the building is new or old. The fitting out of the premises to mutually agreed specifications is accomplished by a Work Agreement. A Work Agreement (sometimes called a “workletter”) is a contract between the landlord and tenant describing what is to be constructed, who pays for it and how, what the schedule for completion is, and who is responsible for delays and cost overruns.

q Zoning. What zoning applies to the building, and is your intended use permitted? Are there covenants or restrictions on the property? Are there easements?

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q Liability and insurance. Who is responsible for liability insurance, and what are the limits? Who carries theft, fire, and other casualty insurance? To what extent does the landlord or tenant excuse the other party for liability for injury to persons or property? Tenants should scrutinize any hold-­harmless provisions within the lease with great care. While you may be willing to reimburse the landlord for losses caused by your negligence, you would not want to hold a landlord harmless for damage caused by actions of the landlord. The provisions should indemnify the landlord only for harm caused by the tenant within the leased space.

q Termination. What obligations are imposed on the tenant as to the condition of the property at the end of the lease term? Are ordinary wear and tear excepted from tenant's obligation to return property in good condition?

q Purchase option. Does the lease give the tenant an option to purchase the leased property? What is the option price, and when and how must the option be exercised?

q Grace period. Are there grace periods for default on rent or other conditions in the lease? What are the lengths of the grace periods?

q Enforcement. Are damages specified for breaches of various lease conditions? Who pays attorney's fees for actions to enforce lease provisions?

q Lease commencement date. It is not unusual for a lease to commence on a date based upon some external event, such as completion of improvements or upon the present tenant vacating. Once the commencement date has been established, the parties should sign an amendment setting forth that date as well as the starting date for payment of rent. This will avoid problems that may arise in the future, such as the expiration date and base periods for determining rent increases. Arbitration should be provided for to resolve any dispute, or if a party refuses to sign the amendment. To avoid delaying tactics, a simple expedient is to provide that the losing party pays the arbitration costs, including legal fees.

q Representations and warranties. The landlord may want the tenant to agree to disclaim any implied warranty or take the premises on an "as-­is'' basis without any landlord representations or warranties as to its condition or history. In either case, such a clause will impede the tenant from holding the landlord responsible for losses attributable to it. A tenant still wishing to lease the space on such a basis should at least request the landlord's specific representation as to any problem of which the landlord is already aware, and ask the landlord to have pre-­lease tests

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conducted by an independent building inspector. Personally, I would not lease space under those conditions.

q Use restrictions. Are there any limits on the kind of business you can conduct on the property?

q Improvements. The tenant may wish to add "improvements'' to the premises which might be of value to the tenant, but not future tenants. Determine the extent to which the landlord will allow improvements.

q Right of entry. It may be in the best interests of both landlord and tenant that the landlord be permitted entry to the premises on an as-­needed basis, despite inconvenience to the tenant, even if a shutdown for repairs is necessary. The tenant should plan to cooperate in these situations.

q Legal compliance. The landlord may want to include a provision whereby the tenant is obligated to comply with all present and future federal, state and local laws, including future environmental laws, affecting the leased premises, tenant's business, or any activity or condition involving the premises;; to change, reduce or cease any non-­complying activity;; and to install pollution control systems, equipment, safety devices and the like in order to comply. This is unlikely to affect you, but you will see it in most commercial leases.

Don’t rush into a lease. Take the time to read and understand the documents using this list as a checklist to understand all of the terms. Even if you have to pay a little extra, it is usually a good idea to sign a lease for the shortest term the landlord will agree to. If you can find a month-­to-­month lease that is the best of all.

Website If you open a store, then you will want a website. The website should tell prospective consignors what your services and fees are, it should have a page where the consignor can look at the contract they are asked to sign, a list of items that you will not accept, your payment policy, and a link to your eBay auctions so consignors can follow their sales. You can build a simple quick website that will accomplish all of this with XsitePro.

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Chapter 15

Fees & Costs Cost control is one of the major challenges of any business. You can’t control your costs unless you know what they are. This will be one of the most time-­consuming of your non-­auction chores, but probably the most important.

I strongly suggest you automate your record keeping with a system such as QuickBooks. The popular Quicken software is cheaper, but it’s not really up to running a full-­time business. You may also want to hire a part-­time bookkeeper to do your quarterly taxes. There are a lot of complications to the tax code once you have employees that can result in fines if not filed and paid on time and in the correct amounts. Fifty dollars a month spent on a bookkeeper can free up your time for more productive work and keep you out of trouble with the state and federal tax people.

Costs of Doing Business As mentioned above, you must know what all your costs are before you can control them. Whether you work out of your home or open a store here some of the costs you will need to track:

• eBay Listing Fees

• Final Value Fees

• PayPal Fees

• Internet (ISP) Fees

• Credit Card Processing Fees

• Labor (salaries)

• Payroll Taxes

• Benefits

• Advertising

• Rent

• Office Supplies

• Utilities

• Telephone

• Insurance

• Travel/Entertainment

• Loan Payments

• Automobile Expense

• Banking Fees

• Shipping and Postage

• Money Owed and Paid to Consignors

• One-­time Costs (deposits, furniture, computers, office equipment, etc.)

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You may have more expenses than these. The best way to track your expenses is to open a business checking account, tie it to your QuickBooks account, and resist the temptations to use your business account for personal use (this really complicates your bookkeeping).

If you need to take money out of the business for personal needs, take it as an expense reimbursement, salary, bonus, or dividend. Don’t use the business account debit card to pay for a new shirt or the latest CD unless you plan to turn around and sell it on eBay. Keep receipts of all your expenditures. Don’t forget to back up your financial and tax records if you keep them on a computer.

Cost Control Running a small business is an exercise in watching your pennies so the dollars take care of themselves. The great thing about QuickBooks is you can get a print out every month by category of expense so you can see where your money is going, right to the penny. You can also track your expenses month-­by-­month to spot trends. For instance, you notice that your telephone bills are increasing—is it time to shop for cheaper telephone service? If you see your eBay fees taking a big bite (you will), then you should look at how you are posting your auctions. Are you paying reserve fees? Are you listing your items above the eBay insertion fee breakpoints? If you are paying special feature fees, are they working? Did eBay change the price of an option and you didn't realize it?

The point is that you won’t know how to control your costs unless you know exactly what your costs are.

Power Tip There is a popular myth that most businesses fail because they were underfinanced to begin with. In fact, most

businesses fail not because they were under-­funded, but because they did not understand their cost structure from the beginning. By the time they discovered where their money went—the money was gone and it was too late to do

anything about it.

Once you have systems in place to monitor and control your costs, you should go back to your business plan and adjust it using real numbers.

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I know that looking at this chapter can be a bit scary. You look at all those fees and costs and say to yourself, “how do I make money?” Don’t stress out over this too much. it is really simpler than it looks and as long as you understand and pay attention to your costs, you will do fine.

Write down your financial goals and targets and measure your progress each month. You may find that over time, your projections were too low or too high. Once you have been running your business for a few months, you will get a better feel for how much you have to invest in advertising and promotion to drive business. Now you can make investment decisions with a greater degree of confidence than when you were just starting out and everything was based on estimates and guesses.

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Chapter 16

Organization & Record Keeping We have already addressed the need to be organized and to keep cost data. However, there is more. Your ability to keep good records and have them organized so you can find them will be critical to your long-­term success.

Here is a list of the information categories you will need to organize, file and control:

• Contact information on each consignor

• Consignor contract, payment receipts

• Merchandise in/out by consignor and buyer

• Tracking non-­paying bidders

• Merchandise storage (connecting the storage location with the auction)

• Shipment tracking

• Delivery confirmation

• Posting feedback

• Payments for auctions

• Image management

• Auction templates

• Personnel data on employees

• Insurance papers

• Warranties and service contracts

• Tax documents

• Correspondence (email and snail mail)

This looks a little complicated but it really isn’t if you take the time to set it up right. Tracking and storing this information will require both an organized electronic and physical filing system. Don’t forget to back up your data frequently.

Looking at this list, you may say: “Whoa—do I really want to get into this?” Only you can answer that question. If you are not an organized person, you should either forget about

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this business or hire someone to help you do it. Notice I said: “hire.” Unless you are married to them, I would forget about a partner. Business partnerships seldom succeed and often lead to lawsuits at the very worst and losing a good friend at the least. I would never go into a partnership with a family member unless it was my spouse.

If you are going to go into business with another person, I recommend you set up a simple corporation where you, or your family members, have at least 51% of the voting stock.

If you find an investor to invest in your enterprise, I would advise seeking professional investors, rather than family and friends. The problem with family and friends investing in your business is that you feel an emotional attachment to their money and pressures you would not feel if some stranger invested in your business.

There are exceptions to this of course. If you have a wealthy relative who can easily afford to lose a few thousand dollars that is one thing. But don’t convince someone to borrow on their home, or their 401K, to invest in your business. You will never forgive yourself if you lose their money. (This is the voice of experience speaking!!!)

A good bookkeeping system such as QuickBooks can easily organize your financial information and generate monthly reports to help track your finances and control your cash flow. QuickBooks can also easily generate the data you need to file sales tax reports and quarterly estimated tax statements to the IRS.

One of the things you will need to track are the goods consignors brought in, when they sold, how much they sold for, your commission, the eBay fees and when payment was made. I would set up an Excel spreadsheet for this purpose. The software programs and online auction management systems covered in Chapter 12 can perform a lot of these tasks for you.

You will also need to sign a contract with each consignor. This can be a very simple agreement laying out the terms of your service, your fees, and how the merchandise will be returned or disposed of in the event it does not sell. I have prepared a sample contract that is located in the bonus contract files.

One word of warning: although I have prepared hundreds of contracts over my lifetime, and I had a lawyer review the contract in the bonus files, I suggest you still have your lawyer check it over to assure compliance with state and local laws.

Any time you spend setting up systems and files to help organize and control your business will pay huge dividends in time and cost savings once your business is up and running.

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Chapter 17

Writing Your Business Plan Every business needs a plan. The most famous statement about business planning goes: “Those who fail to plan—plan to fail.” This is an incredibly true statement. Running a business without a plan is like sailing a boat into uncharted waters. Running a business with a plan is no guarantee of success—your boat may still hit a sandbar, but you will have a plan for getting off the sandbar.

You don’t need an MBA from Harvard to write a business plan. The essence of business planning is understanding what business you are in, who is your target market, setting your goals, setting out a list of tasks to get you there, understanding how much money it will cost, how you will spend it, and setting up contingencies if something doesn’t go as planned.

Let’s look at some of the elements of a good business plan.

What Business Am I In? This is where you describe your business. The key here is to focus. Focus on products, market, or geography—but have a focus. Don’t start a business that will do anything and everything on any given day.

What Market Am I In, and What is My Marketing Plan? Where and how will I find my consignors? How will I advertise? Will I specialize and, if so, what will I specialize in? What goods will I look for and how will they sell on eBay? Am I going after the individual market or the business market—or both?

How much will I have to invest in advertising and promotion? What is my expected return? How much will it cost me to acquire a consignor?

What Resources Will I Need? What will I need that I do not now have? Computers, cameras, photo equipment, physical space, employees, office equipment, etc.? How much will this cost? If I plan to hire employees, what will they do and how much will I pay them?

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How Much Will I Need to Invest in My Business? This is where you create a cash flow plan. Lay out your first-­year costs, month-­by-­month on a spreadsheet. Total them up by month. Now, project your sales and income month-­by-­month. At some point your income should exceed your costs. This is your “break-­even point.” Don’t forget to calculate how much money you will have to take out of the business to live on. (See the sample spreadsheet on the following page.)

There are two main categories of cost you must track. The first one is how much are you spending to attract consignors. At first you will have to estimate this. After a few months, you will want to measure this cost based on actual data. Once you know this cost you will be able to analyze it and control it.

The second category is your selling costs. This includes your eBay and PayPal fees, Internet service, rent if you have a storefront, and so on. Once again, you cannot control your costs if you don’t know what they are. Put another way: “You can’t control something you can’t measure.”

Total all the expenses until you hit your break-­even point and add 20% to it (for a safety margin). This is the amount of investment you will need to start your business.

What Is My Growth Plan? How will I grow my business beyond the first year? How large a business do I wish to build? Will I need more investment in the future? Where will it come from?

A business plan is nothing more than a map to follow—but as anyone who has ever followed a map over unfamiliar terrain can tell you, there are detours along the way that no map can predict. A map, or a business plan, is a snapshot in time. Landslides can change the terrain and economic conditions can change your business plan. A famous military saying is that no plan survives the first contact with the enemy, yet military planners still plan –they just add room for contingencies.

A map will keep you headed in the general direction with a destination in sight;; a business plan will likewise keep you headed in the same direction with an outcome in sight. A landslide is just a temporary obstacle. Changing market factors or economic conditions may cause a slight change of direction or strategy, but the outcome should remain the same.

If you are starting small and plan to bootstrap your business, your plan may not need to answer all of these questions right away—but you should give some thought to all of these

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issues if you plan to grow your business beyond a part-­time endeavor. But most importantly, don’t plan in your head. Write it down.

The illustration below shows a sample cash flow projection. This example is for six months. You should do one for at least a year.

This is an example of a simple cash flow spreadsheet. The numbers are invented for purposes of example. Note that I have only shown the commission income—not the eBay

Income Jan Feb Mar April May June

Commission Income 2,000 2400 3000 3500 4000 5000

Fee Income 50 60 70 80 90 100

Sub-­total 2,050 2,460 3,070 3,580 4,090 6,000

Expenses

eBay Fees 350 400 450 500 550 600

PayPal Fees 250 300 350 400 450 550

ISP & Web Fees 35 35 35 35 35 35

Telephone 45 45 45 45 45 45

Rent 600 300 300 300 300 300

Utilities 30 30 30 30 30 30

Advertising 200 200 200 200 200 200

Shipping supplies 40 50 60 70 80 100

Office Supplies 100 25 10 10 10 10

Miscellaneous 500 200 100 100 100 100

Salary 1000 1000 1000 1000 1000 1000

Sub-­total 3150 2585 2580 2690 2800 2970

Total Income 2,050 2460 3070 3580 4090 5100

Total Expenses 3150 2585 2580 2690 2800 2970

Net Cash Flow -­$1100 -­$125 $490 $890 $1,290 $2,130

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selling prices. You will need to estimate and calculate eBay fees and PayPal fees based on the number, starting price and final value of the items sold. Notice that one of the expenses is salary. At first that is salary for yourself, but later as you grow it would go up if you add an employee.

The lower the item price, the higher the fee percentage will be. It's worth using a free service like ebcalc until you are comfortable estimating eBay and PayPal fees.

Also, notice that I have shipping supplies as a cost element. You should also estimate shipping charges that you collect from buyers on the income side.

In this example you have just over $1,000 in negative cash flow the first month. By the third month, your cash flow is positive, but not by very much. As you can see each month looks a little better as your business grows and by the sixth month you are earning a reasonable income.

Don’t be discouraged by this example—it is only that, an example, to show you how to construct a cash-­flow statement. You could get lucky and find a small business that wants to sell a $20,000 digital telephone switch your first month in business and your results would be quite different. The idea here is to plan and know what the reality is if you don’t find that big sale right away. Also, if you are operating out of your home, then your expenses will not be this high and your cash flow will turn positive much sooner.

Once your business is up and running, it is a good idea to compare your actual numbers with your plan to see how you are doing. If necessary, you can adjust your plan each month as you get a better feeling for the “real world” numbers.

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Chapter 18

Other Consignment Venues and Methods eBay is not the only place to sell and even on eBay there are different selling methods and venues. eBay Motors works differently than eBay.com.

As a consignment seller, you will often be offered merchandise that although it will sell, may not sell very quickly—or not in the auction format. You may often get merchandise in large quantities of the same item. Selling the items in wholesale lots will turn your cash quickly, but may not bring top dollar.

For example, a retailer is closing out a line of toy figures. He or she has 200 of the same item to sell. Instead of putting up 20 lots of ten, or an auction for 200 items, you might try listing them as one lot for sale in an eBay Store or using an eBay Fixed Price listing.

eBay Stores eBay Stores is basically a venue for fixed price merchandise. The listings run for 30 days (or good til cancelled) with a fixed Buy It Now price. You can list one item, or a quantity of items. The fee is the same however many items are available within that listing.

Customers can find your store in several different ways. eBay has a Stores tab on the eBay home page which takes buyers to the eBay Stores hub where they can search items that are only listed in an eBay Store. The other way

customers find your store is from your auction title page. Next to "Visit store" is the name of your eBay Store. In my case, it's The Auction Seller's Resource. When a bidder clicks on this link they are taken to a list of your auctions in the eBay store. If a seller clicks on "View seller's other items," they will see a list including all of your active auctions and eBay store listings.

Although the eBay Store listings look just like an auction, Bidders do not "bid" on items in your eBay store. The only

way to buy is with the fixed "Buy It Now" price.

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If you have multiple quantities of the same item for sale, or similar items for sale, you can drive traffic to your eBay Store by mentioning it in your auction description. You might place a line such as: "If you do not want to wait until the end of this auction to receive your NFL Coffee Mug, you can buy it now from my eBay Store." (The words eBay Store would be a hyperlink direct to your store listings.) If you have similar items in your eBay store you might say: "I have dozens of other sports collectibles for immediate sale in my eBay Store. Please click here to view them.

The advantages of an eBay store are many. You can list items for an unlimited time with the Good Til Canceled feature;; the listing fees are much lower;; all of your ongoing auctions and your emails to customers can have a link to your eBay store. You can also submit your store URL to directories and search engines with a specific referral code that will give you a Final Value Fee discount on all of your purchases that come from that visitor.

However, there is an issue with the fees. eBay Store subscribers get lower fees than just listing in a Fixed Price Listing without a store (see below). A basic store subscription costs $15.95 per month. With a basic store your listing fee is $0.20 versus $0.50 for non-­subscribers. So you have to list at least 54 items per month in your store to recover the $15.95 per month subscriber fee. If you don’t list at least that many items in your store each month, then its better to just use a standard fixed price listing. We will talk about those next.

eBay Fixed Price Listing In 2010 eBay announced a change to the fixed price listing (FPL) format. Now you can list an unlimited number of items for one low FPL fee. The final value fees are a bit higher than for an auction listing, but the lower listing fee and ability to have more than one item available per listing makes up for this. The best feature about FPL is that they run for 30 days but also show up in the eBay search engine whereas eBay Store listings only show up when members search in stores. Also, there is no monthly fee for Fixed Price Listings whereas eBay Stores do have a fee whether or not you list any items.

A Fixed Price Listing works best for items that have an easily set value. They are also good for situations where you get a lot of identical products. For example, if a local business gave you product they wanted to liquidate and they have multiple quantities of the same product. This would be a good time to try Fixed Price Listings.

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It is also a good place to park slow selling inventory. You can put something up on eBay where it will get exposure for a very small listing fee (50 cents for a month, less if it's a "media" item).

Product Website Earlier we mentioned a website where consumers could find your consignment business. But you may also consider setting up a website to sell products. This works best if you tend to specialize. For example, there are consignment sellers who specialize in auto parts and accessories. That is a good specialty to work with a website. When you put an item on eBay, you would also list it on your website. If the item sells from your website, you don’t have to pay any eBay fees. One word of caution, however: When something sells on your website, be sure and take it down from eBay immediately so you don’t sell the same item twice (you can cancel an eBay auction with bids if it has already sold at a different location, but it's better to limit it to Fixed Price Listings if possible).

It is now very easy to build a website even if you have no technical skills. Here is my recommended service:

SiteSell

Shopify also offers a good and quick website solution.

You can use PayPal's web accept and free shopping cart to accept payments for no monthly charge (you do pay a per-­transaction fee though, just like with eBay sales). You may eventually want your own custom designed website, but this is a great way to start. I would avoid the consumer website services that offer free pages for families and hobbies, etc. They are not set up for e-­commerce.

You don’t need a professionally designed website to begin with—all you need to start is a good basic site with a shopping cart and the ability to accept credit cards. PayPal fills this need very well, although you may want to open a merchant credit card account to allow you to accept credit card payments from consignors.

Online Classified Sites The two largest online classified sites are Craigslist and eBay Classifieds. Craigslist is the larger and more popular of the two, but eBay Classifieds are becoming more popular. Basically, I use these venues for selling items that are very large and difficult to ship. I recently sold a zero turn riding mower for a consignor for $6000 on eBay Classifieds. The fee for one month classified ad is $9.95. Craigslist is free to list.

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Both sites work essentially the same. Craigslist is by far the largest so we will concentrate on it here. If you learn how to use Craigslist you will find eBay Classifieds very easy.

Craigslist is organized by geographic location. You can only post ads in one location per account. For this reason we suggest you get several Gmail or Yahoo email addresses and open several accounts.

When you go to Craigslist it will default to your own area, but you can see a list of cities on the right that you can click on, then narrow down to a specific region. If you want to find something to buy, you first click on a category link under the For Sale tab in the center column. If you want to post an ad, you click on the link in the upper left where it says post to classifieds.

If you are going to post an ad, it's worth setting up an account first. You don't actually have to (clicking post to classifieds will let you list items) but you will want an account to

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manage your listings. If one expires and you want to repost it, you can do it very easily if you have an account. Otherwise you would have to retype everything. The ad posting process requires one less step if you have an account too.

To create an account on Craigslist, click on the my account link.

Clicking on the For Sale link for sporting will take you to a page that lists the ads. It looks like this:

Notice that the ads are organized by date. Each day that goes by, your ad drops further and further down the page. This is the opposite of eBay where as you get closer to the end of the auction, your item comes up on top.

So, one strategy is to place your ad for a few days and then cancel and repost it after a few days to keep it on top. However, old ads do get found. I had a scuba drysuit on Craigslist that I forgot about. One day about a month after posting it, I got an email from a buyer in Georgia who was interested in it. We corresponded by email and he sent me the money by PayPal.

Different cities have different expiration times. For example, posting on my local Craigslist, I have to wait seven days from when I initially posted the ad to repost (even if I delete the old one). However, Seattle (our closest major city) let's you repost after three

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days because the volume of ads per day is far higher. Likewise, your ad will automatically delete from a major city's Craigslist quicker than a smaller town's one.

Here is a copy of a Craigslist posting I recently sold: (Sorry this is hard to read but the image was difficult to fit on the page).

As you can see, a Craigslist post is very similar to an eBay listing, but there is no bidding. If someone is interested they email you with questions or an offer. Your email address is hidden from them so you can ignore any spam or spurious offers.

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It is quite common on Craigslist to negotiate. If you are selling something for $300 the first email you might get is from a person asking if you will take $200. You can respond and start the negotiations or you can ignore these requests.

A note of caution: There are email farmers who have autoresponders for craigslist posts. These tend to be generic emails that say something like "I am interested in your item and would like to know if it is still available." Or simply, "Is this still for sale?" It won't name your item because no-­one actually looks at your listing before the email is sent to you.

As soon as you respond (thus giving them your actual email address), you get an auto-­response back saying, "Thanks but I already bought one" or something similar. Your email address just got farmed and you can expect random junk emails to start arriving soon.

To avoid issues from this, use a free service like Hotmail, Yahoo, or Gmail for your Craigslist email. Do NOT use your main email address.

Craigslist or eBay? How do you decide what to sell on eBay or when to put an item on Craigslist instead? The first fact you need to know is that you will generally get less on Craigslist—not always, but this is usually true. However, you do not have the hassle of shipping so sometimes this outweighs the price difference—particularly for items that are awkward shapes and need special packaging that takes longer to organize.

Depending on the type of business you set up, you may be organized to ship large or heavy items. Personally since I work out of my home, I don’t want to bother with that. So in general (not always), if something will not fit in a standard sized box or weighs more than 40 pounds, then I put it on Craigslist. Of course there are exceptions. I once sold a complete set of sound studio equipment for a local recording company that went out of business. It was about $20,000 worth of equipment so I wanted to sell it on eBay to get a higher price. It took six large boxes to hold all the equipment and the entire shipment totaled about 200 pounds, but the effort was worth it because I made a 30% commission on $20,000.

On the other hand, I had a $400 very heavy electric potter’s wheel to sell. I didn’t want to deal with shipping it, so I put a listing on Craigslist. It sold for the $400 asking price and the buyer came with his pick-­up truck, paid me cash, and took it away.

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Power Tip Know your area. If you live in a rural area where there are no shops selling a particular niche of items, these will usually command higher prices on Craigslist. For example, the closest Babies R Us to our town is 90 minutes drive away. So, used baby/kid items (jumperoos, exersaucer, high

chairs, outdoor play equipment, etc.) go for good money on our local Craigslist. The prices on the nearest major city

(Seattle) are lower because there are many local stores that offer these products.

So when it comes to shipping, you really have to ask yourself how much work you are willing to do and for what money. If you run a drop off store or a truly large consignment business you will probably have to get set up to ship large items as this type of merchandise tends to be more valuable. But if you want to operate out of your home then you should become familiar with Craigslist and use it to sell your larger items.

Amazon

I left Amazon for last because they are known as the venue for new merchandise, whereas most consignment items are used. There are some big exceptions: Used books, CDs and DVDs, sports memorabilia, and used kitchen products (in excellent condition) sell quite well on Amazon.

Amazon is a fixed price site, with no listing fees, but they charge a commission on each sale. The normal commission is 15% on most items, but there are some exceptions. If you Google Amazon Fees there are links to the detailed fee schedule.

Earlier we covered working with Retailers to reduce their stock. This is almost always new merchandise. So, Amazon is being used by more and more consignment sellers of this type because Amazon outsells eBay almost 10 to 1.

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Chapter 19

Cost Control -­ Reducing Your eBay Fees eBay has several types of fees. Understanding how eBay calculates their fees is essential to learning to control them. The various fees are categorized as Insertion Fees, the cost to post an item for sale, Final Value Fees, the cost to sell an item, and Fees For Additional Listing Options.

The fees listed here are for auctions only. I talked about Fixed Price Listings earlier in the book. Those (and eBay stores) have their own fee structure. To see the Fixed Price Listing fees click here. For eBay Stores, click here.

eBay Insertion Fee: eBay gives you listing fee credit for your first 50 listings each month, then they charge 30¢ per item after that.

If you use the eBay Sell Your Item form, your first 50 listings per month do not have an Insertion Fee. (Final value fees exclude shipping cost unless you offer free shipping. In that case, the final value fee is for the total amount of the sale. (The offset to that is items with free shipping sell much faster and you can build your shipping cost into the price.

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Final Value (selling fees):

You are only charged a final value fee if something sells. If an item fails to sell you may re-­list it in the same category without paying an additional listing fee, but you will still pay the final value fee if the item sells.

Optional Feature Fees: eBay offers several optional listing features designed to make your listing stand out and to place your listings where they will be seen by more potential bidders. These fees are discussed in greater detail below.

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Review of Optional Fees If I am selling an item with at least a $40 profit margin, I always use the bold option. The Bold option is a good value. eBay research shows that bold items achieve a 26% higher average final value.

List in two categories is a great value if you have the profit margin to support it. This feature will usually result in increased hits.

Buy-­It-­Now (BIN) is a great feature and it’s free This feature lets you set a price where a buyer can end the auction and buy the item for the price you state. I use this on almost all of my auction listings.

Fees are where eBay makes their money. They are also a major portion of your selling costs. Be sure to keep track of your fees so you know how much you are spending.

eBay Calc is a free interactive program where you enter your item’s costs and it calculates the fees for you using different starting prices, options and so on. This is an excellent program that will really help you reduce and control your fees over time.

If you sell on Amazon there are no listing fees and final value fee (Commission) on most items are 15%

eBay Motors You may be approached to sell a car, boat, truck, trailer, jet-­ski, motorcycle, etc. on eBay. Some states require you have a dealer license if you sell over a certain number of vehicles per year, so be sure to check your state's regulations. From a fee perspective though, it's not that expensive. Here is the current schedule:

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For this reason, I suggest you require the successful listing fee upfront as a "listing fee" from your consignor, but then deduct it from your commission if the item sells (or offer a slightly lower commission).

You can see all of the eBay Motors fees here.

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Chapter 20

Listing and Selling Strategies When it comes to a listing strategy, the issue of reserve price auctions is one of great concern to consignment sellers.

I know PowerSellers who never use a reserve, no matter how expensive an item is. Of course these sellers tend to sell popular items that almost always sell such as digital cameras, computers and so on.

Many eBay drop off stores have a policy that all auctions must start at $1.00 with no reserve, unless you pay them a special fee of $19.95 to launch your auction.

What is the reasoning behind these strategies?

Starting an item at $1.00 (or any low number) attracts attention—and eyeballs—to your auction. As you will see in later chapters, you need to get a bidder's eyeballs to move from your auction title (headline) into your auction description to make a sale. The more bidders who click on your auction, the more bids you will get—and the higher your final price will be.

Bidders look for action. The number of bids you have received is posted on your item description title page and in the search results. eBay has proven that active items (those with a high number of bids) get more bids. Therefore, getting the bidding started is crucial to realizing a high bid price.

Starting the bidding for an expensive item at a very low price is an excellent strategy, as long as you are selling a desirable item that is in demand. You would not want to use this strategy if you are selling an arcane item or something for which there is a very narrow market.

Reserve Price Auctions (RPAs) I can’t find the data anymore, but about two years ago someone did a survey and found out that over 30% of eBay bidders will not bid on a reserve price auction. As anecdotal evidence, I have seen hundreds of posts on the eBay message boards citing the same fact. No one likes reserves. Many people think they are somehow unfair. Millions of eBay sellers just have a negative emotional reaction to an RPA.

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The only exception to this seems to be on eBay Motors, where people realize that the risk of putting a $60,000 Porsche up for bid with no reserve is simply too risky. You will also find that people who buy artworks, expensive jewelry, real estate, boats, jet planes and so on, also understand the need for a reserve price.

The other issue for the seller to consider is the fees. Last year at eBay Live, eBay threw a party for Titanium PowerSellers. I met one consignment seller who does over $80,000 a month on eBay selling primarily consumer electronics that companies are liquidating. He sells items such as digital cameras for under $200 up to and including $2,000 Plasma TV’s. He told me they used to use a reserve on anything worth over $500. After two years he did an audit and found that eBay reserve fees (and the higher listing fees)12 where costing him over $3000 per month. He tried selling without a reserve fee for two months. In a few cases, he actually ended up selling an item for less than his cost—but, his final bids on the more expensive items tended to be about 8 percent higher and his hit counters were showing a 12 percent increase when he added the letters “NR”13 to his auction title. Most of all, he was saving far more on his eBay fees than any money lost selling the occasional item at less than cost.

High Starting Price Another strategy to make sure something doesn’t sell for well below its value is to start the auction with a high starting price. The downside to this is sometimes it’s hard to get that first bid. So you are left with starting a listing at a low price and either taking your chances or using a reserve.

One way I get help with that decision is to check the completed listings on eBay like we will show you how in the chapter on research. Look at two things: The sell through rate and the average final price. If the final prices are close to what you are looking for and the sell through rate is over 50% then you may be safe just using a low starting bid. But it they don’t match up to what you are looking to realize then you might try a low starting bid with a reserve.

12 When you use an RPA, eBay charges the reserve fee plus the listing fee is charged as if the reserve price was the starting price.

13 No Reserve (NR)

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Strategic Decisions Now, what does all this mean for the consignment seller? The strategy you use may depend on who your consignor is. If an important consignor (an estate attorney who gives you lots of business) gives you an expensive item that sells for a pittance because you did not use an RPA, then you might lose an important source of ongoing supply.

In the end it all comes down to your experience and judgment. To use, or not to use, an Reserve can sometimes be a difficult call. Once you have completed hundreds of eBay auctions, you will gain the experience to make this call without losing sleep over it.

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Chapter 21

Research: The Key to Profits One thing about consignment selling you will have to adjust to, is selling all types of goods—many that you are not familiar with, or even know if they will sell on eBay. In the morning you might launch an auction for a collectible carnival glass piece and in the afternoon, an old gentleman walks in with vintage tractor parts. A little later, someone calls you wanting to sell his or her mineral rock collection. The next day an attorney calls you to liquidate the equipment from a restaurant that is going out of business. How do you know how to price all these different items? Fortunately, there are plenty of research tools at your disposal.

Ask the Seller Your first step is to ask the seller to tell you everything they know about the merchandise. What is it? Where did it come from? How old is it? Do they have any idea of its value? (Be careful believing what they say—many people have an overblown concept of what their treasures are worth.)

Searching Online There are several search options available to you. eBay has a very powerful search engine. Terapeak has a comprehensive research service that searches completed auctions and tells you not only what something sold for, but also the best time and day to list the item, the best category to sell it in and other helpful information. The service costs $24.95 per month. Another popular service is HammerTap. I have used HammerTap for several years and like it, but I have lately switched to Terapeak. HammerTap was sold and the new owners have really dropped the ball on support and customer service

If you are researching antiques and collectibles, be sure to visit www.tias.com. TIAS is an online mall of over 15,000 antique dealers. You can search by product and see what other dealers are saying, and what they are charging for specific collectibles.

Kovel’s Online (www.kovels.com) has more than 12 price guides online. You can now search and browse through appraiser-­approved actual PRICES for more than 450,000 antiques and collectibles! Establish values for your Federzeichnung vase or look at seven-­year market trends for mass-­produced items, like an Adam Depression glass plate or a Roseville Magnolia vase. Kovels also has an excellent yellow pages resource of

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antique and collectible sites and great articles on spotting fakes. If you are going to sell antiques and collectibles on consignment, this site is an absolute MUST resource.

eCommercebytes has an excellent resource with links to collector sites for all type of art, antiques and collectibles. Click here to access the links.

There are over 3000 price guides printed on coins, stamps, art, and various antiques and collectibles. Many of them can be found at your local library. If you live in a small town, your library probably has the capability to borrow from a major city or the state library so all of these should be available to you.

For general searches, my favorite Internet search engine is Google (www.google.com). Google is a very fast and powerful search engine. You can search worldwide or domestic, in various languages, search for photos and images, and there are tools built in for advance searching techniques.

eBay Search Engine You will probably use eBay’s search engine more than any other. If you are trying to estimate an item’s worth, I suggest you search closed auctions only. What something sold for is a more reliable guide, than current bids on ongoing auctions.

Go to the Search tab at the top of any eBay page. When the search page opens, click on the tab that says: Advanced Search. This will take you to a new page where you can use the techniques listed below.

Searching More Effectively There are literally thousands and thousands of items listed up for auction on eBay, and finding exactly what you are looking for can be a real chore. EBay’s search engine is quite powerful, but to obtain the best results, should be used properly. Here are some simple, but powerful tips and tricks for searching eBay auctions and finding the item(s) you want. Remember: eBay’s search capability searches only the titles and does not search through the listing descriptions unless you check the Search Description box. Checking this box will bring up many more listings—sometimes too many. Try searching titles only at first. Use a description search only if you can't find the item on the first try.

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Search Completed Listings If you search for something on eBay, you only get the current auctions and the current bid prices. Once you select Advanced Search, look on the left hand column of the page and find the radio button for Completed Listings. Completed Listings will show you all of the listings that ended in the prior 30-­days along with their final value and whether they sold or not.

This is the information you want. Learning what other sellers are asking for something isn’t much help. But knowing what something actually sold for –or if it sold or not, is crucial information. You can even look at the successful listings to see what the seller did –or unsuccessful listings to see what a seller did not do. This is valuable competitive information. There is also a button that says Sold Listings, but if you search that you have no idea what percentage of an item sold (the Sell Through Rate

Locating Auctions That Include a Specific Word If you want to find all listings that include the word "watch" in them, you'd simply enter the word watch in the search field at the top of most of the listing screens and press Enter. All listings containing the word “watch” would be displayed.

Narrowing Your Search Since using a single word for your search can return too many results, you may want to narrow the search to get down to a more specific need. For example, suppose you are looking specifically for Timex watches as opposed to just any watches. Then you'd enter Timex watch. This would return a list of all results with both the words Timex and watch in them and exclude all that do not contain both words.

Narrowing Your Search Even More If you are looking for auctions that include certain phrases, or words that go together in a specific order, try this: If you are searching for teddy bears, you can use quotation marks. The command you would use is "teddy bear". This will return a listing of all listings with the words teddy bear in them. The word bear must immediately follow the word teddy for the listing to show.

Finding Listings with One of Multiple Words If you are searching for auctions that have one of multiple words, you put the words between parentheses with a comma separating each word. For example, if you wanted

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to find all auctions that include the words teapot or teacup in the listing title, then you would enter (teapot,teacup) in the search field. This would return all listings that have either the word teapot or the word teacup in their listing. Make sure you type the parentheses and don’t put a space between the comma and either word. You can also include other keyword functions. For example flowblue (teapot, teacup) will return all items that have the word flowblue and either teapot or teacup in the title. Note: There is a space between the word flowblue and the opening parentheses.

Locating Listings with One Word but Not Another If you are looking for watches, but are not interested in Timex watches then you would enter: watch -­Timex. This would return all results whose listings included the word watch, but excluded the word Timex. Note there is no space between the minus sign and the excluded word.

Offline Research Tools You will also need some traditional reference tools, such as antique price guides, books about collectibles, and other traditional reference materials. These books can be very expensive. You can save a lot of money by purchasing them at flea markets and secondhand bookstores. The prices will not be up to date—but that is ok, because you can always research the prices on eBay. The books are very useful in helping you identify what you have, getting the correct names and spellings of unfamiliar items, and helping you correctly date items. One of the best general books is the Kovel’s Guide to Antiques and the Kovel’s Guide to collectibles. These books sell for over $25 new, but you can get a one or two-­year-­old copy in any secondhand bookstore for about $5.

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Chapter 22

Auction Calendar: Best Time to Launch Auctions One of the keys to earning maximum bids for your auctions is to end your auctions during times of maximum activity on eBay. The more people online searching and browsing, the better your auctions will do. People, especially impulse buyers, tend to look for auctions ending within a few hours—or sometimes even minutes—so they can bid live or snipe. Here is a calendar to help you pick the best days to end an auction:

Monday Excellent

A lot of people surf eBay at work. After the weekend they need their "eBay fix." Lunchtime is a good time to catch those browsers, but Monday evening is also an excellent time.

Tuesday Worst Tuesday statistically receives the lowest number of bids on eBay.

Wednesday Poor Wednesday is average.

Thursday Fair Thursday is a good time to end an auction in the spring and summer because people who go away for the weekend will bid on Thursday before they leave.

Friday Fair Friday before 7:00 PM can be a good day for students and young people.

Saturday Good Saturday daytime is OK, but Saturday evenings are poor

Sunday Excellent Sunday evening is the highest time of bidding activity on eBay. If your auction ends about 4:00-­6:00 PM Pacific time) you will maximize your bidding activity.

Remember eBay times are Pacific coast time, three hours earlier than the East coast.

As you can see, the auction duration you select is closely related to what day your auction will end. I personally prefer to launch my 3-­day and 10-­day auctions on Thursday night so they end on Sunday. An exception to this is holiday weekends when Monday is a holiday. A lot of people will be gone on Sunday, returning on Monday night. Also, be

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careful to end auctions when the time competes with other events such as election night, the Superbowl, World Series, or State of the Union Address. I have also found that Sunday during NFL games is a good time to catch women. I know a lot of women watch and enjoy football, but a lot don’t, and they seem to go online to shop.

There are some exceptions to the ending rules. If you are selling professional items to businesses, then you want the auction to end during the business day (avoid Friday afternoon). If you are selling products that appeal to the elderly, they also tend to be at home all day and you might do better ending the auction on a weekday during the afternoon.

Another factor to consider when deciding how long and on what day to end your auction is where your auction will appear.

When a bidder performs a search or goes to the listing page for a category, they are given several choices how to view the auctions. Below is a screen shot that shows the choices.

As you can see the default is Best Match—this is what eBay thinks the buyer want to see. But people also search by other criteria. One of the most popular is “Time: ending soonest.” This shows the listings that will end in the next four hours. The Best Match default also tends to show auction ending sooner at the top of their results. So this is why you always want your listings to end at an optimal time.

If you would like to see an interactive auction calendar, go to www.auctionbytes.com/cab/pages/calendar.

There is another issue regarding ending times that you need to be aware of. If you are launching dozens of auctions per week and all of them end on Sunday evening, then you will have an impossible job answering emails, getting payments and shipping on Monday and Tuesday. If you are a high volume seller, you will need to spread your workload out over the week. In this case, use Terapeak to find the best ending day for each of your catagories. You may find some items do better ending on a Wednesday than on a Sunday.

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Chapter 23

Writing Auction Titles The success or failure of your consignment business will largely depend on how good you are at selling the merchandise on eBay. Learning to take good photos and selecting the proper categories are important keys to your success. The most important factor, however, is your ability to attract potential bidders to your auction.

I consider compelling auction titles that get your description read to be the single most important factor that will increase your bids and sales. An attention-­grabbing or arresting title has the power to get the “clicks.” Remember, unless the potential buyer clicks on your title, your item description will never get read.

You need to choose your words very carefully for maximum impact. Remember eBay gives you 80 characters including punctuation and spaces. So each character is important. You want to make the most of it.

There are two important keys to getting your title read and clicked on:

People search for products by keywords—by typing in the name of the product. So the first requirement is that your title contain the product name people search for.

When the eBay search engine is in the default Best Match mode, it looks for keywords in three places:

1. The title

2. The first 100 chracters (not words) of your description

3. The item specifics

Once people see the search results, you want to attract them to click on your listing before the others.

An auction title is nothing more than a collection of words designed to stop your potential buyer’s eyes from scanning, and linger for a moment on your ad. To achieve this, your title must be:

• Compelling

• Concise

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• Imply a benefit or deliver intrigue

• Specifically mention a product the bidder is looking for

I recommend you experiment with all caps titles. Use hot-­button trigger-­words such as STUNNING, BEAUTIFUL, CHARMING, HOT-­ITEM, NEW, NEAT, RARE, UNBELIEVABLE, SEXY, UNIQUE, SUPER-­DEAL, SECRET, PRECIOUS, BEST-­VALUE, etc.

Do not use fancy symbols or other "cheesy" ways (such as L@@K) to attract attention to your auction. Such tactics immediately turn-­off potential customers and make your business look unprofessional or even ridiculous.

If you are new to writing auction titles, try this exercise with a few auctions to help you get the hang of writing great titles:

Before writing your title, sit down away from your computer with a pad of paper and brainstorm. First write down the top three benefits. Next write a one-­sentence description of your primary customer (this is the person you are trying to attract). Do you have a competitive advantage? If so, list them (price, quality, performance, etc.). Try writing at least five completely different titles. Notice I said: “completely different.” Don't write variations on the same title. Now go back over your titles. Which ones’ appeal to you the most? Take those two or three and start refining them. Eventually you will emerge with at least two good titles. You can either pick one, or test them both if you have multiple quantities of an item to sell.

You won’t have to do this exercise for all your auctions. Once you do this several times, you will develop an intuitive sense of what makes a good title. If you have a product that is not selling, then go back and do this exercise again. You may have fallen into a “title rut,” and doing the exercise will help sharpen your focus.

eBay limits your title format, so you have to use some tricks to get attention. I call these tricks: “White Space & Bold Face.” Advertising professionals know that nothing attracts attention like white space. Bold face is just what it says. It’s designed to be bold and “in-­your-­face.”

Let us say you are selling Keds Tennis shoes. You could run a headline like this:

NEW KEDS TENNIS SHOES, Size 7 -­ 50% OFF RETAIL

Or, you headline could look like this:

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*** NEW, Size 7 KEDS ~ TENNIS SHOES ~ 50% OFF ***

Here is another example:

Unique 1960s Elvis Presley Collectible Watch

Or using boldface and white space:

~~ UNIQUE ~ 1960s ELVIS ~ COLLECTIBLE ~ WRIST WATCH ~~

You can see the difference. There is more white space to attract the eye and the bold face helps to catch it. White space is also important in your item descriptions. We will cover this in the next section.

Here is a checklist for auction titles:

1. Does it mention a highly specific product? (1976 Ferrari Dino Matchbox Car)

2. Does it arouse curiosity?

3. Does it use “action” words? (Now, Buy, Save, etc.)

4. Does it mention or imply a benefit? (Save money, lose weight, look beautiful, etc.)

5. Does it use a hot-­button trigger word? (Unique, Stunning, Rare, etc.)

6. Is it solution-­oriented? (Solves a problem)

7. Does it state or imply a competitive advantage?

8. Is it compelling?

9. Is it provocative?

Your headline must meet test No.1 and should meet at least two of the other tests. If it doesn't, start over!

By far, most items sold on eBay are found by people using the search feature. People looking for specialized items, art, antiques, collectibles and so on, search by key words. Most importantly, make sure your key words are spelled correctly. If you are selling a Staffordshire plate and spell it “Staffordshir,” your auction may not come up when bidders use the eBay search feature to find items. (However, the eBay search engine has a spell corrector, but it is not 100% effective).

I used to collect football cards when my kids were younger. I once saw a Terry Bradshaw rookie card at an auction (with no reserve and no bids) selling for a low starting bid. When I looked closer, the seller (a new seller with low feedback) had spelled Terry’s last name

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as “Bradeshaw.” I could have stolen the card at a ridiculously low price. But, trying to be a nice guy, I sent the seller an email pointing out his error and suggested he revise his auction before he lost a lot of money. Instead of getting the card at an obscenely low price, I got an obscene e-­mail in return telling me to place a bid, or mind my own business. (He obviously never bought one of my manuals).

Writing a compelling title is one of the best ways to increase your auction hits—and therefore bids.

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Chapter 24

Writing Winning Auction Descriptions A big part of your sales pitch is the image or photograph you attach to your auction. But, the Item Description is your sales pitch. This is ultimately where the sale is made. You should consider each auction description as a sales pitch.

A successful sales pitch appeals to the self-­interest of the customer—not your interests. When writing a sales pitch, attention to psychology counts more than attention to writing style.

Make your item description appeal to the type of buyer who will be viewing your auction. If you were selling children’s clothing to a single mom, you would write differently than if you were selling computer servers to an engineer.

I recommend using things such as bold, underline and text colors to enhance the description, but use them sparingly. Overuse will have the opposite effect.

I do NOT suggest giant letters and distracting objects such as blinking, animations, or more "cheesy" items in that regard (unless you are selling a really cheesy product).

A potential buyer wants to know what your product will do for him or her, and does not need a lot of useless distraction. Again, your item description must appeal to the profile of the buyer and promote a feeling of professionalism and trust in you as the seller.

Here is an exercise to help you write compelling auction descriptions:

Use the power of words! List the benefits of your product on a sheet of paper. Arrange the benefits in priority order (for your target customer) and place them beside your computer.

Now start writing about the first benefit and move on to the next. Keep writing about the benefits until you run out of benefits to write about. Be sure to write about benefits not product features. For example: “This Teddy Bear has lifelike brown eyes” explains a feature. “This unique Teddy Bear will bring delight to your child. Her eyes will light up and she will squeal with excitement when you tell her, “I got it just for you honey.” In this second example, the benefits are in italics.

Here is another example:

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This unique bagel slicer is rugged. It will not break. Its foam-­covered handle is soft and will not slip, even if wet, and is sized for a woman's hands. It is perfect for people with arthritis. “Foam-­covered” is a feature. Will not break, will not slip and perfect for people with arthritis are benefits. You use features like “foam-­covered” to describe benefits such as “soft" and "will not slip.”

A complete guide to writing winning advertising copy is beyond the scope of this manual. Rather than reinvent the wheel, there are many good books in your library on the subject of advertising copy writing and direct response copy writing (which your auction listing is). Here are some keys, however, that anyone can follow to write a good ad:

Organize your thoughts and information before you start writing. The goal of direct response copy is to get people to act. Therefore, use action words and active verbs. Understanding and using active vs. passive verbs is the most critical aspect of advertising copy writing. (If you don’t understand what active verbs are and how to use them, click on this link for a simple explanation.)

• Use short simple words. The shorter the sentence, the better. If you write a sentence longer than ten words, follow it with a sentence of less than five words. Short sentences command attention. They should contain your call to attention or action.

• Use short paragraphs and/or bulleted lists.

• Use pronouns: You, Me, I, She, Him, etc. “You” is the most powerful pronoun. Many of your sentences should begin or end with the word “you.” (Example: Why pay full price for a Christian Dior blouse. You can look sexy and beautiful with this quality European-­made copy.)

• It is more important to express than to impress! A word about the English language: If you do not write well—get some help! You do not have to write as well as Hemmingway, but you should write clearly and concisely.

Prospective buyers notice grossly misspelled words and tortured sentences. There are many people who can help. Ask your friends and family first. Visit your local community college. There are always English students looking to make a few dollars. Your copy doesn't need to be brilliant;; it just needs to be readable. Prepare your copy in a word processing program such as Microsoft Word that has a grammar and spelling checker. Then paste your copy into the auction template.

• Ask for the sale. The last item in your description should be a stand alone sentence that is a call to action (where you ask for the sale). An example

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might be: Don’t miss out on this item. Hit the Buy-­it-­now button before someone else does.

Key Words We already mentioned this in a previous section, but it bears repeating here.

Most key words are related to the product description. These include brand names, size, model numbers, colors, material (i.e. stainless steel) or uses such as “outdoor,” “garden,” “boating” and “camping.”

For example, one of the titles I use for my firepits is:

Rugged Solid Steel Outdoor Patio Firepit Barbecue Grill

Over 80 percent of eBay buyers use the “Search” feature to find items they are looking for. Make sure the key words in your auction title and description are spelled correctly. If not, the search option will not bring up your listing, and you will get fewer bids. One thing you should always do is re-­state the title of what you are selling as the first item of your description. The reason for this is the eBay search engine searches three things when someone types in a search request:

1. First it looks at the title for a match

2. Next it looks at the first 100 characters of your description. 100 characters is about 8 to 10 words.

3. Lastly it looks at your Item Specifics for a match.

The more matches it finds the higher your listing will come up in the search. By re-­stating the title keywords you increase your chances for a match. You would be amazed at how many experienced sellers do not do this –and by you doing it, you will leap ahead of them in search placement and results. That is the sort of thing that puts money in your pockets.

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Chapter 25

Customer Service If you sell on consignment, then Customer Service falls into two categories: Consignors and eBay bidders. You will need to do a good job with both categories.

Consignor Service Your consignors are the lifeblood of your business. If you live in the suburbs or a small town, word of mouth will be essential to the growth of your business. Customer service consists of three main elements:

• Excellent communications

• Fair, clearly-­stated business policies

• Keeping your promises

If you commit to do something by a certain time or date, then do it. If you can’t keep your promise for some reason, it is essential that you communicate with your customer to explain that you will not meet your deadline and why.

Explain all of your business policies in advance. Don’t assume the consignor will read the contract. In my experience, over half of the people I give a contract too just turn to the last page and sign it. At the most, they might scan through it. Only about one out of ten people will take the time to read through the contract thoroughly.

The best way to explain your policies is to prepare a simple brochure with a list of your services and your fees, and then simple bullet points that explain your policies as regards to items that don’t sell, requiring identification, and so on.

Earlier I mentioned a business policy you must always adhere to: Taking possession of the merchandise. This is so important I want to mention it again. Imagine this scenario: A well-­dressed gentleman contacts you with 12 nice pieces of Roseville pottery that he wants to sell. You agree to sell it, but he says he want to keep the pieces until you sell them. You reluctantly agree because he looks like such a nice honest person.

Now, Roseville pottery is a very hot seller on eBay. You put up 7-­day auctions and all the pieces sell bringing a very nice price. You call the gentleman up and ask him to bring the pieces and he tells you that his daughter called him and talked him out of selling the pieces because she wants them to remember their mother by.

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Now you are looking at contacting 12, about-­to-­be-­very-­upset, bidders and letting them know you can’t deliver. Some of them will have already paid you via PayPal using the instant payment feature. You will have to return the money.

Next, you will have to apply to eBay to get your final value fees back, which could be substantial on a couple thousand dollars’ worth of sales. Lastly, at least one or two of these bidders (and maybe more) are sure to leave you negative feedback. Not what you need when you are trying to build your business.

Here are some ideas that will help you convince the consignor to leave the product with you:

• Tell the consignor the importance of having good photos of the items and that you have a professional set-­up to get good photos.

• Explain that potential bidders are going to be asking questions about the merchandise, and that you will need it so you can look at it and answer quickly and accurately. You don't want to have to call the seller every time someone asks a question and try to come up with an answer over the phone.

• Explain that you will be researching the item so you can write the best possible title and description and that you need it in your possession for easier research.

• Show the consignor your insurance certificate and your surety bond (if you have one).

• Point out the clause in your contract (see the bonus files) where you mention that consignors cannot cancel their contract once something is sold.

You can also make the consignor more comfortable by giving them their copy of the contract. Show the seller any testimonials you have and if necessary, give them the names and phone numbers of two or three satisfied customers.

In the end, if the consignor won't let you have possession of the item during the selling process, walk away from the deal. It's very likely they aren't the type of person you want to deal with in the first place. Without having actual possession of the item(s) your exposure to problems is way too large.

Good communications consists of things such as having a written agreement where everything is spelled out so there are no misunderstandings or confusion. Answer all emails and return phone calls quickly. Your consignors will call frequently with questions such as: “My auction has been up for six days and there are no bids. What is wrong?”

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Remember, these people know little about eBay and how it works. You will have to answer each question patiently—even the stupid ones.

eBay Bidders Always answer a bidder/buyer's email as quickly as possible. Whether the customer is praising your product or complaining, offering his input or asking a question, he or she deserves an answer—particularly on eBay, where feedback and DSR communications scores really count!

If you fail to answer emails, you may receive such comments as "unresponsive seller" or "ignored my repeated inquiries" in your feedback file. You will also earn yourself a poor reputation and lose respect in the online trading community.

Not to mention that if your communication DSR drops below 4.1 you will not be able to list any more items on eBay until either the low ratings drop off, or your rating improves because of ratings from auctions that haven't ended yet. This is a huge incentive to keep your communication good!

My recommendation: Keep your answers short, courteous, and to the point. Provide all relevant information and be friendly, but don't get bogged down in long email conversations back and forth, and don't let the customer lead you on an irrelevant tangent. Your time is money.

Create a classy signature file that inspires confidence in you as a seller and looks professional. Finally, I strongly recommend creating a folder in your email program entitled "pre-­written messages" in which you have template messages already created to answer common questions such as:

• When was my item shipped?

• When did you receive payment?

• How long does shipping take?

Customize your pre-­written messages to fit your particular product, as you will notice very similar questions and comments from customers as time passes.

It is much easier to send out a pre-­written email than to write a specific answer to each inquiry. However, make sure that it doesn't sound like you are using a form email and add a personal touch when possible. Use the person's name if you know it, or their eBay username if you don't. Always give your name. When considering e-­mail customer

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service, you must balance time, efficiency, and courteousness to maximize your working potential.

Customizing the eBay Smart FAQs can be a huge timesaver too. These are the common questions on policies that you usually have in the auction but buyers don't read. When the buyer clicks "Ask the Seller" she will be presented with these before she can email you. eBay will automatically pull what it can from your listings, but it's always worth reviewing these answers and tailoring them. You can cut your email answering time dramatically by covering your most commonly asked questions here.

Amazingly, giving out your telephone number can save you lots of time too. I started listing my phone number in my email signature. Sometimes a phone call could clear up an issue in much less time than it took to send several emails back and forth. Also, the fact that you list your phone number really enhances your credibility and reduces suspicion.

One advantage of the auction management services we discussed earlier is the pre-­written personalized e-­mails that are automatically sent out to each buyer. Other specific messages, such as a payment reminder, or request for a shipping address can be sent with a simple mouse click. The few dollars you spend per month for these services will save you hours each month composing and sending repetitive e-­mails.

Remember, your reputation for customer service exists both offline and online. Offline, you will want to build a reputation in your community as a reliable and professional businessperson—someone who is friendly and a pleasure to do business with. Online, you will want to build a high positive feedback rating with hundreds of glowing comments about your service.

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Chapter 26

Summing Up Running a good eBay business is essential to your success. This is where it pays to remember the basics. In the previous chapter we talked about customer service. When you are just an eBay seller you only have one customer—the eBay bidder. Now you have two customers, the eBay bidder and the consignors. It can be a balancing act to keep both parties happy. If you are ever in the position of having to choose, choose the eBay bidder. Ultimately your feedback and your reputation on eBay are far more important to your long-­term success than an individual consignment customer.

Be honest and fair in everything you do—but always remember you are running a business not a charity. You need to make a fair profit if your business is to continue to grow and service others.

Although you may think of this as a business you are engaged in for profit, always remember that you are providing a service someone else needs. What you do benefits them as well as you.

The eBay consignment business is growing quickly and about to become very competitive. The survivors will not necessarily be those with the most money or the biggest advertising budget. Ultimately it will be those who provide the best service at a fair price. This is a win-­win for everyone: You, eBay, the consignor, and the eventual buyer.

Good luck in your consignment business and good luck on eBay! And remember – Always take possession of the merchandise !!!