Build an eBay Business Part 4

Acquire Inventory

To keep your eBay business engine fueled, you need merchandise, which can
come from a myriad of sources. Inventory can be procured from traditional
eBay sources, such as garage sales, but to ramp up your business to higher sales,
you’ll want to explore sources used by retail businesses, including buying from
wholesalers, using drop-shipping outlets, and buying from abroad.

Find Items the Old-Fashioned Way

Not all eBay businesses tap into manufacturers’ sales representatives, import
from China, or otherwise buy from traditional wholesale markets. Many eBay
businesses just improve on obtaining items from the traditional sources they
used when they started out, except now they do it more efficiently:

• Basements, attics, and closets provide the most readily available and lowest-cost
items (you already own them). Include items of friends and relatives that can be had
for nothing or next to it.

• Thrift stores contain hidden treasures that can be ferreted out with a sharp,
experienced pricing eye and persistent scouring. Go (early) on promotion days to
obtain even deeper discounts.

• Garage sales are typically announced in your local paper and on your
nearest telephone pole. Get out early, map out your route, and be done
before brunch. Seek out sales that start on Friday—you’ll avoid many
amateur buyers (they have day jobs) and get first look at the freshest
merchandise.

• Estate sales liquidate the contents of a household. The quality of
merchandise can range from the trappings of the rich and famous
to items more commonly found in Dumpsters. Depending on how
the contents are sold, you can purchase individual items, as in a
garage sale; or you can make a bid to purchase the entire lot. Check
the auctions section in the classified section of your newspaper for
upcoming sales. To find leads on buying an entire estate, network
with estate-planning lawyers and other professionals who often assist
survivors with liquidating family assets.

• Live auctions provide great experience in the world of bidding and
overall auction psychology (see Figure 2-8). Check out your Sunday
paper for upcoming events. Most cost very little, if anything, to
attend and provide invaluable pricing data, networking, and usually
entertaining auctioneers.

CAUTION: Buying the contents of mini-storage units whose owners failed to continue payments is a classic example of caveat emptor (buyer beware). Typically, the storage unit management periodically hires an auctioneer to sell off their inventory of unpaid units. By law, in many states, management cannot open the unit until the auction, at which time the lock is cut. The bidders, in real time, then get a chance to view the contents from the door and place a bid on all the contents. So what really is in that box labeled “Guns” or “Jewelry?” There are stories of people who, in cahoots with the storage management and auctioneer, seed a unit with junk, hazardous materials, and other hard-to-get-rid-of items, and then apply deceptive arrangement and eye-candy labeling to sell these items to unsuspecting bidders.

Acquire Wholesale Sources

A classic way to run an eBay business is to buy at wholesale and sell at retail
(or at what the highest bidder is willing to pay). Unfortunately, until you’ve
established yourself as a high-volume seller, many wholesalers do not want to
bother with smaller accounts. That’s not to say they won’t sell to you—they just
don’t seek you out. Consider these issues when trying to line up a wholesaler:

• Research the manufacturer for the product you want to sell. Many companies simply
place their brand name on a product made by another company. The classic example
is the Sears Kenmore brand—Kenmore washers are actually made by Whirlpool. You
may have to do some sleuthing to locate the manufacturer, as most branded products
don’t generally advertise their true roots. Check manuals, nameplates, and service
centers to find the OEM (original equipment manufacturer).

• Contact the manufacturer’s sales department and ask for a list of their wholesale suppliers.

• Contact the wholesale suppliers and request to set up an account. Prepare for
questions about your business and sales potential. Give honest answers and, if
rejected, move on to the next supplier on your list.

• If you don’t have the success, time, or desire to do the leg work, consider purchasing a list
of suppliers that have been screened and are willing to work with online sellers. Be aware
that a Google search will turn up legitimate as well as questionable providers. The eBay
Solutions Directory lists several providers of wholesale items whose reputations have
been verified; however, you won’t be the only eBay business trying to sell their products.

Buy Wholesale on eBay

You’ve got to love the marketing folks at eBay. Not only do they provide the
mechanisms for you to sell your items in an efficient and inexpensive manner
to a worldwide market, but they also provide you a channel to buy your items
wholesale on eBay “in an efficient and inexpensive manner from a worldwide
market.” To find items to buy in quantity and at a hopefully lower wholesale
price each:

1. On the eBay header, click Categories, and the All Categories window will open.
2. Look through the Category items. At the end of
many of them will be “Wholesale Lots.” If you click
this line, you will see a listing of all the wholesale
lots for that category.
3. You will need to narrow your search considerably, as many eBayers use wholesale lots
to sell their single items.

Import from Abroad

Buying from outside your borders opens your buying opportunities to markets
where other eBay businesspersons don’t often venture. Many businesses avoid
global transactions for a good reason, but if you’re willing to learn the ropes,
there are untapped buying opportunities. You can import through traditional channels on your own or use eBay to help you in the process.

UNDERSTAND IMPORT FACTORS

Many headaches and costs are associated with an import business, and for most
eBay business with relatively low sales volumes, it may not be worthwhile. The
main limitations to buying abroad are determined by:

• What you buy:

• Many items do not adhere to U.S. safety, Environmental Protection Agency (EPA),
and other standards. For example, several news accounts have highlighted the toxic
lead that was contained in toys made in China.
• Items of cultural importance may not be allowed outside the borders of a country.
For example, in Turkey, items more than 100 years old are not generally allowed to
leave the country.
• Some items just have higher duty rates than others (as a twist on the previous
bullet, antiques more than 100 years old can enter the United States duty-free).
• Heavy items may incur prohibitive per-item shipping costs, unless you buy in very
large quantities.

• Where you buy it:

• Duty rates are broadly assigned by country. Duty rates for goods entering the
United States are extracted from the Harmonized Tariff Schedule Annotated
(HTSA) of the United States, published by the United States International Trade
Commission (www.usitc.gov/tata/hts). Most countries enjoy “Column 1 of the Duty
Rates,” or favored nation, rates. Items from unfavored “Column 2” countries pay a
higher rate, as shown in Figure 2-9.

• How you bring it into the country:

• Bringing them with you is the easiest way to bring items back to the United States.
You can simply produce the items for inspection, and informal verbal declarations
when driving across a border or simple Customs forms used when arriving by plane
or boat are painless.
• Shipping by mail is an acceptable entry method because you don’t need to be
personally present at the point of entry. When the United States Postal Service
(USPS) receives an overseas package that contains dutiful items, it’s passed to a
Customs agent, who reviews Customs forms on the package and determines any
duty fees. The package is given back to the USPS, where, upon delivery to the
recipient, the duty and Customs handling fees are collected.

• Freight shipments are how most international trade is conducted and is not
generally recommended for businesses new to global shipping. You or your agent
(to whom you will need to pay fees) will need to quickly arrange movement of
the merchandise from the shipper’s warehouse to Customs to avoid demurrage
(warehousing costs) and then produce invoices, bills of lading, and Customs forms
to determine the duty owed. In the post-9/11 world, shipments are being visually
inspected more and more, and you will be responsible for associated costs to open
containers and remove shipping and packing materials.

BUY GLOBALLY ON EBAY

Many eBay users avoid global transactions because of the extra work and
potential pitfalls involved with conducting business outside the borders (see
“Understand Import Factors”). Their reluctance can be your opportunity to
acquire unique items that every other eBay business isn’t fighting over. The
“At a Glance” statistics on eBay’s Global Trade page show you the monetary
incentive to consider eBay’s global potential. eBay provides searching to its
worldwide sites and offers a lot of useful information to help you navigate the
labyrinth of currency fluctuations, shipping costs, language problems, and other
issues.

1. On the eBay header, click Site Map.
2. Under Selling Resources, click Sell Internationally
3. On the Global Trade page, shown in Figure 2-10:

• Type keywords to search global sites for items
(see “Buy Wholesale on eBay” earlier in the
chapter for keyword hints for wholesale listings).
• Click an eBay worldwide site’s flag or link to
display that country’s “Hot Items” and “Hot
Categories.”
• Scroll down and click one of the many resource
links to learn more about the aspects of buying
and selling internationally.

Use Drop-Shipping

So you want to become an eBay business, but you live in a studio apartment without a square
foot of space to store inventory? Not to worry—you can conduct a successful eBay business
without ever buying, seeing, or touching your items. Using drop-shipping, you establish a
relationship with a wholesaler, who will package and ship items you sell directly to buyers (even
with a mailing label using your company name). As far as the buyer is concerned, the billiard table he or she received came from your studio apartment. You pay the drop-shipper
the wholesale cost of the item and shipping and handling costs. Of course, the trick to making
this work is finding a reputable and reliable company with which to partner. Doing a search on Google will produce pages of potential drop-shipping sources, but as with most things on the Internet, it’s best to get a second opinion before you do business. To find companies vetted
by eBay that drop-ship or that provide lists of companies that do:

1. Click Site Map on the eBay header.
2. Under Selling Tools, click eBay Solutions Directory.
3. In the Solutions Directory, under Selling Solutions, click Sourcing.
4. Click the links of the solution providers that indicate they offer drop-shipping services,
as shown in Figure 2-11.