Sell Online to Achieve Financial Independence

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Many think selling on eBay means selling the junk in their basement and garage. Although people do sell these items, your house offers a finite supply of items and minimal profits. But by working with suppliers, sellers open the floodgates to high-income potential.

  1. Establish Your Business

Decide What to Sell

Marketing is easier if you choose products you like and know, but also consider product quality, profit margin, consumer demand, competition and product availability. To compare products, check out the SaleHoo Market Research Lab to review average sale prices, competition level, total listings, total bids and even product performance charts.

Select a Business Name

Choose a business name that speaks to what you are selling, but don’t include any copyrighted names, such as Xbox Games Unlimited.

Obtain a Sales Tax ID

A Sales Tax ID allows you to charge sales tax. To obtain it, visit your state’s website for instructions. The procedure differs by state and some don’t require sales tax.

Read your state’s guidelines to determine which sales are subject to tax and what those tax percentages are. Some sale types aren’t subject to tax, and some mandate different percentages than others.

Register Your Business

Again, regulations differ by state, so visit your state’s website for specifics. Decide what type of business to form: sole proprietor, partnership, limited liability company, or corporation, and weigh the advantages and disadvantages of each before making a decision.

  1. Find Trusted Suppliers

First, decide what type of supplier you want to work with. Each has its own benefits and drawbacks, so in many cases, working with more than one type of supplier provides an optimal supply for your business.

Dropshippers, suppliers who ship products directly to the consumer, eliminate the hassles of shipping, managing inventory and minimum order requirements. With this arrangement, you can offer a greater variety of products, such as 4,000 different DVDs. However, you pay about $2-5 extra per order for the benefit of having someone else process and ship your item.

Wholesalers sell large quantities of products to retailers at lower rates. The more you buy, the more you save. When choosing a wholesaler, consider the minimum order requirement, the size and weight of items because you’ll handle them yourself, your inventory storage capabilities, and the quantity needed to maintain a healthy supply while accounting for restocking time.

Liquidators sell inventory below cost to make quick cash, usually as a result of going out of business, relocating or downsizing. Liquidation sales aren’t predictable, so they aren’t reliable sources of long-term stock. Some liquidators require buying by the pallet load without allowing for pre-inspection, which sometimes leaves you with damaged, worn or undesirable items.

Manufacturers produce the product. As the first link in the supply chain, they offer the best prices, but minimum orders are usually high, requiring substantial startup cash. This cost-effective method is best for established sellers who can afford it and are willing to make the large investment.

After choosing your type(s) of supplier(s), look for trustworthy, quality businesses in that category. Consider profit margins, recommended selling prices, pricing structure, minimum order requirements, fees, warranties, guarantees, shipping policies, return policies and customer service performance.

Thankfully, you don’t have to start your search from scratch. There are several directories, such as SaleHoo, that have already conducted extensive research to determine which suppliers are legitimate and offer quality products at healthy profit margins.

Build a Relationship with Your Supplier

Even if you’re starting small, quality suppliers will try to cultivate your relationship. Accept any gestures offered and take advantage of opportunities to discuss your business goals, future plans and even your personal life. Call your supplier regularly to discuss new products and plans for ordering in bulk, which reinforces your commitment.

  1. Manage Your Inventory

Place Your Order

After selecting your supplier(s), order a sample to gauge product quality. If the product is satisfactory, determine the highest price you can pay and still make a profit. Then negotiate with the supplier to agree upon a reasonable price.

Pay with a secure payment method, such as a credit card or PayPal, which hold the payment until the buyer receives the order. Unsecured payment methods, such as wire transfers, do not offer protection. If a supplier only accepts unsecured payment forms, the supplier is likely illegitimate and shouldn’t be used.

After receiving your shipment, which usually takes two weeks or more, check all the merchandise for flaws, and contact your salesperson immediately if you discover any.

Monitor Your Inventory

If you maintain inventory, monitor it regularly and keep detailed records to ensure you never run short. If you use a dropshipper, contact your supplier weekly to check on stock levels, or if possible, login to your online account to check.

  1. Decide Where to Sell

Amazon and eBay are two of the largest options, offering the most traffic, but there are more obscure marketplaces for specific niches, such as Ruby Lane for collectibles and Bonanza for high-end products. If you’re unfamiliar with the platforms, test them by selling a few items around your house.

Amazon

Amazon offers more than triple the number of potential customers as eBay, but in some ways, less flexibility. Typically, you are limited to the supplied product description, and your only pricing option is a fixed cost.

Amazon distributes your earnings only every two weeks, and for every sale, a fee is automatically deducted, usually around 20 percent. Fees are even higher with Fulfillment by Amazon. With this option, you ship your items to a fulfillment center. Amazon ships your items whenever you make a sale and even handles returns for you. However, Amazon charges about $1.48/pound for packaging, an additional 60 cents for storage and 20 cents for labeling. On the upside, your items become eligible for Prime, which offers free two-day shipping, often leading to additional sales.

eBay

Although fewer customers frequent eBay, the platform provides greater flexibility. You can accept bids on fixed price listings, and you can create your own product descriptions, providing greater control over your marketing. With more automated features than Amazon, eBay also requires less monitoring, and you are paid directly after each sale.

Create Your Own Store

Eventually, you may want to create your own store, giving you greater control over prices, a central location for all your listings, eliminating listing fees, and providing a platform unburdened by competition. Operating your own store increases your credibility and conveys a greater degree of professionalism while providing additional branding opportunities. You can even create a store with little-to-no Web development knowledge by using SaleHoo Stores or similar sites that offer design templates, an online shopping cart and marketing features.

  1. Sell Like a Pro

Write Detailed Product Descriptions

Unless you’re selling on Amazon, you’ll probably have to write your own product description. Use proper grammar and spelling; avoid jargon, slang and acronyms; and include as much detail as possible, such as the model number, color, size, item condition, etc. Aim for incorporating at least five keywords that potential buyers are likely to use as search terms.

Include Quality Photos

Quality photos are at least as important as product descriptions. Create a clean background by using a white or black sheet to contrast with the product. Use a quality digital camera, and take multiple photos showing different angles and close-ups of important details. Use a flash or take the photos in a well-lit room. Use photo-editing software, such as Picasa, to perfect your final photos.

Price Competitively

Competitive pricing is key to becoming a top seller. Calculate your overall costs, including the item’s unit price, importing, storage, and listing fees and shipping, to determine the most competitive price you can offer while still earning a profit. If you are in a position to undercut other sellers, your price doesn’t need to be much lower than theirs to win you the sale.

Select the Auction End Time

If applicable, select a time when people are likely to be online. The more people who are shopping when your auction closes, the more bids you are likely to receive.

Understand Amazon

Even if you don’t sell on Amazon, you should still try to understand the platform because most likely, it’s your biggest competitor. As such, Amazon can affect your prices, profits, sales volume and your customers’ expectations for fast and free shipping and a liberal return policy.

  1. Provide Exceptional Customer Service

Outstanding customer service is paramount to earning repeat customers. Respond to all customer communications as quickly as possible, and don’t let any inquiry go unanswered for longer than 48 hours. Fill orders as quickly as possible, ideally within one business day.

Return Policy

Create and post your return policy, so customers don’t face any unexpected surprises. Be willing to refund a customer’s money, and try to rectify the situation if possible.

  1. Market Your Business

Don’t expect customers to just find you; take a proactive approach to your success by rigorously promoting your business.

Upselling

Upselling refers to selling additional products to the same customers. Collect your customers’ contact information and email them about new product releases, related products, product accessories and special offers. Don’t forget to abide the CAN-SPAM act for email marketing, and check out free email marketing solutions such as MailChimp.

Social Media

Social media offers free marketing avenues, but you must actively engage your audience, which takes time. Inform and entertain your followers, and don’t make promotion your sole purpose. Try to post a variety of content, such as photos, videos, industry news, product reviews, special offers, price notices, etc.

Blog or Forum Marketing

Find blogs or forums that are related to your products or that appeal to your target market, and post helpful comments and occasionally link back to your store. Don’t go overboard on promotion or you may actually discourage sales.

Pay-Per-Click Ads

With pay-per-click ads (PPC), you only pay when someone clicks your ad, and you can target your ads for a very specific audience. PPC is available through Google and Facebook. Costs depend on how competitive your niche is.

  1. Make the Sale

Send a thank-you email after every sale, and if possible, arrange for the email to send automatically.

Ship the Item

Compare shipping providers, and decide whether you want to include insurance or check whether the carrier includes it automatically. Shipping prices vary by the item’s starting location and its destination, but offering free shipping will shoot you to the top of the search results. If you charge a shipping fee, make sure it’s realistic because eBay removes auctions that appear to be trying to profit from shipping charges.

Aim to ship all items within one business day of the sale, and package your items carefully. Consider branding your shipments, or if you are dropshipping, see whether your supplier will put your brand name or logo on packages.

Leave Feedback

If selling on eBay, leave positive feedback for your customers, which encourages them to reciprocate. Your feedback score is crucial to your online reputation, which most shoppers check before making a purchase.

Follow-up Email

After receiving payment, send another email thanking customers for their purchases, and ask whether they are satisfied with their items. If they haven’t already, encourage your buyers to leave feedback. Consider sending a customer satisfaction survey to identify areas of improvement and to monitor your supplier’s performance.

Track Your Efforts

In addition to customer satisfaction surveys, test auction formats against Buy It Now. Determine whether your products sell better on eBay or Amazon. Sell different products to determine your best sellers, and experiment with different auction end times to determine when is the most profitable. Ultimately, keep testing your strategies and reading industry news to never stop learning. This SaleHoo blog post, for example, discusses different pricing strategies to maximize your profits.

 

Simon Slade

About the author

Simon Slade, CEO and Co-Founder, Doubledot Media

simon-sladeSimon Slade co-founded Doubledot Media in 2005 with Mark Ling, director at Doubledot Media, in Christchurch, New Zealand. With 500,000 individual customers and businesses around the world, the company specializes in e-commerce resources and solutions.

Doubledot Media offers seven different training and software applications, most notably Affilorama, an affiliate marketing training portal with 250,000 members and over 100 free video lessons; SaleHoo, an online wholesale directory of over 8,000 prescreened suppliers; and Traffic Travis, a search engine optimization tool.

As CEO, Slade oversees the strategic direction of the company, manages and contributes to product design and supervises staff and daily operations. Thanks in part to his leadership, Doubledot Media was named the 23rd fastest-growing company in New Zealand on the Deloitte/Unlimited Fast 50 index and one of the 500 fastest-growing companies in the Asia Pacific. Also in 2008, Slade was named a Global Operator Finalist at the Champion Canterbury Awards and an Exporter of the Year Finalist at the AmCham Export Awards.

Slade began his technology career in 2001 as a sales representative at Sellagence Limited. Two years later, he moved to Hewlett-Packard as its South Island territory manager after graduating from Griffith University with a Bachelor of Business Management and a bachelor’s in marketing. Eventually, Slade resigned his role at Hewlett-Packard to pursue his entrepreneurial dreams full-time.

In his spare time, he serves as vice president of the Mt Pleasant Squash Club, and he also enjoys snowboarding and discussing startups.

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