How To Become A Virtual Peddler

The Online Seller's News, April 26, 2010, Volume 10, No. 7

Tips, Tools, News and Resources for eBay, Amazon and independent Online Sellers
by: Skip McGrath

In This Issue:

Musings from eBay and beyond

1. How To Become A Virtual Peddler
2. How Much Does it Cost to Work at Home
3. How To Purchase Liquidated Products Direct from Suppliers
4. eBay Niche of The Month – Used Baby Car Seats & Strollers
5. New Wholesale Sources for April 2010

"It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change." ~ Charles Darwin

Musings from eBay and beyond

I have had a lot of email from our readers wondering what happened to our affiliate program.  The new program is up and running. You can just click here to join our program. It is quick and easy and we pay 40% commission on all sales.

You do not need a website to promote our program. You can put links in Facebook, Twitter, Blogs or emails to your customers.

One of my best affiliates last year was an eBay seller who signed all of his eBay-related emails with "Would you like to learn how to sell on eBay." Those words appeared below his signature and contained a hyperlink to his affiliate link for the Complete eBay Marketing System. Over the past year he earned over $3,000 in affiliate commissions.

We have been using PayPal payment buttons to sell our books ever since we started our website over 8 years ago. PayPal works great, but one problem has always been shopping cart abandonment. People get to the buy page and don't want to use PayPal and they leave.  So this week we changed over to a new system from 1Shoppingcart.com.  This allows people to check out with a credit card or PayPal and they have a built in newsletter publisher so you can email clients and a built-in affiliate system.  So if you have a website and need a simple shopping cart solution take a look at 1Shoppingcart.com.

One question I get a lot of email about is from eBay consignment sellers who have bought my eBay Consignment book and are looking for a good auction management system that has a consignment tracking feature.  A little while ago I discovered AuctionSound. This is a great auction management program for any eBay seller –but it is especially good for anyone who wants to sell on consignment.

A few weeks ago I told my readers about James Jones Micro Niche Finder. Some of you wrote me that you didn't quite understand how it works and how you could make money with it.  James did a great webinar last week that explains the whole program and he recorded it so my readers could access it.  I really like Micro Niche Finder. James has just released the latest version, 5.0.

If any of you bought the earlier version you can upgrade for free. But James is still holding the old price for the new 5.0 version for a little while longer. So if this interests you, take a look at the webinar and jump on it before the price goes up. Here is a link to the webinar.

Let's get started with the articles for this issue:

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1. How To Become A Virtual Peddler

Announcing my latest book: The Virtual Peddler, How anyone can make money buying and selling online

Despite the crummy economy, higher fees and new eBay policies, thousands of sellers still make a living on eBay –but it is harder today than it was just a few years ago.  The biggest problem is profit margins.  When the economy slows, buyers are bargain hunting and we don't see bids and final values as high as we did two years ago. And there are more people selling online today. This increases competition and drives down prices.

But there is one category of products that plays into these trends and even benefits from them:  Used Goods.

There are several advantages to selling used goods:

1. Less competition - The very nature of any used product means that there are fewer sellers for any given product.
2. Higher search visibility - People actually use the word "used" when searching. This eliminates search results for new products with the same title. And eBay has an item specifics selection for the word "Used."
3. Higher profits – You can buy most used goods for pennies on the dollar. A used pasta machine picked up at a garage sale for $3.00 can bring $30 on eBay. That is a 90% profit margin. On a new pasta machine you would be lucky to make a 20% margin after fees and costs.
4. Easy to source products – Used products of all kinds are all around you: garage sales, Estate sales, Thrift shops, flea markets and small town auctions.

There is one disadvantage to sourcing used goods. You are always looking for products to sell. With new goods, I can email a purchase order to my supplier and a box shows up full of new products to sell. But with used goods I have to go out and look for them.

But this is far outweighed by the potential profits. You would be amazed to learn how many successful power sellers sell nothing but used goods.  They can vary anywhere from books to baby clothes, tools to tape recorders –virtually anything you can think of will sell if it is used and still in good condition.

But there are traps and things to learn. So I have written it all down in my latest book, The Virtual Peddler, How anyone can make money buying and selling online.  The book is available for immediate download and I have included some great bonuses.

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2. How Much Does it Cost to Work at Home

Karen and I were looking at our household budget the other night and she happened to notice what we were spending on dry cleaning. "Wow," she said: We spent about $60 on dry cleaning this month. That's a little high, but when you were working in your last job, we used to spend that and more every week. I used to cringe every time I picked up your suits and shirts at the cleaners."

That got us to talking and thinking about how much money it costs to work and how much we save by working at home.  Here are just a few of the monthly expenses I used to have when I worked in an office building in Seattle:

That works out to $14,904 a year and probably doesn't include everything like higher cell phone costs, gifts to co-workers, money lost on business trips. I kept track of all of my expenses for a couple of business trips and noticed that my expense reports rarely equaled what I spent. On one trip to New York City, I came up over $200 short in out-of-pocket expenses that were not reimbursable. So lets call it close to $17,000 per year.

At home I work in blue jeans and a sweatshirt. When I need lunch I walk down to the kitchen and make a ham and cheese sandwich. When I worked we used to socialize and entertain co-workers. Now instead of buying fine meats and cheeses and good wines, we get together with real friends and neighbors in back yard with beer and hamburgers. My car insurance, maintenance and expenses are much lower. Instead of paying $325 a month to park in a lot, I park in my garage.

So what is the point of all this?  You are probably thinking, "Duh. Its obvious it's cheaper to work at home."  Well, in this economy unfortunately I get a lot of email from folks who have lost their jobs and are wondering if it's really possible to replace their income by selling online. The point I am making is you don't really have to replace your entire income.  Depending on your situation and how much you made, you may only have to replace 60 to 75% of your income to realize no change in your living habits and expenses.  And even if you can't replace that much, there are many other ways to cut expenses and make it.

One of the things I noticed when I took early retirement was that we were much more aware of our spending habits.  We didn't have to make any drastic cutbacks, but I no longer had two or three Starbucks Latte's a day. Now I would just go downstairs and make a cup of coffee when I wanted one. We also ate out less often. I would categorize our belt tightening as pretty minor, yet we figured out that we probably spent $10 to $15,000 less per year without drastically affecting our lifestyle.

We found we were using our credit cards less and within no time at all we had paid off everything except our mortgage and we are making extra payments on that.

The other advantage of working at home is that you pay lower taxes. Because so many things are now deductible that weren't when you were working at a job. For example, a person making $35,000 self-employed would most likely pay less total taxes than someone making $40,000 who is working on a salary.

There is one expense however that did go up: Health insurance.  I was shocked at the cost of keeping my company plan under Cobra. It would have cost us $1300 a month. So we shopped around and decided to set up a health savings account with a high deductible plan. Cost $480 month and we end up every year with extra money to roll into next year's plan.  But folks who leave their jobs now don't have that worry. President Obama is going to give us all free health care. (Don't worry –I am not going political. Just a little tongue in cheek humor  J ).

If you have lost your job, the first thing you have to do is not panic.  Take a couple of days to feel depressed and sorry for yourself  --you're entitled. But then it's time to get to work.  Start with the obvious things. Analyze your spending and set up a budget. Before you dive into starting or growing your online business, raise some cash by selling off all of the stuff you have around the house that you can't use. I gave this advice to one reader who emailed me and a month later she emailed me back and said she had raised over $3000 just selling her useless stuff on eBay and Craigslist and she realized when she was done that she didn't miss a thing.

Be sure and set some money aside for your business.  It doesn't cost much to get started selling on eBay, but there are some expenses –mainly you need money to buy products to resell.

Next is set some goals. It is much easier to reach a goal when it is written down and you can look at it every day. I used to start each day by looking at my goal sheet and asking myself, "What is the one thing I can do today that will bring me closer to my goal?" I know it sounds corny but it works.

Another question I get is from folks who are on unemployment compensation and want to know how much they can make before losing their unemployment. I am not one to advise people on breaking laws or government regulations, but I know a lot of folks who are unemployed and their eBay business is registered in their spouse's name. In most states, you are allowed to earn as much as $600 before you have to notify your Department of Labor. But you should check on that as tax law varies from state to state.

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3. How To Purchase Liquidated Products Direct from Suppliers

I have been purchasing liquidation products and selling them on eBay for the past eight years, but it has always been a small part of my business. Last year I met Chad Maslak, who does this full time. He really opened my eyes to the opportunity and profits. So I asked Chad to write an item for my readers.  Here is Chad's article:

I recently received the following email: (Source deleted for confidentiality)

I have been in the E- commerce industry since 2001 so I understand the game but I'm new to finding wholesale items for my wife to sell on eBay as a part time business. One company that she has done well with when I have bought mixed lots of clothing from sites like liquidation.com is Xxxxxx. How do you get just one designer or one brand at wholesales closeout prices?

Thank you very much in advance for any info that can help, and sorry if you have a whole section of your book on this and I just have not read it yet… My wife is about to have a baby girl soon. So I'm just trying to keep my head above water w/ everything that is going on right now.

Benjamin C…

My response:

An excellent question Benjamin and congratulations on your new baby!

When purchasing from liquidation companies, or when purchasing liquidated products (shelf pulls, closeouts, return goods), these are usually purchased in bulk pallet loads. Products on bulk pallet loads are usually mixed, meaning that there are different types of products that vary in quantities.  And the manufacturers can be mixed.

For example if you buy 20 pairs of jeans, you may find some are Wranglers, some may be Levi's and some may be a generic brand. All of these jeans will not only come in varying quantities but also in various sizes. (unless you find a load with lots being sold in the same sizes).

Well, what happens when you find an excellent product that sells like hot cakes that you profit on and then you run out? How can you purchase that same product on a continuing basis without running out?

This is exactly Ben's question.

The first thing to understand is the difference between liquidation products and wholesale products. These are apples and oranges and so are the price differences between them.

Let's say you start off buying pallets of liquidated products. You find a product of a particular brand and manufacturer that you want to get more of so you can continue selling them.

Here is what you do:

1. Get the contact info of the manufacturer or the distributor.
2. Give them a call and tell them you are a wholesale buyer and surplus liquidator and you would like information on purchasing directly from them in bulk for both of these types of products.

Explain that you are interested in purchasing bulk products at wholesale cost for new products or current products. Tell them you are also interested in purchasing directly from them any of their overstock items, returned products, shelf pulls, closeout items and so forth. Basically any products that the manufacturer, distributor, or company will sell off to the reclamation centers to get them out of their stock.

Let them know you are interested in ongoing relations to purchase these types of products and that you would like to see how you can buy the liquidated goods from them before they are sold to someone else.

For purchasing wholesale products from the company, figure out what the wholesale percentage is verses retail costs to make sure you have enough profit margin.

For purchasing the liquidated goods, try to find out what they are selling to the reclamation centers for and try to negotiate a price for the products before they are sold to the reclamation centers.

You may find with both product types, you may be able to negotiate a lower price, the more products you buy. Be sure and ask about this.

There are several other variables that may come into play.  These include: payment terms, special deals where you need to pick up the items in person and so forth. If you're purchasing wholesale, you will need to supply a tax ID obtained from your state authority to show you are a legitimate wholesaler.
I would recommend having your tax ID before contacting them. Any legit company cannot sell wholesale to you unless you have a tax ID.

You'll realize the variables required when you talk with them but the best advice I can give is to be real, be polite, be professional and be cool. You want to build an excellent relationship with the rep.

Get the contact info and simply pick up the phone and give them a call.

Try it out, you'll be amazed at what you may uncover!

Chad has written a great book on buying and selling liquidation and surplus products. I asked him if he would make a special deal for my readers. Click here to learn HOW  & WHERE TO BUY BULK PRODUCTS AT PENNIES ON THE DOLLAR to resell for mega profits...Without losing your shirt and a wad of cash with it!

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4. eBay Niche of The Month – Used Baby Car Seats & Strollers

This is a great niche especially for those of you with young children because you have some experience with the products.

My daughter-in-law showed up at our house to drop off our granddaughter for a play-date with the grandparents. When she was taking the car seat out of her car to put into ours, I noticed it was a new seat.  Our granddaughter is almost 4 and I think this was their 5^th or 6^th car seat –and those things are expensive.

I decided to do some research on eBay and spoke to a few sellers.  Most of the sellers are just Moms who are getting rid of a seat their child grew out of, but there are a few sellers who specialize in them.

Here are some screen shots of recent baby car seats sold on eBay. I looked at those with higher prices and their weren't any sales. The price range around $100 to $150 seems to be the sweet spot.

So where do you get them? It turns out that they are pretty easy to source if you live anywhere near family neighborhoods.  They turn up at Garage sales, thrift shops and flea markets.  But maybe the best way to find them is to advertise. One seller in Florida told me that he gets five or six calls a week from his classified ads on Craigslist and in the newspaper. He typically pays between $25 and up to $50 for a really good seat in good condition. But he has bought them for as low as $10 at thrift shops and has even found a few free ones on FreeCycle.

The real key is to stick with the better brand name seats and only buy seats in good condition. As you can imagine baby seats can get trashed pretty fast by messy babies. So the first thing you want to do is inspect the seat very carefully for any tears or damage. Pay special attention to the harness. Make sure all of the clips work. Next examine the seat for cosmetic damage such as stains that are unlikely to come out.

Lastly give the seat a good cleaning. The newer seats are made of better materials that clean easily, but you will need to get into all the cracks and crevices. One seller told me it takes her about 30 minutes to really clean a seat before she photographs it.

Take at least 3 photographs  close up and from all angles. Buyers want to see the front, back and sides.  Next describe the seat completely. Here is a link to About.com where you can read reviews of the most popular car seats.

Closely related products to baby car seats are baby strollers.  They sell for far less but you can still buy and sell them profitably. The sweet spot here seems to be from $25 to $50 with a few strollers selling for as much as $100

The one downside to selling these products is the shipping. You will have to find some good size boxes to ship them in. Boxes of this size can cost as much as $3 to $4 so you want to price that into your shipping costs.

One word of caution: Be sure and check if something has been recalled before selling it.   You can check for recalled items on the Consumer Product Safety Commission web site: http://www.cpsc.gov.

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5. New Wholesale Sources for April 2010

Since we had an article about sourcing liquidation merchandise, here are a few liquidation and surplus sites:

Topper International sells a wide variety of liquidation and surplus products and deals frequently with eBay Sellers.

Boulevard Wholesale sells quality clothing and accessories

CTS sells sunglasses hats and other accessories

RG Riley sells off brand and brand name clothing and apparel

New York Designer Inc specializes in wholesaling and liquidating small and med-size lots of current season and last season designer women's, men's, and children's clothing, shoes, and accessories. Brands range from Gucci, Cavalli, Dolce & Gabbana, Diesel, Taverniti, True Religion, Seven for all Mankind, Christian Audigier, Giorgio Armani, Fendi, Guess and more.

Nico Wholesale for the outdoor or hunting enthusiast! Nico Wholesale carries a large selection of Camo Clothing, hunting products & accessories @ closeout prices.

Now for some other sources:

Kakadu is an Australian company with warehouses here in the US.  They sell a great line of Australian clothing and bags for men and women.

World Famous Sports sells a nice line of outerwear, camouflage, denim and flannel goods and rainwear.

Hoovers Manufacturing sells a complete line of military pins, hats, insignia, belt buckles and other military and police goods.

Streetwise Security sells a complete line of security cameras, safety products, and personal security items such as stun guns, pepper spray and safes that are designed as rocks, soda cans and wall clocks.

That's It for now. See you in about 2 weeks.

Skip McGrath
The eBay Seller's News

P.S. If you missed the last issue, click here to read it.

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