Online selling is big and only getting bigger. Every day people want to “import from China” and sell online – particularly on eBay & Amazon.
Here are four things you must know – if selling on eBay and Amazon:
1. You cannot “tiptoe” into a volume market
If the market has volume, you need to be doing full containers or significant volume to even get started. You cannot tippy toe into a volume market. Many people want to start with a small trial order say less than $5,000. That’s fine if you want to lose money on the test.
The problem is you WON’T get good pricing from the factory. And your shipping/logistics cost will be high. Your competition may be buying 50 containers per year of this product. They have good pricing and low shipping cost. And many online sellers are happy with relatively low margins 10, 20 or 30%.
This doesn’t mean you cannot enter the market. You can. But you cannot start small and expect to compete.
Also to get rankings on any online sales platform you need reliable supply. No point shooting to the top, then running out of stock and having to start all over again.
2. Thinking you will make big margins on volume products
After ALL the costs are calculated margins tend to be fairly low. eBay/Amazon are highly price competitive markets.
Any product that sells in good volume will have skinnier margins typically 10-40% and that’s if buying in volume at decent pricing. Of course, there are markets which violate this rule, but if your strategy is to look at volume markets on terapeak this will usually be the case.
Of course, you can buy low-value items and sell these at high margins. But sales volumes are usually much lower.
3. Know your competition and their flaws
eBay sellers are good at reducing products specs/sizes to make their product cheaper. Other sellers have figured out how to sell the most inferior product possible without a huge defect/return rate. This means they might reduce the size, materials or other features.
You must understand what is going on. Even simple products have a variety of materials that can be used to cut down on price. It can take considerable time to dig into the market and figure out what everyone is doing.
4. The days of the online cowboy are over
Years ago eBay sellers could get away with selling very ordinary products. Not anymore.
Amazon, in particular, is relentless about customer service and closely monitors customer defect rates if you sell on their platform. If your product is no good you will get into trouble. eBay is playing catch up on Amazon and becoming more ruthless about product control.
So you will struggle to successfully enter a market with a poor product. Many experienced sellers ride a fine line between reduced product specs and keeping customers happy.
Here are 5 rules to remember:
- For a product selling in serious volume, you will not get good enough pricing if doing small quantities of product. Your competition will be buying big and will have driven costs down at their suppliers.
- You will not get the best pricing without personally visiting a factory.
- You will not know the true story, background, and history of a factory unless visiting them in person. And once you’re at the factory there’s an art in getting crucial pieces of information.
- Smaller factories are usually the cheapest, particularly for simple products. They have no marketing spend, fewer sales staff, lower overhead and typically set up in very cheap areas. However, they are more difficult to work with and generally less reliable.
- Sometimes suppliers have no internet presence and can only be found at trade shows. So if you want to cover all bases you need to go to trade shows and look for ALL potential suppliers.