It’s been a couple of weeks since I last updated my progress with retail arbitrage.
Truth be told it’s not as easy as it sounds. All of my listings have gotten some attention, and all of them are for products that, as far as I can tell, are fairly popular. I’ve been tracking the number of views and “watchers” that each listing has attracted and it looks like there’s a fair amount of traffic.
Unfortunately I haven’t gotten any bids, and thus, no sales. The cost of these items for me to stock was pretty minimal, since I got them all on clearance, but it sucks having them sit there taking up space in the house waiting for a sale.
Why haven’t they been selling?
Here are a few reasons my (and maybe your) eBay listings might be attracting traffic, but not getting any bids or sales:
1. Presentation is important in sales on eBay (or anywhere, for that matter)
Competitive retail arbitrage is apparently pretty cutthroat. I already knew this when I started, but I was kind of hoping that there was still room for the little guy to make a dent here and there. Companies and vendors pay big bucks for professional listings. They put lots of money into R&D on how people shop on eBay, how they browse and scroll through a page, and even what colors and fonts they tend to flock towards.
Given all of this information, I was hoping that I’d still be able to make a sale as “that weird guy in the neighborhood who always has extra shit for sale on his front lawn.” Turns out that isn’t the case. Looks like most buyers would rather spend more money for an item that looks like it’s coming from a professional seller, than less money on an item that they think might come with bloodstains on it.
I haven’t put much work into revising my listings yet, but in the future, if I continue to venture down this path, I intend to create a much more sexy template and do a little more research on presentation.
Like sales in any line of work, the pitch is probably the most important part. Sure, people search for things on eBay and probably sort those items by price, but peace of mind weighs about as much as that price tag does.
So if your items are like mine, and they’re attracting viewers and watchers, but not any bids, consider your sales approach.
2. Don’t treat retail arbitrage as a get rich quick scheme. Watch your pricing.
We wall want to do the minimal amount of work for the maximum benefit (buying value). But consider that all fortunes and empires are developed and built over time, and rethink your pricing approach to your sales listings.
For example, I bought an item for $9.99 on clearance. It retails for $37.50, and most auctions and Buy It Now listings on eBay are going for the low $30s most of the time (new), and high $20s (used). Well that’s a pretty substantial profit from $9.99. Sure would be nice to triple my money on a single sale.
Like item #1 though, you’re competing with professionals who do eBay for a living. Maybe you want to get to that position some day, but you have to start low. A steady 10%, or even 5% profit still beats most investment avenues.
Don’t get greedy on your pricing. Understand that you still have training wheels on. Settle for the small victories and move on. At some point you’ll make one of those big 300% boosts, but from what I’ve researched, most people who perform well in retail arbitrage do so because of many small victories and profits.
When my next group of listings expires without a bid, I’m going to re-baseline what kind of profit I’m looking for. I’ll consider a 10% profit worth my time, consider the alternative is a 0% profit. And I’ll start caring more about that percentage as I put more work into the listings themselves. Obviously if you’re spending 2 hours of work on a group of listings, you need to include your time cost in your profit margins, and should aim higher. But at that point, the amount of work you invest in the listings should reciprocate because it will result in better, more attractive sales pages.
3. People want instant gratification. Consider dumping the auction protocol.
When I started selling on eBay (or, trying to sell, rather), I considered everyone would be jumping on my low starting point auctions, hoping for a steal. What I’m discovering though is that people want the instant gratification instead. A lot of people don’t seem to want to place a starting bid on an item, even if it’s cheap, if it means they’ll have to wait 6 days for the auction to complete, with the possibility that someone outbids them at the last second.
Instead I think what many people want is a cheap Buy It Now price. Not everyone is looking for a steal, and probably a bulk of the people really nickel-and-diming eBay anymore are retail arbitragers like us, looking to buy something they can resell at a profit.
If you’re dead set on keeping the auction formula going for you, then really pay attention to where your starting price is. Remember you want to bank a profit on your item, but in order to offer enough benefit to the potential buyer over a well-placed Buy It Now price, you’ll need a super sexy starting point. The unfortunate part of this is that if you start your auction too low, you might end up being on the hook for listing fees and shipping costs that cut into your bottom line and even take you out of being profitable.
I’m starting to distrust the auction format, the more and more I think about it. I’m doing a little more experimenting with my starting point prices to see if I can milk out a few bids, but if it doesn’t pan out, then in the interest of profitability, I think I will be focusing instead on an appealing 10% profit Buy It Now price, with a well designed listing page instead.
You can also include a starting auction price as well as a Buy It Now, price. There is probably lot of sales science that goes into doing this effectively. I’m sure there are all kinds of psychological ways to create the most effective pricing for these two styles, but that might be more than I’m willing to do right now.
4. Free shipping is king
Here’s a tough pill to swallow. In the well-informed age we live in, people are smart consumers. I don’t think most people fall for the $0.99 auction with $47.50 shipping fee anymore. The ones who do are very scarce, I feel.
Many people will make educated assumptions about your listing based on the total price they’re going to pay for your items. If your doo-dad costs $5.00 with $5.00 shipping paid by the buyer, but instead they see another listing for $11.00 with free shipping, they are likely to go with the other listing.
Why is that?
I’m sure it has to do with some chemical bullshit in the brain. Everyone likes getting something for “free,” even if they’re paying a little more for it. So why don’t the “free” listings with $25.00 shipping sell well? Because people malleable and somewhat easy to manipulate, but they aren’t dumb!
What you’ll need to do is find a balance in your pricing. I haven’t offered free shipping yet on my listings, but intend to in the long run. The tricky part (and the reason I’m waiting) is to price your items well enough that even an exorbitant shipping cost won’t put you in the hole. eBay has a shipping estimator which is somewhat accurate, but it’s not perfect, and it doesn’t account for packaging and time.
Keep all of these things in mind when you’re pricing your listings.
And remember that people love seeing that little “free shipping” truck icon next to a listing. For one, it conveys a sense of professionalism about the lister, and for two, it triggers that subconscious feeling in the potential buyer that they’re getting something for a better deal than they’d get somewhere else.
5. Know your market and scale appropriately
If you’re not into the idea of doing this on a steady basis, then consider some other approaches. eBay is not the only way to make retail arbitrage work. It’s convenient because it gives you access to a huge number of potential buyers, and it doesn’t have a lot of the barriers to entry like Amazon does. But if you’re a smallville seller, then you’re likely to attract smallville buyers.
Consider selling your stuff at a yard/garage sale, or by finding a classifieds section like Craigslist or Facebook Marketplace. These are all free and will connect you to people who aren’t necessarily sitting there crunching a lot of numbers and doing statistical analyses on your pricing.
I’ve had several successful sales of items on Facebook marketplace, which had no interest on eBay.
Also consider your market and don’t just buy stuff because it’s cheap. At some point it will be good to specialize and create a niche for your online store. For now, you want to be flexible in order to find what you are able to sell best, or what sells best in your area.
Since I live in bumfuck nowhere, I know that people here are big into outdoorsy stuff like grilling and camping. So I’m not going to sell stuff like cheap Arduino processors, most likely.
Don’t quit
The unintended benefits of trying to succeed at something you’re not great at are worth the effort alone. I strongly urge you not to give up, and continue revising your approach until you find something that works.
There won’t be a magic bullet, and you probably won’t make millions right away, but at the very least you will gain a useful and marketable skill to help establish you as a person of the universe.
Success usually doesn’t come on a first (or many times second, third, fourth…. 50th) attempt, but the sweetest successes are the ones that you’ve seen evolve over time, and which you’ve personally created. And with failure, the worst case scenario is you have a couple extra doo-dads lying around that you might have to sell for a small loss.
Good luck, and I’ll provide another update when there’s something worth writing about!