How We Used Ebay To Assess The Viability Of Our Business

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I just wanted to take the time to introduce my wife Jennifer who will be guest posting for today. Jennifer is the heart and soul of our online business. She basically manages 90% of the operations on a day to day basis in addition to taking care of our daughter. She is the brains behind all of our products and the buying choices we make.

Technically, she’s not a guest poster since she does own half of everything I do including this blog, but I think it’s only appropriate since this site is called “My Wife Quit Her Job”. I’ll let you know how she feels about being called just a “guest” after I publish this article. Without further ado, I present her first post.

Ebay As An Exploratory Tool

Photo By Matti Mattila

Photo By Matti Mattila

Though we don’t recommend opening an Ebay store, we do think that selling on Ebay is worthwhile in the early stages of your online business.

This is true not only for marketing purposes and for testing the waters, but also for researching your target market as well.

Especially if you are not sure what to sell in the beginning, Ebay can help you determine if your target market even exists. I myself was surprised by the wide range of buyers that Ebay is a host to. Ebay’s user base is extremely far reaching and transparent.

It’s really easy to see which products have sold and which have not and at what price. If the market that you trying to enter is saturated, it’s becomes immediately obvious simply by observing the sheer number of sellers of a particular product.

In addition, you can get a fairly good idea what your margins will be just by looking at the prices of completed items. The best part about Ebay is that throwing up an auction is really easy. You just need to register with Ebay, have a potential product and snap a few pictures with your digital camera.

In the early stages of our business, we weren’t sure what to sell so we tried selling many different things on Ebay. We did this mainly because we didn’t want to devote a lot of time into the creation of our business until after we determined what products to sell.

For example, we couldn’t really name our business, create a website, or figure out our corporate structure until we figured out what market we wanted to go after. Not to mention the fact that we didn’t want to invest in huge amount of money on inventory either until we knew which products would be in demand.

Some of the items we tried selling included electronics, vintage games, collectibles, personalized holiday blankets and bibs. Though we had considerable success selling these items, we were able to narrow down our product selection based on results obtained from initially testing the product out on Ebay.

We eliminated certain products based on how labor intensive they were to produce and we eliminated others based on product demand and profit ratios. For example, one Christmas I decided to sell personalized holiday blankets and bibs.

These products sold quite well but it took a considerable amount of time for me to create them. After analyzing the profit margins, I determined that it simply wasn’t worth my time.

One of the reasons for the low profit margins was because there were already a ton of other sellers selling similar products and I couldn’t up charge as much as I wanted to in order to remain competitive on price. Not only that, personalizing the blankets and bibs was extremely labor intensive.

I had to custom design each and every blanket and bib to the customers’ specifications. Originally, I was charging fifteen dollars more than the cost of the good, which is a decent markup. But when I took into account how much time I was spending on personalizing each item, it no longer seemed like a good idea.

In fact, I probably could have made more serving burgers at a fast food joint given the same time constraints. In retrospect, I still question how those other sellers can make a reasonable profit selling their products at such low prices.

Our Store Is Launched. Is Ebay Still Useful?

We still sell some stuff on Ebay but only occasionally. We’ve found that Ebay is a great place to sell unwanted items. Ever heard the phrase, “One mans garbage is another man’s treasure”? Ebay is the perfect demonstration of this statement in practice.

We always have unsellable irregular linens lying around the store and we try to salvage a few extra bucks by selling our irregular wedding linens on Ebay. Most people on Ebay don’t care about a few imperfections as long as the price is right.

In conclusion, Ebay is great as an exploratory tool when you are trying to figure out which market to pursue and when you want to get rid of unwanted items. But other than that, it’s extremely difficult to make decent profit long term if Ebay is your primary source of income.

Further Reading

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6 thoughts on “How We Used Ebay To Assess The Viability Of Our Business”

  1. Brandon says:

    Great post Jennifer! I’m testing the viability of an idea and this post helped me out. Thanks,
    Brandon

  2. Hello. I absolutely agree with you on this. My brother has an eBay store and I keep telling him that he needs to use eBay as just a marketing tool to drive traffic to his website. I don’t think he fully grasps just how much cheaper it is and less labor intensive to sell the same item on his website versus selling it on eBay.

    The benefit of eBay though is being able to reach so many people at one time. The drawback of course is that there are lots of other people selling the same thing. Competition dives prices down dramatically. Thanks for this article.

  3. Such an amazing post! I was just thinking about using eBay for business. Thanks for this information !

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