Welcome to the first part of this 8-part e-course on How To Start A Successful Online Retail Business.
If you are excited about the possibility of starting an online retail business, but need a little help getting started, there’s plenty of advice around the Internet. In fact, just search on the phrase “how to start an auction business” and you will get 32 mìllìon results, give or take a couple thousand! Apparently it’s a hot topic, and everyone has something to say about how to launch a new business online. That’s probably because there are mìllìons of people like you who are also excited about the same idea, and they are also looking for information, forming an ever expanding marketplace for how-to guides.
Has a little red flag just popped up in your head? Is that flag giving you these messages?
- If mìllìons of people want to do the same thing, can we all succeed? Or, more to the point, how can I succeed?
- It will take a bit too long to read 32 mìllìon pieces of advice; how do I decide which guidance is the best for me?
We have written this Insider’s Guide to answer those questions.
As a leading international trade portal, gauk Auctions has lots of opportunity to interact with bona fide online retail entrepreneurs who are out in the real world of trade identifying markets, sourcing products, managing marketing campaigns and selling merchandise on the Internet. These are the folks who are figuring out how to be successful every day. They have business experience gained the old fashioned way by experimenting, making mistakes, learning from them, and building their companies.
We have put together this Insider’s Guide to starting an auction business by reaching past the basics, to offer “boots on the ground” advice from people who’ve “been there, done that and got the T-shirt!”. Our Guide is filled with hundreds of tips from experienced online retailers. If you would like to avoid the beginner mistakes and race up the learning curve, read on as we get the juice from real world entrepreneurs.
This ecourse is divided into 8 sections. Each designed to give you the information you need to build a successful auction business in 8 easy steps.
Section I – Put your toe in the water first
Section I discusses how you can start your online selling experience by first experimenting to learn the ropes quickly and inexpensively.
Section II – Narrow the universe enough to pick a product to sell
Section II identifies numerous methods to source profitable products to resell at auction and discusses pros and cons of each approach.
Section III – Create a legal structure and get your “ducks in a row”
Once you have defined how you will be sourcing products, you need to decide under what legal form you will be trading. This section outlines the pros and cons of each trading setup.
Section IV – Hosting and Website Development
A hosting account and website can complement greatly your auction business. In this section we explore every step to setting up a hosting account and website inexpensively. Or you can obtain a free, fully functional eCommerce website by contactinggauk Media.
Section V – Product Sourcing
Section V focuses on how to identify reliable supplier partners. Once your business is more established, it will be desirable to order in large quantity from a select few suppliers. This section identifies ways to source supplier partners.
Section VI – Supplier Selection and Verification
Section VI discusses how, once you have identified new supplier partners, you can verify their legitimacy before concluding a purchase.
Section VII – Negotiating a Deal
Section VII looks at negotiation techniques to obtain a better deal from your supplier.
Section VIII – Pricing Your Products
Section VIII looks at how to price your products for optimal profits.
By the time you have finished this ecourse, you will feel confident you can easily and accurately resell at online auction and make a profit in the process.
Section I – Put your toe in the water first
Let’s face it. Most of us would love to be our own bosses, work from home, and make enough money to live the life we want to live. The Internet has made that dream possible, IF you do it right. However, the path from working at your day job (and drawing a paycheck) to managing a business online (where there are no bosses, no need for suit and tie and no restriction on sick days) is a long and curvy road. Plus, while the perks look great, it’s still a lot of hard work that requires strategic and managerial skills, great interpersonal skills, discipline, and the ability to live with a certain amount of risk, e.g., no regular paycheck, a downturn in the economy, or a product problem that’s not under your control. The message here is, don’t quit your day job yet!
Start on EBay to test your skills and temperament
You need to be sure that you are going to be able to manage an online business – which you have the skills and the commitment to make it work. One of the best ways to do that is to start by testing your abilities and comfort level in a controlled, lesser risk environment. For most people, a good place to start is eBay.
eBay has changed a good deal since its inception 15 years ago, as a simple used goods auction site where “everyman” could become a seller. eBay has figured out that its revenue stream is closely tied to the largest sellers who offer primarily new products at low prices. This means that eBay is a little less comfortable now for “everyman” because its policies are targeted to support Power Sellers. But, it’s still a wonderful place to get the feel for trading.
Set a loss limit
This is an experimental time for you. You may make some money, but it’s equally possible that you may lose money. Even if your plan is to sell your kids’ old toys (that would otherwise be hauled off to the landfill for a fee), you will experience some costs. For example, you may list some items that don’t sell, but will still have to pay the listing fee. You may make a mistake on a shipping cost and end up having to eat some of the cost. Make a decision about how much money you can afford to lose in this experiment. If you don’t, you can get in over your head and find yourself in trouble. That doesn’t mean that when you hit your loss limit, you should quit. It means that it’s time to stop and take an honest look at what you have done so far and decide if you can keep moving forward at that time and in that way.
Expert tip: Set a loss limit so you don’t get in over your head when you start selling online.
Gather some items to sell
Find some things to sell. Clean out your garage and your attic. Look for items that aren’t difficult to ship so that your shipping costs and logistics will be minimised.
Open an account on EBay and put up your items
Some key but overlooked strategies include listing your products in the right categories, looking around eBay to be sure that you’re setting your auction or your “Buy It Now” price at something the market will bear, checking eBay completed listings to get an idea of the average selling prices, using the market research wizard to discover which listing formats work best for your type of products, offer the lowest if not free postage & packaging whenever possible (rather than trying to make a lot of money on postage & packaging), etc.
Now go to your local auctioneer and bid on items that you can sell to someone for more than it will cost you to buy them, and put them up as well. You can of course access the web’s largest database of verified auctioneers, liquidators, wholesalers, trade distributors and dropshippers here. Another good strategy is to visit your local shops and identify items that are in low demand locally, but when resold on eBay they could experience much higher final sale prices due to a higher national demand (for example, think about visiting charity shops in nearby villages where local demand is likely to be low, you’ll be able to purchase used items at a substantial discount which when resold nationally are likely to net a good margin; or ask your local retailers if they have unsold end of line items, explain them that you are willing to help them get rid of their unsold stock (after you have done some researc h online to verify online selling prices) if they can sell it to you at a substantial discount; and so on, we will discuss sourcing methods in more detail later).
Once you have sourced your first goods to resell, see how the reselling process works and how you feel.
- Are you comfortable responding to customer questions? Can you organise yourself to mail an item immediately?
- Are there items that haven’t sold? Can you figure out why? Can you try something different to make a sale?
- How much time has this venture into selling taken? How much money did you make or lose? Did you subtract the administrative costs associated with EBay into your expenses?
Assess the results.
Take a moment to think about how well or not well your foray into sales worked. You should assess:
- Your temperament for running a business
- Your discipline in following up on details
- The time commitment you believe will be required to go from this experiment to a full plunge into business.
- The amount of money you can put at risk to set up a business.
Online retail does not necessarily take lots of cash, but it does take some – you’ll need to figure out how to afford it. Frankly, if you are doing okay on EBay, that revenue stream could supply the extra income you need to move into the next phase of your retail life.
In Section II we will discuss how to source profitable products to resell at online auction.
To your success