Don´t Get Burned By "Hot Lists"

By Steve Nye, eBay Certified Consultant

If you are looking for new products to diversify your inventory, then Hot Lists are the perfect place to start. The keyword here is start—not end!

Let me tell a story to illustrate my point. A friend of mine sells basically whatever he can get his hands on. After watching an eBay hot list for a few weeks, he took the plunge and bought 100 refurbished iPod Shuffles.

Unfortunately, he wasn´t able to sell these for a profit. He lost money on every sale, and ended up dumping the remaining iPods with a lot sale to cut his losses.

What went wrong? He followed the hot list.

Basing a product sourcing decision strictly on a hot list is like playing with fire—you´re most likely going to get burned!

A Little Information on Hot Lists

If you have never used a hot list, eBay´s is perhaps the most complete and can be found at eBay´s Seller Central.

But in order to use a hot list effectively, you need to know how these lists are created.

Many hot lists are created for lower-level categories and are based upon averages. This means that some products in that category will sell above the average while some will sell below the average.

These averages are for Listing Success Rate only. This means that products within that category are selling at a high success rate, usually selling 50% of the time. But don´t forget—some products will sell more than 50% of the time and some will sell less than 50% of the time.

Aside from the numbers, what does "Super Hot," "Very Hot," or "Hot" really mean? I had to read through each definition several times and am still unsure as to how they help me as a seller. To see them for yourself, click here.

You see what I´m getting at? While the information is helpful, it´s often vague and cannot be used to make successful product sourcing decisions on its own.

Hot Lists: A Great Place to Start

I´m not advising you to avoid hot lists altogether. All I´m saying is that you should only use a hot list as a starting point—and not as an ending point—when you´re looking for new products to sell.

My friend used a hot list as an ending point, and bought 100 refurbished iPods. What he didn´t know is that refurbished units were not hot. These were on the less than average side of the line and in the end he lost money.

Instead, use a hot list as a starting point.

For example, I went to eBay´s Seller Central and found the Baby > Strollers > Jogging Strollers > Single Category to be "Super Hot."

By now you should know that some of these single-carrying jogging strollers will sell above the average and some will sell below the average.

Once you know which categories are hot, you can use a research tool to find out if this category is hot for your business.

Reading Around the Average Line

Let me illustrate what I´m talking about with some research.

In the results above you can see that the Baby > Strollers > Jogging Strollers > Single Category is Hot, selling just over 51% of the time on average.

But how can we know which brands or types are above or below 51%? Two brands stood out to me, and you can see them in the figure below.

While Schwinn strollers sell 62% of the time (above the average), Rhino strollers sell 32% of the time (below the average).

If we would have simply gone off the hot list and purchased 100 Rhino strollers, we would have made a very bad assumption from a hot list.

Finding What´s Hot for Me

Let´s compare Schwinn and Rhino in a little more detail. After all, just because Schwinn sells 62% of the time doesn´t mean it´s a hot product for you.

In this case, Schwinn sells more often (higher Listing Success Rate) and for a higher price (Average Sales Price) than Rhino.

Obviously Schwinn is the hotter product, right?

On eBay, yes—but for you, not necessarily.

A product is only hot if you can make a profit on it. And you can only find out if you can make a profit by knowing your actual costs to source the product.

Simply put, if your source for Schwinn strollers is charging you $100 each, then it´s not a hot product. On the other hand, if your source was charging $60 for Rhino strollers, than it would be a hot product—for you.

In order to really find out if something is hot, you need to know the cost of sourcing the product. It´s only after you compare the performance of the product to your actual sourcing costs that you can decide if a product is really hot for your business.