A Reliable Approach to Building Your Profitable eBay Business

By Amy Kendall, Research Education Specialist

If you sell products on eBay, it’s your business. And the primary ways to increase ANY business’ success are:

1. Sell Your Product at a Higher Price
2. Sell More Often

Today we’re going to explore how each of these fundamentals of business success can impact the success of your eBay business.

Sell Your Product at a Higher Price

Think about the last thing you sold on eBay. How much did you sell it for? More importantly, how much of that money did you get to keep? In the end, it’s profit, not sales price that matters.

It’s easy to get caught in the trap of focusing solely on increasing the closing price of your eBay listings. But even if you’re selling snow in Alaska, you’ve got costs and expenses. First, you have to buy the product you want to sell, unless you’re just cleaning the clutter out of your house (or grabbing snow out of the front yard), and no matter which product you sell, you have to value the time you (or someone else) spends listing, packaging, and shipping the item.

You always have costs, and you probably can’t reduce them below a certain level (shipping, packaging, inventory). Profit = Selling Price – Cost to Sell the Item (including Inventory cost). If you can’t reduce the cost to sell your product, the only way to increase your profit is to increase the selling price.

So how do you do it? How do you increase the closing price of your eBay listings by 10%, 20%, and sometimes even 50%? Market research is the answer!

First of all, you’ve got to make sure you’ve got a product that’s in high demand. So how do you find that out? Again, the key lies in research how well a product performs on eBay.

We can use HammerTap market research to compare two items we might want to sell on eBay. Let’s say we have found a great source for golf clubs at deep discount. A golf store is closing everything out and a drop-shipper you know of bought an entire semi truck load of golf club sets. They just want to clear them out, so they offer any set of golf clubs for $200.

I ran searches for both Nike and Ping golf club sets, and the figures below show how much you can expect Nike and Ping golf club sets to sell for.

Figure 2: Ping Golf Club Set Results – Average Sales Price

Figure 1: Nike Golf Club Set Results – Average Sales Price

From the data shown above, we see that Nike golf club sets sell for more than Ping golf club sets. To be exact, we can expect to get an additional $25.52 on average when we sell Nike. Regardless of whether you know anything about golf, you now know you can expect to sell Nike clubs for more.

With a market research tool like HammerTap, this kind of data comparison takes two minutes or less. Unless you’re Donald Trump or Bill Gates, I’ll bet you’d happily spend two minutes to make $25.52.

Now, let’s figure out how much money you’d get to keep in both cases. Let’s say your drop-shipping source for the clubs charges $25 for shipping and handling. So, let’s compare profit.

Looking at just the average sales prices, we got just $25.52 more by selling Nike instead of Ping golf clubs. For a large purchase like this, it doesn’t sound like that much (although totally worth 2 minutes of our time)—until you calculate the net profit. Selling Nike golf clubs instead of Ping increased your net profit from $37.36 to $62.88, a whopping 68% increase!

Sell More Often

You can either boost your profits by increasing your net profit, as shown above, or you can sell your product more often. Let’s look at the same examples as before but this time we’ll focus on which brand sells more often.

Figure 3: Nike Golf Club Set Results – Listing Success Rate

Figure 4: Ping Golf Club Set Results – Listing Success Rate

This time the Ping clubs come out on top. Our HammerTap research shows us that by selling Ping golf clubs, we’re more than twice as likely to make a sale the first time than if we were selling Nike clubs.

Balancing Net Profit and Listing Success Rate

In our first look at the results, we saw that we can make $25.52 more by selling Nike golf clubs over Ping clubs. But on the second look we found that we will only sell them about half as often (67.29% success rate for Ping, 32.71% success rate with Nike).

So what’s this mean to you? Is average sales price or listing success rate more important?

That really depends on you. If you’re interested in quick money, you might be better off selling the Ping clubs, since they are more likely to sell the first time you list them. If you want to squeeze every penny out of a sale, even if you make a sale less often, sell Nike golf clubs.

Auction Intelligence vs. Product Knowledge

Here’s where many eBay sellers fall down. They believe they much have in-depth product knowledge to pick a winner. You don’t. I don’t have to know a thing about golf to know whether I can make money on Nike or Ping golf club sets.

In fact, product knowledge can actually be a huge disadvantage! If I don’t know anything about golf, I’m more likely to do my homework and base my eBay listings on facts because I have no knowledge of my own.

But let’s imagine that I’m a huge fan of Ping golf clubs. Or maybe I‘ve read that they are superior and very well made. In the absence of eBay market data, I might be tempted to pick Ping golf clubs to sell over Nike. After all, one could reason that the better clubs should sell for more. And in this case, I’d be dead wrong.

My point is that I don’t care why Nike golf clubs sell for more on eBay. I just care that they do. If you’re like most of us, you’re busy. You don’t have time to become an expert in golf clubs to make an extra $25.52 more on an eBay listing. Your time is certainly worth something.

With eBay market research software like HammerTap, you make the most of your time. When you spend less time researching what to sell on eBay, you can spend more time doing what matters most to you. You’ll be confident in the knowledge that you’ve done everything you can to reduce your risk and squeeze the most profit out of every eBay listing you make.