Is wholesale buying good for your eBay business?

Anyone new to eBay probably starts by selling unwanted personal and household items and is often surprised how much they make on this hitherto ‘worthless’ stuff. Then the selling bug bites and there’s nothing left in the house to sell? Now what?

The most common step is to decide between selling rare and one-off items such as collectibles and antiques or bits and pieces picked up at flea markets and auctions.

Those one-off items are frequently big profit makers; often they break auction price records.

But as more people get to know about sometimes incredible high prices fetched on eBay, the more intense bidding becomes at local auctions, the more established traders start buying at flea markets before the public arrives, and the less scope there is for smaller and inexperienced traders to cash in on these fabulous ‘miracle finds’.

But no such restrictions exist on buying consumer goods from wholesalers. This is usually the best way to grow a profitable eBay business, and the reason it’s also top product sourcing choice of all the world’s top eBay sellers.

Benefits of buying wholesale…

Like me, I suggest you use ‘wholesale’ to include all means of obtaining goods in bulk at a discount on typical retail values, especially eBay prices. So we’re including traditional wholesalers here, alongside manufacturers, job lot specialists, liquidation auctions, and so on.

This is what makes wholesale buying so special…

  • Usually the more product you buy the lower unit prices become and the greater your profit margins will be.
  • Wholesale products with reliable repeat supply lend themselves to multi-purchase buys, second-chance offers, and back-end selling to established buyers. You can sell several times from one listing, paying eBay just one listing fee, while using the same listing template over and over again without changing anything. It’s the way virtually all top eBay sellers work and it’s not only easy and effective, but very profitable too, even on a limited budget.

This set-and-repeat process can change a small unit profit margin into a huge income earner on most repeat sale products.

That’s because it’s by no means unusual to find 10 or 20 different people bidding on one item fetching, say £20 unit profit, and half or more of those people accepting a second-chance offer and generating £200 profit or much more on one listing.

Important: It’s very tempting to buy all you can at low prices, but you must be careful not to over-stock on items that are cheap but don’t actually sell. Instead, look for wholesalers selling products individually and in bulk – which means you can buy a single unit of product to test bidder numbers and price potential before buying in quantity later.

If you are quick, and your supplier is reliable, you might even make second-chance offers immediately the auction ends, take payment and call in to the wholesaler the next day to buy more stock.

  • Traditional wholesalers get their products direct from manufacturers. Wholesalers of this type understand their products and have close connections with manufacturers for further supplies, spare parts and repairs.
    Beware of too many brokers in the chain between yourself and the manufacturer (called ‘sub-wholesalers’), who usually buy in bulk from liquidation auctions and job lot companies and rarely have contact with manufacturers.

The more remote the link between those from whom you buy the product and those who actually made it, the greater the number of people sharing in the profits and the smaller your profit margins will be. Also, the less chance you have to call in uninvited for replacement goods and back-up support.

  • Niche markets are potentially the most profitable of all, especially if you find a manufacturer or reliable wholesaler of unusual items that are not currently listed on eBay.

Niche markets are those whose members share a distinct interest or characteristic, such as dog art, adult material, racing and gambling plans, country music, scrapbooking materials, magic tricks, and much more besides.

By their very nature, niche markets are smaller than general markets comprising people buying food, clothing, toys, and other essential items. But niche market buyers are among the most enthusiastic buyers of all, and many will continue buying from you for the lifetime of your mutual existence.

A seller who finds a supplier of niche market products not currently being sold on eBay stands to make incredible profits from a handful of products and only one source of supply. That is why it’s worth spending as long as it takes to find your niche.

When you find it, look for a supplier, preferably local, obtain a few products, list them on eBay, determine selling and profit potential, then form a contract with the supplier guaranteeing you sole eBay distribution rights.

Problem areas and how best to avoid them…

Without doubt, the worst problems come from sourcing wholesale companies online and using companies without testing their service. Most problems surrounding wholesale buying can be avoided by making contact with local suppliers and forming exclusive marketing arrangements. This is what I always recommend you do.

These problems show why…

  • Many ‘so called’ wholesale companies, especially working entirely online, are actually buyers themselves (sub-wholesalers) who purchase from other wholesalers, add a hefty profit, and pass all their overheads on to you.
  • Many ‘wholesalers’ are not product suppliers at all, but just a source of information about ‘possible’ wholesalers for your chosen products. For ‘possible’ read: ‘addresses culled from any old telephone directory, out of date, no longer in business, not even selling products in bulk, perhaps not even selling products at all.’

Wholesale lists are a nightmare and you don’t ever want to buy a so-called ‘list of wholesalers’. Even genuine lists date fast and, because these lists sell in their thousands, whatever profitable products did once exist are soon market-saturated on eBay.

  • Some companies charge a membership fee to view their products online – another sign you’ll access lists of companies (some also charging hefty membership fees) and very few genuine wholesale supply sources.

Note: this is not always the case and some companies charge a fee, usually a light one, to access lists of genuine updated wholesale supplier sources. It’s hard to know good from bad, so if in doubt go to Google, key in the name of the supplier or their web address, add ‘scam’ and you’ll soon learn which ones to trust.

For example, for a hopefully fictitious supplier called ‘Money Making Products on eBay’, operating from London, go to Google and key in ‘money + making + products + on + eBay + London + scam’. If nothing turns up, that usually means the company is genuine, especially if they’ve been in business a few years.

But it could also mean the company is new and not yet indexed on Google, or scam news is still filtering through.

You can determine how new a company is by keying its url (Internet address) into Google’s search engine, if nothing turns up, the company is probably too new to be indexed on Google – but that does not make it a scam. Yet!

Now go try this wholesale buying idea out for yourself and please let me know how you get on.

This article first appeared on Auction Genie. Read more and comment here