As you guys probably know by now I am really interested in making money from the internet and my main focus so far has been blogging. Now that my blog is going quite well I decided to try and branch out a little bit and diversify my income streams online so myself and a friend thought a good idea would be to make money from tangible products. The formula should be nice and simple you buy something cheaply in bulk and then sell it off individually for a profit. Neither of us had done this before so we spent quite a few sessions down the pub chatting, researching online and thinking of all the different costs involved so that we could work out how much profit we could expect and finally decided it was worth it.
The product we chose was the X-mini II speaker because we both had one and thought they were a neat product that we could buy quite a few and then sell them on ebay. Here are some of the costs that went with this little venture.
60 Of The Speakers
We got the speakers from this supplier and we decided to get 60 because that was at the top level of what we could afford and you get a slight reduction in price when you buy 60 or more. That came to a total of $816.04(£497.63) and that was with the shipping included which was nice. That makes each unit $13.68(£8.29) We found a couple of cheaper looking companies but we couldn’t be sure of quality and we also weren’t comfortable with the method of payment they wanted us to use (wire transfer).
Tax to Get The Parcels Into The Country (Unexpected cost)
Should have really considered this but not having brought anything that costly into the country before I didn’t know about the charge. There was a £40 tax to bring in that amount of goods. The tax was measured by how valuable the package was.
Petrol Costs To Pick Them Up (Not thought of)
At the time I didn’t really consider this as a cost but since my margins started getting squeezed and with petrol prices rising I decided to work out how much that would cost me and think about this in its entirety. It’s 23.2 miles to the parcel force depot and back and my car gets on average 46.3 miles to the gallon. This means that I will have used up almost exactly half a gallon which at £1.30 a litre cost me £3.25 plus wear and tear on the car.
Packaging To Post Them In
This one we considered and decided to shop for them in bulk online. After a fair amount of research we found a website called paddedenvolopes.co.uk where we got 50 envelopes of the right size for a total of £15.86. We didn’t buy the total amount because we figured we didn’t need them all yet.
Postage Cost To Anywhere In The UK
We decided at this point to put them up with free shipping on Ebay for a fixed price. The shipping for each unit actually costs £1.76 for each unit shipped so that is taking money straight out of our pockets each sale.
Listing Price To Sell On Ebay
This is a variable which we had considered but in a way we underestimated the cost of it a little bit. Now this part is not to expensive because you can choose to have a simple advert up and sell all or your items for 30 days. The minimum cost that you can get away with is 40p for that listing but if you want your advert to look impressive at all I would argue that you need to spend at least 80p. I have put up two adverts so far at a price of 80p making that cost a total of £1.60.
Paypal Fees For Accepting Payment (Unexpected Cost)
Neither of us had ever accepted a payment through Paypal before because we had only used it to buy things so we didn’t know that they take a fee. On the website Paypal says it takes anywhere from between 1.4-3.4% +20p of every payment. From Each payment I have been receiving they have been taking off £0.71 which selling them at £14.99 is a 5.2% rate. Take Away the 20p and I am getting charged 3.3% right at the top of the range and I can’t imagine many people get a better rate than that.
Final Tally Of How Much It All Costs
I am going to do this in price per unit in pounds Stirling.
Buying Them And Getting Them Here £8.29
Tax £0.67
Petrol £0.05
Packaging (10 More To Buy) £0.31
Postage £1.76
Listing (So Far) £0.03
PayPal Fees £0.71
Total Costs £11.82
Total Profits £3.17
Other Problems We Came Across
Although we thought they would sell really fast because they are so good they have only been trickling out at about 4 for every listing we put up so if it carries on at the same rate we will have to put the listing up several more times before they are all gone. I think the reason for this is that we don’t have a lot of sales under our belt so our account doesn’t look as impressive as some other peoples profiles and also we couldn’t sell them for as low a price as some of the other models and sellers so we can’t have any USP(unique selling point).
Also we looked up average prices on the internet before we started selling them but the average price has gone down since we researched. In hindsight we believe that was because we did our research around Christmas time when prices were higher. The prices before Christmas ranged from between £15-28 and now they are averaging between £13-28. I know it doesn’t sound like much but it just means I’ve got more competition at the price level that I want to be dealing at.
Lessons Learnt From This Experience
Can you make a profit from dealing on Ebay, yes you can but it is a lot of effort and it is time consuming for the amount of payback you get out of it. If I ever do this kind of thing again I am going to make sure I consider all of the costs before going into it which I tried to last time but my inexperience didn’t help. Now I am wiser I can work out the costs more effectively. Also I would only buy in larger quantities so that the cost of purchasing them goes down. You will have to pay more tax but you should get slightly more profit overall.
Have you ever tried to make money from ebay and how did it go? Do you think its worth the effort?
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I tried to sell on ebay a year ago and it didn’t go well. I put almost all my product on auction and some of them didn’t reach even the cost!. I put them on auction because my previous listings didn’t sell. So I learn ebay is a tough market by actually losing money.