4/14/2008

Online Millionaire eBay Training - product strategies and sources

The trick to online millionaire ebay training is in your product sourcing strategy.

There are essentially two types of sources you can find your products on ebay
  1. One-time wonders/blunders
  2. Repeatable supplies

One-time includes garage sales, your attic, cute rocks you find at the sea shore or creek. You will probably never see another one like them. They can be wonders or blunders as sales items based on a wide variety of possible variables, your headline, your copy, your photo (or lack of them), your presentation overall - and whether anyone is online when you try to sell it who wants to buy one of those things.

Repeatable supplies are from having access to the manufacturing source - or wholesaler who will work with you. But just because you have a lot of widgets doesn't mean you are going to sell a lot of widgets or that they are even worth what you paid for them.

In both cases, you have to do market research - which is not so scary or intimidating as it sounds (we don't have to be MBA's to do this sort of stuff - and practically, it wouldn't help anyway: just too simple and easy.)

Market Research - simply finding what people want to buy

Market research is finding both supply and demand, then what information you need to know, need to give - and how to supply the best service to your potential clients.

Marketing is both finding a market and building a market for your goods.

On eBay, the best tool I've seen so far was formerly "Deep Analysis" and is now called "HammerTap", after the company which made it.

This anecdote from Earl Nightingale (among others) tells the story:

One of these huge machines in a factory went down and no one could get it going again. So they called a engineer from the manufacturer to fix it.

The engineer came in, listened to all their descriptions, and to all the various attempts they had made to re-start it, as well as all the ideas they had as to what was going on with it.

The plant manager was there, very eager to have this machine running again, as anything not producing something in that plant was costing him and his shareholders money.

The engineer, after digesting all this data, went over and examined the machine carefully. He ultimately went over to one side of the machine and stopped. He put down the tool bag he was carrying and pulled out a small hammer from it. Reaching over to the side of this massive machine, he gave it a simple tap.

Nodding to the operator at the control, the starter button was pushed. And the machine roared to life.

The engineer then got out a pad and wrote out the bill, handing it to the manager.

"5,000 dollars!" the manager exclaimed. "You've only been here 15 minutes and only tapped with with a hammer! I demand a full accounting and detailed invoice on my desk in the morning!" And with that the manager stormed off into the plant.

The next day, that manager found the following invoice on his desk:

"Visiting your plant and tapping with a hammer - $1.00

"Knowing where to tap - $4,999.00"

It is that precision of knowledge which drives sales on eBay.

What threw me off of this subject was the vast amount of auctions which have no one bidding, or only a single bidder. Needless to say, this is a way to rack and ruin if you are trying to make a living from it.

The very smart power sellers make extreme use of this HammerTap tool in order to make their outrageous profits. And it's such a powerful tool that there are many, many ways to use it - but only a few which give you the data needed to create really successful and profitable auctions time and time again. The folks at HammerTap have created multiple tutorials to help people get the data they need to utilize their tool: http://www.hammertap.com/webinars_and_workshops/

I'm going through these and will tell you all the new ideas I find. Just using the tool, or using eBay is worth your own education in this area - I won't be reporting on the common data we both already know, or the specifics of using eBay and setting up auctions. There are too many great books out there (as well as cheesy also-rans) which give you all this data.

Now for the new stuff ...

In this workshop, Long-Term Profits with Market Research and Product Sourcing, Jen Cano discusses some basics from her book "eBay Performance: Selling Success with Market Research and Product Sourcing". These are found in forums hosted by eBay for their community.

She talks here about a Turnover Principle, meaning that your market is constantly changing, and you need to be able to change with it. With few exceptions, you can't continue to just sell one or a few items and not eventually exhaust your market. Unless you sell food and have no competitors, you will have to be researching new products continually as part of your regular routine.

The turnover principle consists of three parts:
  1. Research
  2. Source
  3. Sell
Three benefits she mentions for keeping these three points constantly in play:
  • You focus on profit by being pro-actively seeking out new products (or revamping old ones) instead of reacting to unanticipated challenges.
  • You have in-demand products in the market weekly, because you're phasing in new products as you phase out the old.
  • Changes in demand don't surprise you - you'll know how to predict change and produce your buyers' needs and wants, having it ready for them.
Let's take these three turnover principle points one at a time:

1. Research - use HammerTap/Deep Analysis to find what sells, when, and how. This program can do some incredible things - right down to which keywords are in what high-selling items. And also will tell you if enhanced options (you pay for) have been associated with that item. Using an analysis program like this makes sure that you are always on top of changes and can review your existing items and phase out items where competition has become too extreme, or demand has slowed (snowboots in summer?). Research should be daily or weekly in your schedule.

2. Sourcing should be a regular part of your schedule. Finding new, lower priced, or improved service in your suppliers is a constant. When items get to be more common, your prices should drop from your supplier. Also, suppliers are in the same game of constantly finding new items or better rates from the manufacturers - so that they in turn can sell more, or phase them out when they don't sell as well anymore. So your sources should be improving and helping you with more discounts, or better rates on your dropshipping - or simply telling you that they have a hot new item which should be selling well for you. Always look to improve your sources.

3. Selling is something that you constantly work to improve - usually through bettering your copy or headlines - or simply by using different strategies for selling. Jen's recipe for this:
"Start out simple, by selling smaller, lower margin items.
Earn your customers quickly through loss leaders.
Once you have customers, please them beyond their wildest dreams!
Broaden your product mix.
Get into trends early and monitor their progress.
Up-sell, cross-sell, and add value."
In this, she has three selling strategies - which are time worn:
  1. High Volume in listing success rates - high volume sales yield greater profit in the long run, even though profit per listing is less.
  2. High Profit in average selling price - greater profits per sale will give you long run profits, even if your conversion rate is lower (fewer completed sales per number listed).
  3. Balancing Profits versus Volume - going for the balance between lots of listings completing and the highest possible profit for each one.

Obviously, you can see how these work in various examples.
Wal-Mart and Dollar General are under the first. Stores on Rodeo Drive in Beverly Hills are in the second. Mid-range store chains like Target, JCPenney's, Walgreen's - these are in the middle tier of these. Even bookstores like Barnes & Noble, Border's and Amazon are in that middle tier.

Your own auctions might have these different strategies for each type of item.
  • One-up items might be for best profit per sale. Especially collectibles. List these several times, even with reserves if needed.
  • When you have bulk in something that a lot of people want, you might go for more repeating sales and have a higher percentage of completed auctions - and get a lot of subscribers for your list (who you can tell what new items are going up for auction...)
  • If you can get a bulk (or small-bulk) amount of a generally higher-priced item that is selling good right now, you could use the best of both worlds and get the maximal profit that way.

Your strategy depends on what you're selling. And HammerTap allows you to simply determine which strategy to apply, based on the records they pull from eBay for you. But check out their tutorials (like the one this is based on, linked above) for the details on how to do this. Being able to quickly digest all this eBay data from a single database screne is much easier (and faster) than trying to study eBay data across their thousands of categories and millions of auctions.

Our use of this is to point out the three strategies which can be used on your own online marketing, regardless of what your niche is. I don't know that eBay data can or can't be used reliably outside of eBay itself. Certainly eBay buyers follow the trends and fads. But you can see how this principle above explains how regular brick-and-mortar sales work - which is the same basis for all online marketing.

Jen next tempts us with other interesting uses for HammerTap:

  • Day and hour to begin and end your listing
  • Type of listing to choose
  • Starting prices which cause a bidding frenzy
  • Listing length to capture interest and sales
  • Successful title words
  • Seasonal trends (you can even check last years trends)
  • Size of market for the product
  • Whether demand is rising or falling

But again - check out that forum linked above, plus the other links available on the HammerTap site.

Mimicking and Follow-The-Leader

You can learn a lot by doing what other leaders selling your products are doing. Check out their patterns of sales, in all characteristics: copy, start times, end times, pricing, features. By doing what they are doing (don't plagiarize) you can get similar results to theirs.

One caveat - they'll leave the market faster than you and start new products sooner. So you won't make their profits, that is until you learn how they do their stuff and start becoming a market leader yourself.

That requires homework. HammerTap will show you who the market leaders are - and then you can find out what they are selling, selling routinely, and what their completion rates are - how many auctions they post and how many actually finish. That homework will tell you whether you should get into that market at all.

Jen says in her next HammerTap forum that if over 50% of a market is occupied by newby, casual sellers, that market can be occupied profitably.

You want to perform better than average, which means you have to offer specific products and promote them with good headlines and copy.

To determine change in your market, you want to track how that market has been doing. While you could simply track this from week to week, you can also generate weekly reports from within HammerTap's database to see if the sales have been improving or declining. You aren't working with a month's average, but looking at each week by themselves. (And don't forget to check last year's sales trends of this type item to see what the seasonal sales are - but note that new items last year might not sell as well once they reach distribution peak and there is lots of competition for them.

The Product Life Cycle is briefly described as:
  • Ascendant - new product, expensive to manufacture, bugs are being worked out, few people know about it.
  • Peak - Lots of sales, cheaply produced, lots of distributors - this is where the bulk of sales are done.
  • Declining - becomes a niche market instead of widespread. You can get stuck with pallets of goods which no one wants to buy. (Picture a lifetime supply of laundry detergent sitting in your garage.)
Notes on this description:
  1. Products can go through this more than once. Especially some 20 years later when someone finds the "retro" look. Collectibles are examples of this - as well as Disney "re-releasing" their "classic" movies as a "limited-time offer".
  2. The declining side is also a time to sell accessories or their particular battery. People have the product and now want the stuff to go with it - or can't find replacement parts anymore. There is a local tractor supply business who makes their money buying up old tractors, and then selling their parts all over the planet.
  3. With marketing, especially to niches, you can revive the market product cycle - and maybe create a fad while you're at it.
  4. A saturated market isn't the place to be. Low profit margins and it easily tips over into a declining market. The two profitable places to be are when the demand is ramping up (few competitors, even though the items are pricey) and the declining side (where you sell accessories and replacement parts - or replacement items).
Time you spend on Auctions - versus the rest of your life

I got a freebie "Interviews with Power Sellers" in the mail, on a CD. (Nice packaging.) When I started going through most of these, I found that they spend varying time on their production. Most over a 40 hour week, one at 60 hours.

Their problem, for the most part (I did find one who only spent 20 hours a week) was that they weren't working efficiently. Sourcing for most of these were through the time-consuming work of attending auctions, garage sales, and clearances. They did no real research through a program like HammerTap and so couldn't work efficiently. Consequently, most were running at about 50% sales ratio. Now, as I noted above, you can definately be profitable at this.

BUT - you can't get time spent back.

My ideal is to replace my part-time day job with my part-time (20 hour's) eBay sales job. And make 2 or 3 times as much or more. The idea here is to enjoy what I'm doing and then get onto something else I enjoy doing. Compartment my week so that I never get "burnt out" on anything, but can move from one to another during the week, or during specific times during the day.

I farm in the morning currently, spend the afternoon and evening on research and studies, then do a couple of 10-hour days on my day job (which just pays my bills). My current research is moving me over into understanding how auction sales works, which will build up my back end (of necessity) and move me over into making profits from all my research and writing.

While I do 60-70 hour weeks, I like everything except the day job. And that's changing.

Here is the reason for the Online Millionaire Plan - move yourself over into control over your own life, making the money you want to buy the things and help the people around you - just the way you want to. The underlying foundation of this is to return choice to your life, over your life. Quit enabling people to control and chose for you, over you. Start living for yourself.

You see, giving up control completely is slavery. Giving up control partially runs the gamut of Communism, Fascism, Socialism, Totalitarianism, and a whole lot of other -ism's. Regaining maximum control doesn't mean complete capitalism either - but it will mean that you are deciding for yourself within the data and choices you have about what you are going to do with your life and what world you are going to create around you.

- - - -

And so this blog post ends for today.

I'm starting to see the end of my theoretical studies and will probably post some items for sale this week, with auctions that end sometime next week or this coming weekend (depending on what the best days are for these items). Once I get my feet really wet with what I have around the house, I'll probably jump in with Wholesale Brands and start drop-shipping away - small at first and then build up my profit (reinvesting this) to buy larger items with bigger profit margins.

But a few more tutorials to finish tonight and we'll see what tomorrow brings...
Post a Comment