Some people here have expressed interest in my business (former sideline, now primary) and conveniently there is an article on survivalblog…
I wrote this response as a comment, but promoted it to post due to length. It’s still a bit rough though.
This article isn’t horrible, and in fact has some good stuff, but the author seems to completely miss the point:
“I am, again, currently unemployed. However, I finally took the initiative and started an online business to bring in some extra cash.”
She says this like it’s a revelation, yet she previously started and failed at two other businesses “I have had my own HR consulting company,[and] started my own sporting goods store”– what she really means is “This time I decided to buy and sell stuff online” thinking that it would be easier than working.
Online business is a BUSINESS. It’s got differences but it’s a business, not a magical unicorn that farts money.
Throughout the previous 25 years, she keeps going back to being an employee, subject to the whims and vicissitudes of others. This time is no different, she’s still got the mindset of an employee (do as little as possible, collect check).
Even with this statement– “In 2015 I saw the collapse in the oil and gas industry coming and decided that I needed to generate some “mailbox money” then to help supplement my unemployment insurance until it ran out. I was finally RIF’ed (selected as part of the Reduction in Force) in February 2016. My unemployment insurance ran out August 2016. Fortunately, I began prepping for that moment back in 2015 when I began investigating the fastest ways to make money and build a business. Not only that, but I doubled my efforts putting up canned goods and other consumable items.” — And so she reveals herself. She PLANNED to fail, coasting until her benefits were gone. She’s looking for the next ‘get rich quick’ scheme. She does start stacking, which is to the good, but that’s the only positive thing in the paragraph.
Then she discovers that there is a learning curve, and she’s gotta WORK at it! “There is definitely a learning curve to selling online. One must take into consideration pricing your items correctly, selling fees, monetary transaction fees, shipping fees, shipping supplies, time listing the items, negotiating with buyers, and other issues. I lost money the first month and began to run out of stuff to sell. I had to find another way to find stuff to sell.” — JUST LIKE A BUSINESS, who’da thunk it? And how do you lose money selling off your old cr@p?
“Although I knew I was going to lose my job, I was not mentally prepared for it.” — which is because she never really accepted that it was going to happen, which is probably why she never treated the online selling as a business.
“PayPal account … Since it was difficult to get money out of that account, I left it there for my “rainy day”. ” — NO IDEA what she’s talking about here. Paypal is linked to a bank account. You hit “Transfer money to my bank” select an amount, and in 3-5 days go to your bank and withdraw the money. Simple. Or use Paypal at POS machines instead of cash or credit. LOTS of real life stores accept Paypal.
“Finding Sources of Products Online To Sell For A Profit” — here’s another mistake. She’s buying cheap crap from alibaba and aliexpress to resell. That’s a REALLY crowded field, with no way to differentiate yourself except price, AND it’s all cheap crap anyway. Liquidation.com sells large lots of store returns and open box merch (mainly) which are going to have issues. I’m gonna guess at a 20-40% breakage rate, or in other words, only 60-80% of it is going to be good. Might be wrong, because it’s been a while since I looked at that stuff. I decided it was too crowded on the buy side with all the newbies bidding up the prices past where you could make any money. Never looked at bulq . com
“Starting an online store is not that difficult, but it is very, very, very time consuming.”– more unnecessary work and expense. WHY build your own store at all? For this kind of thing, use ebay. Even setting up an ebay store (if you have the volume) is straightforward, and your customers are already looking there! No bothering with SEO, promotion, or ‘driving traffic’. NO web fees, SSL certs, or site management.
“When I ran out of stuff to sell around the house, I had to begin using the money I had to begin buying stuff. Since it takes time to sell stuff, I began running out of money fast to buy stuff and to live on at the same time.” — translated, ‘after I lost money, selling off all my old crap, I discovered that buying a bunch of cheap crap and hoping to make a few cents on each sale, ties up money in inventory, and when those sales don’t happen, there isn’t any PROFIT.’
So she takes on debt to further her ill considered business model– ” I borrow money from them, buy the product and sell it with a bit of a markup; in return, they get their money back in full plus interest.” — translated as ‘ I enter another business agreement with FAMILY to piss away their money too.’
Then she looks at entering ANOTHER agreement, to take on MORE debt, but (I think) didn’t qualify as she doesn’t say she actually signed up for the “Working Capital”.
Finally she closes by expressing her fervent desire to abandon her business venture, and return to the bosom of Big Corp at the approximate age of 5o? 55? –” I’ve been unemployed for a year and a half. By the grace of God, I will find another job. ” –her own words reveal that she never thought of herself as ‘working’ at her online business.
So what can we learn from this?
The nature of work is changing. If your entire employment history is one desperate transfer from one sinking ship to another, STOP! Get out! Don’t expect to continue finding a chair when the music stops. Sooner or later you won’t and you’ll be forced to face that. Act at the time of your choosing. Change industries, fields, or start that other business.
If you have warning that your situation will be changing, TAKE THE TIME GIVEN! Take it seriously and get prepped! She should have learned her lessons while she had the cushion of a regular paycheck, or she should have been actively looking for another situation… NOT planning to coast and milk her benefits until they ran out THEN start looking.
Business is business. Being online doesn’t change that. You still need to know how a business runs, what makes it successful/profitable, and you need to put in the work. What is different about selling online is that your startup costs can be very low, and you can start very slowly. You don’t need to rent a building, stock it with inventory, and hire employees. (she did the virtual version of this- exactly what you DON’T need to do.)
As she did, you can start by selling stuff you already own. Old hobbies, and collections that no longer interest you are good sources of items. There is no way you should lose money doing this. If you can’t take free stuff, and sell it for a profit, that should be a lesson for you! (assume the stuff has 0 cost basis as it’s just sitting there unused and unwanted) Again, businesses have costs. Shipping, fees, commissions, supplies, etc are all part of the cost of doing business. If the price of the item won’t cover those things, DON’T SELL IT. If you do, you are paying someone to take your stuff. In that case, you’re better off piling it on the curb, or having a yard sale. Many things WON’T be economical to sell online, and you should just have a yard sale.
This first part is your ‘learning’ period. You learn about Paypal and Ebay taking 10-13% You learn how to take good pictures so you don’t need to edit every one. You learn about shipping options and costs. You learn what sort of things sell for you. You learn how long it takes to measure, weigh, photograph, and list items, and you learn HOW MUCH you need to PROFIT on the item to make it worth doing! This is what she should have been doing during the year warning she had.
After learning the basics and building your transaction history and skills on ebay or etsy or your local FB group, then you need to start sourcing more stuff to sell. Decide what you LIKE looking for and LIKE selling. Do you have special knowledge or skills? Do you have a hobby or collection that gives you special insight? Keep in mind that ‘collector’ mindset will hurt you if you are doing it for profit. Keep in mind that each type of item will have its own learning curve wrt desirability, pricing, packaging, etc. For example, toy trains might interest you. You might start buying them at what you think is a reasonable cost, but it turns out they are all very common sets and don’t sell well unless deeply discounted. Every time I decide to sell some new type of items, I made mistakes in purchasing and selling. Sometimes they were VERY COSTLY mistakes. That’s why it’s very helpful to start out with items you know, and items that are LOW COST TO YOU.
Like any business, if you have low margins you need HIGH VOLUMES to make profits. If you can keep your margins up, you can sell a lot less and still make profit. You’ll work a lot less, and your costs will be lower too. This was the mistake she made. She had low margins on cheap crap, and was not in a position to sell high volumes.
Leverage existing networks/infrastructure. Ebay is the big dog for a reason. It costs you nothing but fees to get started on ebay. In the beginning ebay was like an online yard sale, but that has changed. There are sellers with MILLIONS of transactions. I routinely see sellers with 10s and even 100s of thousands of transactions. Almost everyone will go to ebay and search ebay, many of them looking for brand new commodity items or traditional retail items. Your listings are right there too! Whether you are selling one of a kind vintage items, or you aspire to 100s of thousands of sales, why NOT go where the customers already are? AND save the cost, time, and effort of developing your own store.
What sells well changes over time and is different for different sellers. Don’t build big inventory. Just in time works for little guys. Buy it with the goal of selling it right away. DO NOT sit on items! (this can be difficult for me, I like to let certain things age in my possession. You’re buying to SELL, not KEEP. Don’t get high on your own supply.)
The best way to maximize return on effort is to buy multiple items you can sell from one listing. It takes the same time to list a $20 item as a $200 item, or 20 items that are all the same and sell for $30 each. Guess which listing keeps paying you for the same effort?
Sometimes an item won’t sell for a LONG time. I’ve got stuff listed that finally sold after literal years. ONLY relist items like that if they are going to generate a good profit when sold, and when you have ‘free listings’.
Price aggressively. Use the “Sold Listings” search option to see what similar items sold for, then click on the “Sell one like this” button and start your listing from there. Always check if an item is selling, has dozens of unsold items just like it already listed, and what it actually sells for BEFORE buying the item. Even if you can double your money on that thrift store item, is it worth the effort for $5 net? If you don’t ask that question, you won’t make any money! Your goal should be to minimize any inventory. You want constant turn over on unique items, and quick sell out on lots.
Keep in mind that you need enough profit to fund more purchasing, and to throw off cash for your personal goals (eating this week, or funding the new bang toy, etc)
Do some research on youtube. See what other ebay sellers/ thrifters are doing. (this is a whole lifestyle thing, buying and selling online, with a vblog) Decide if it’s something that will work for you. (one prominent youtuber says they make good money selling Hometics power supplies. I see them all the time, so I started picking them up. I can’t seem to sell ANY. Not gonna pick up any more.)
Maximize your ‘edge’ whether it’s specialized knowledge, repair skills, or regional arbitrage (buying where an item is common, and selling where it is not.) Eventually, your edge might be that you can buy multi-pallet lots for thousands of dollars, and have your staff process the warehouse full for sale! You’ll be able to outbid me every time!
Finally, selling online is relatively easy, has very low barriers to entry, and can be profitable. Like most businesses, you get out of it what you put in. If it’s going to be a primary source of income for you, after that initial ‘trial period’ you need to COMMIT and put in the effort, but be smart and learn first WHERE your effort is best spent.