It is a common misconception that when you start trading online you should aim to resell products that are in hyper-demand. A classic example is selling the latest DVD and Blu-Ray titles: the reason you stand no chance is no fault of your own, supermarkets and music retailers are themselves losing money when reselling those products.
'Why oh why?!'
you may ask. The reason is that they need to attract customers to their door, to sell them the OTHER products that make them huge margins.
When you sell online however, through your eBay store or any other merchant service, you already have the customers, they are ALREADY at the door. Therefore the question becomes:
'Why am I trying to sell them what brings them to the door when the customers are already at the door? Shouldn't I be focusing on the OTHER products that have stratospheric margins?'
Of course you should. Now the next obstacle arises:
'What are those OTHER products? What can net me 10, 20, 30 times what I put in?'
There are many products that can do this, and the answer depends on two factors only, your start up budget and the current mood of the market.
- If you have only a couple of hundred pounds to invest, aim for items that will cost you pennies and sell for pounds (mobile phone covers, cables, lighters, tapes, stationery, sewing products, shoe laces, accessories for electronics, etc, etc, etc). Imagine purchasing goods at £0.20 cost per unit, with a £100 initial investment and a retail price of £2 per unit. By selling all your stock you can multiply your initial investment by 10 (£100 * 10 = £1,000). That's a higher return rate than you will EVER make in a year from property or most other investments.
- When you have more capital, you can expand your product range and start selling more expensive or seasonal items. Designer sunglasses and hawaianas at the beginning of the summer, back to school items at the end of the summer, Halloween goods between September and October, toys at Christmas, and so on. Spotting demand trends is easy, simply be an avid reader of news. Buy magazines related to your industry and find out what the new trends are. Then plan a buying strategy around those trends. Buy brand name goods or offer an unbranded alternative (of the same, equal or higher quality). You could even create all three qualities yourself, possibly brand them with your own logos, and distribute all three, all in competition with one another. You can then grab a broader range of the market.
- It is only when you have done all the above AND have a strong position in your marketplace that you can consider risking money on loss leaders and promotion.
If you are starting from loss leaders you are grabbing the bull by the tail. Grab it by the horns and you will get very good results in managing your budget effectively and profitably.