eBay Business Model: High Margin or High Dollar?

Strap on your thinking cap.....

I had a few thoughts after my post this morning. Normally the items that I put on this blog are bought very cheaply, usually less than $15, and they usually sale for 20, 50 or even $100+. With the posting of the golf clubs that I have posted the last few days you have seen a different method buying.

What is the difference?

In the Yardsale/ Estate Sale / Auction world you normally pay rock botton prices that return 100-200% margins. That is easy to do...on a small scale. Anyone, and I mean, anyone can make $1000-2000 a month working 15 hours or less a week doing this. Simply going to yardsales on the weekend and listing the things they buy can produce several thousand dollar a a month.

They key to this method is to start with a SMALL amount of money (no more than $50) and slowly buy and sell and learn about what you are buying. Working at it and investigating EVERYTHING you buy BEFORE you buy it. You then use the profit you make from your sales and turn it over and slowly build that original $50 into a larger sum of money.


Now if you do this for two months and you are dilligent you can easily have $2000-4000 at the end of that time. So the question you have to ask yourself at that point is, "What do I do now?" Here are your options:


1) Keep doing what you doing
2) Keep doing what your doing AND Add some larger ticket items to the product mix
3) Cash out and start over
4) Quit buying small items and start buying wholesale low margin items

In the 6 months I have been doing this I have goine through all 4 options. You'll have to personally evaluate what you want to do once you reach this point, but lately we have been doing step #2.


So what we have started to do is, continue buying the unique one of a kind items from yard sales but also we have been buying more expensive items from other sources (i.e. Craigslist). Now, what you have to keep in mind is that you wont make the crazy high margins with these items, but you will make more money PER ITEM.

For instance, with the below golf club. I paid $150, it sold for $219. That is a profit of $69 (before fees). That is a profit margin of 32%. That is nowhere near the profit margin I made on the 35mm splicer I bought a few weeks ago. I paid $9 for a Floral Stemming Machine at Goodwill and it sold for $29. That is a profit margin of 69%, significantly higher. However, the total profit was only $20. It would take selling more than 3 of these to equal the same amount of actual money that the one, lower margin, golf club sold for.

Clear as mud?  Good!

As we go forward you'll keep seeing a mix of HIGH margin items as well as HIGH dollar items as well. 

Now you know why!

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