An online auction store such as an eBay store, webstore.com, or online auction.com is a business I have contemplated several times over. A successful online store requires products that are in demand, a huge amount of research, and a well formed marketing strategy. Finding products that consumers want and/or need is the first order of business. Accomplishing that is a daunting task and has continued to be a great deterrent for me personally; however, I have not entirely dismissed the idea either. Recently, I looked at various costs, particularly inventory. It is imperative to research costs via a reputable source.
In reviewing Wholesale Liquidators, a popular online bulk auction site, I found a wide selection of bulk merchandise auctions at what seem to be reasonable prices. Their terms are presented in a manner that is easy to read, straight forward, and explicit. Costs, fees, terms of service, and other pertinent buying or selling information is readily available. Every auction I viewed had the following statement, “For an explanation on the various condition codes used on Liquidation.com please Click”. Trusting in wholesale liquidators, I signed up for a free account. Still contemplating this business, I chose a real and random auction listing of products of interest as a cost model.
This auction is for a lot of shelf pulled women’s designer clothing. 169 pieces in total.
The manifest states the following, with the dollar amount shown as the retail listing.
12 NEW WITH TAGS FRANKIE B JEANS 178.00
12 NEW BRAND NEW TEENAGE MILLIONAIRE BURNOUT 32.00
16 BRAND NEW CALVIN KLEIN HALTER TOP SHIRT (TWO COLORS RED AND BLUE) 35.00
16 NEW WITH TAGS PLAYBOY EMBROIDERED SHORTS 49.00
12 BRAND NEW PIXXIE BLUE SEE THROUGH TOP 38.00
16 BRAND NEW URBAN OUFITTERS NEW YORKERS HAVE MORE FUN T SHIRT 32.00
16 BRAND NEW URBAN OUTFITTERS SPARK IN THE DARK PURPLE SHIRT 32.00
15 NEW WITH TAGS WRANGLER CORDUROY JEANS 54.00
12 BRAND NEW ED HARDY WOMENS TUNIC SHIRT 108.00
12 BRAND NEW MENS ED HARDY SKELETON DEADHEAD THERMAL SHIRT 118.00
6 BRAND NEW WOMENS CRYSTAL ROCK CARGO PANTS (THESE ARE SAMPLES) 208.00
12 BRAND NEW WITH TAGS MENS ED HARDY T SHIRT 108.00
12 BRAND NEW WOMENS PREMIUM URBAN OUTFITTERS CHASER 38.00
Currently the highest bid is $270.00. Assuming that would be the final bid, the clothing per item gross cost would be $1.60 per piece.
Next, we add the buyers’ premium of 5% or $13.50, increasing the cost to $1.68 per piece.
There is also a quantity variance of 3%, which could reduce the lot by 5 pieces, thus raising the cost per piece $0.05.
The shipping terms are as follows: Liquidation.com, in conjunction with one of our transportation partners, will arrange the shipping of goods from the seller to the buyer’s location. Liquidation.com will charge all shipping expense to the buyer.
Price quotes area available. I calculated the costs for shipping to my home town.
Your Estimated Shipping Cost is $40.25
Price per Unit: $0.24
Price per pound: $1.34
Considering the 3% variance, this adds $0.24 to the item costs.
Finally, this lot of designer clothing would cost about $2.00 per piece.
After doing a small amount of searching on Google, I found that most of the retail amounts in the manifest were exaggerated. The auction was equipped with photos permitting comparison of similar products on other sites. The price ranges returned by Google were rather large and quite surprising. For example, the same men’s Ed Hardy shirts varied in price by over 100%, with the lowest being $12.99 and the highest at $35.00.
Assuming one determined there was a demand for this style of designer clothing and the articles were sold for $15.00 on average, $13.00 per item sounds like a fair gross profit base. Other costs include packaging and shipping materials that perhaps could be added to the sale price.
The other big fee would be the auction listing fees. These vary from one auction site to another while a number of sites claim to be completely free. Choosing a site to host your auctions involves researching site fees with an emphasis on comparing traffic to site listing fees. Sites like eBay where the listing fees are somewhat higher may be worth paying when compared to the amount of traffic the site generates.
Purchasing wholesale clothing or other online inventory is only one aspect of an online auction business. I believe it most important to do a great deal of research on your own first, and then seek professional advice when contemplating an online auction business.