In previous posts we’ve dealt with the very basics of getting yourself started on eBay with selling your own items, sourcing them from yard sales, Craigslist and even moving forward as a Trading Assistant selling stuff on behalf of third parties and taking a commission for handling the listing and sale.

Now it is time to look at developing yourself further as a professional eBay money maker and sourcing goods for sale which are new and customers will want now and again and again.

Identify Products.

Once you have identified which products are selling on eBay, and more importantly are selling today, you need to source the products in a cost effective way so you can achieve good margins and develop a consistent product range to sell. The major sources for products at prices which will allow you to make a good margin and make good income for yourself are the wholesalers, but where do you find them?

Understand how the distribution chain works in global terms.

The manufacturer makes the product and they will sell them in bulk or high dollar value transactions; they usually do not deal with the public as they are not interested in selling one DVD or one MP3 player – they are selling them in volume such as thousands or in high value transactions of tens of thousands of dollars. Wholesalers are the major customers of manufacturers.

Wholesalers buy in bulk from the manufacturers; sometimes they are one and the same but more usually they are not. A wholesaler will buy in bulk a range of products and by using their bulk-buying capacity are able to negotiate extremely low prices for the products they are carrying. Wholesalers will in turn sell to retailers at lower volumes or total transaction values with an enhanced price for the individual units compared to the manufacturer which is where they make their profits.

Retailers are customer facing i.e. they sell to the public and this includes you as an eBay auction seller – you are known as an eTailer in this instance because you are selling online and using eCommerce. Retailers apply a mark-up to the products they have sourced which the customer pays and this is where the retailer makes their profit.

As you can see at each stage of the chain, mark-up is added until a final price is established which the customer pays. Your challenge is to source products at the lowest cost, highest quality and in greatest demand which you can sell for the most profit and get them into the hands of customers paying you for them.

A form of wholesaler is a dropshipper; they will take your order after you have sold an item and ship it directly to the customer. You are responsible for selling the item and collecting the money as well as handling any customer issues; the dropshipper is instructed by you to send the item to the shipping address provided which bypasses you, direct to the customer and you pay the dropshipper for the product supplied leaving a profit which is yours.

Now you understand how the distribution supply chain works and where you stand in it, it is time to move on to the detail of how to get the most out of your wholesaler or dropshipper and make some serious money. This we will discuss next time.

Wishing You Rippling Success! Please share your thoughts and ideas in the comment section!

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