eBay Inventory the Smart Way: How to Find Great Sources and Manage Your Merchandise to Maximize Profits on the World's #1 Auction Site

eBay Inventory the Smart Way: How to Find Great Sources and Manage Your Merchandise to Maximize Profits on the World's #1 Auction Site

by Joseph T. Sinclair, Jeremy Hanks

"The chief concerns of any retail operation are where to get inventory and how to get the best prices and terms. These are ongoing business challenges that apply as much to eBay sellers as to traditional retailers. eBay Inventory the Smart Way is the first book to look exclusively at the most profitable strategies for finding reliable suppliers and


"The chief concerns of any retail operation are where to get inventory and how to get the best prices and terms. These are ongoing business challenges that apply as much to eBay sellers as to traditional retailers. eBay Inventory the Smart Way is the first book to look exclusively at the most profitable strategies for finding reliable suppliers and marketable products. Readers will learn how to:

• form relationships with wholesalers and obtain dealer status

• finance purchases, manage inventory better, and use just-in-time delivery strategies

• increase profits with drop shipping and co-op advertising

• deal directly with manufacturers and wholesalers, “work” trade shows, and take advantage of trade organizations

• research product sales potential, buy closeout merchandise, and tap into pawnbrokers’ inventories

• and even buy inventory on eBay

eBay Inventory the Smart Way covers more than 25 inventory sources and tells how to profit from each. Whether buying in bulk, sourcing one item at a time, or establishing a powerful inventory management system, both established online retailers and newcomers will find this book indispensable."

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eBay Inventory the Smart Way

By Joseph T. Sinclair Jeremy Hanks


Copyright © 2006 Joseph T. Sinclair
All right reserved.

ISBN: 0-8144-7359-8

Chapter One

Identifying, Choosing, and Finding Something to Sell

Determining what you are going to sell is one of the first steps to take in starting your eBay business. Equally important is figuring out where and how to find the items that you want to sell. For those who already have an eBay retail business, this chapter will help you approach the task of finding new inventory in a systematic way. Indeed, this chapter is an overview that abstracts the ideas you need to select your inventory intelligently. Then, starting with Chapter 9, the book collects and elaborates on individual ideas for acquiring inventory. But there is much to consider before you get that far.

Sources of Product Ideas

Later in this book is a series of chapters that lists various inventory sources. However, you need to decide before proceeding what types of products you desire to sell. The following sections will give you a good start on getting ideas suitable for your own situation.

Personal Experience

Most people who start a retail business on eBay, or online, start with products they know and understand from their own personal experience. That personal experience may be a job, a hobby, or another activity that entails buying and sellingproducts. For instance, if you had a job working for a restaurant supply company selling kitchen supplies, it would be a natural for you to sell similar kinds of equipment on eBay. And there is a consumer demand for such professional equipment.

If your hobby is buying and selling antique dolls, then buying and selling antique dolls and other related collectibles on eBay would be a natural for you.

And finally, if one of your activities is horseback riding, buying and selling tack on eBay would be a natural for you.

What's the common denominator of all these activities? By being involved in these activities, you know the following:

* The various products associated with the activity

* The quality of various brands

* The dollar value of new and used items

* How the products are used

* How the products are bought and sold, and what guarantees and warranties are given in the transactions

* How the products are financed

* The size of market for the products (i.e., the number of potential customers)

It's this kind of knowledge and more that will enable you to be successful as an eBay retailer. It is also this background knowledge that will give you the confidence to get off to a good start and do a good job with your new eBay retail business.

That is not to say that you cannot start an eBay retail business without this kind of personal experience, but most people find that a good starting point for creating a retail business is based upon their own experience and knowledge with certain types of products.

Keep a Clear Head

Don't fall in love with a product. It's OK to be enthusiastic about the products you carry, but you have to be objective too. A good product for your inventory is one that you can sell for a good profit margin on eBay or elsewhere online. Assess the demand for each product you sell - before you start selling it, if possible. Read Chapter 27 for research information.


When most people begin to get involved in a new activity, they start buying the products needed to sustain such an activity. Although many people are careless buyers who tolerate wasting money and even tolerate low quality products, most of us do the best we can to research the markets and get the highest quality products for the lowest possible prices. This process of evaluating quality and pricing products at the beginning of a new activity sometimes takes a lot of research. It is exactly this kind of research that will make you an expert on such products. Therefore, being a buyer is a good start on opening the door to establishing your eBay retail business.

In fact, many people, in going through such a buying exercise, discover that there are niches in the market that have not yet been filled by anybody. They find products for which they believe there's a demand that has not yet been satisfied on eBay. Or perhaps certain products are not yet available on eBay with the variety that should be available. Thus, if you do your buying carefully and energetically, you will often discover niches that you otherwise would never know existed.

We (the authors) always buy as much as we can on eBay not only to get a wide selection and good prices, but also to keep in touch with the vast eBay market. In doing so, we run across ideas for potential niche markets all the time that present great opportunities for others who will discover them just as we have discovered them.

Supplementing Existing Inventory

Those of you who already have an eBay business are invariably interested in supplementing your existing inventory or perhaps even starting new lines of products. The most logical approach for you to take is to find similar products that have similar consumer markets. That will enable you to sell the new products to your existing customers.

Hence, if you are selling touring bicycles on eBay, you might want to consider selling such things as tents and lightweight cooking utensils for people who will take their bikes on long cross-country tours. Tents and lightweight cooking utensils are not necessarily bicycle accessories, but many people who take bicycling seriously are outdoor types who might be likely to go on a cross-country bicycle tour and camp out each night.


The obvious related products for you to seriously consider selling are accessories to the products you are already selling. So using the bicycle example from above, you can see that the following accessories might be good additions to your product line:

* Clothing designed for bicyclists

* Bicycle racks for carrying things on bicycles

* Bicycle helmets

* Bicycle lights

* Tire repair kits

* Bicycle racks for cars

And the list is endless. Many products have a long list of accessories, and you can expand your inventory to carry them profitably because you already have a group of customers in your database who are likely to buy such accessories. Then, too, the future customers of your existing products are also likely to buy such accessories.

Customer Service

Some accessories are inexpensive and perhaps not worth your trouble to handle. However, providing such accessories to your customers is a type of customer service, which may be an overriding consideration in determining whether such accessories are worth selling. In addition, if you can sell such accessories as a package with your existing products so that you don't have to sell them separately, your handling cost is less and the dollar amount to which you can sell each customer is higher.


Parts are like accessories. You can sell them to your existing customers. After all, your customers are the ones who may need parts for routine maintenance and repairs. Depending on the product and the market, you may want to sell either new parts or used parts or even both. In any case, parts seem a logical and reasonable choice for acquiring and selling additional inventory.

The parts business is pretty good on eBay Motors and for other sections of eBay as well. There's a good chance it will work for your retail business if your products are repairable.


Parts are for when something breaks. But many products have consumables, accessories or parts that get consumed or lost and have to be replaced routinely. For example, you buy a hand-powered labeling machine at an eBay Store. It comes with three rolls of labeling tape. You use all the tape and need some more. You order a three-roll pack for $2.35 from the eBay store. The shipping and handling is $3. You've just paid over double. If, however, the eBay retailer offers you a set of six three-roll packs for $11 and the shipping and handling is $3, you will probably be a happy camper.

So offer consumables in sets that make sense. Even if consumables can't be sold gracefully on eBay one at a time, they might be a profitable addition to your inventory if you sell them in sets.

Small Bulk

The ultimate logical extension of selling in sets is selling in bulk. If you go to the supermarket, you can buy rolls of paper towels one at a time as you need them. You can even buy a set of three. But if you want to buy them in bulk, you will probably go to Costco and buy a carton of 12. If you're an eBay retailer, why not sell in bulk?

We're not talking big bulk here like a big business might buy. We're talking small bulk like a person might buy if given the opportunity. For instance, Joe likes to keep his life simple by wearing the same kind of socks every day. He has 30 pairs of synthetic white athletic socks all exactly the same. (Dress is casual in California.) About once a year, he buys a new set of 30. In other words, he buys in bulk. However, he would prefer gray socks. He has been looking on eBay for two years for synthetic gray athletic socks to buy in bulk and has not been able to find an offering for more than a set of three. He continues to look.

This is not a strategy that will work for all products, but if it applies to the products you sell, it's worth a try.

Full-Service Retailing

Speaking of accessories and parts, what about a full-service approach to retailing? A full-service retailer is one that sells certain primary products and all the accessories, parts, and services to support such products. We have seen little of this approach on eBay. It seems that few eBay retailers sell more than a modest portion of all the products they could sell to support their primary products.

There are certainly many offline retailers that run full-service stores profitably. Yet online would seem to be a more appropriate market for such an approach. Perhaps most eBay retailers don't have the capital to take the full-service approach, or perhaps they are satisfied to cherry-pick products based on profitability. Whatever the reason, there seem to be plenty of opportunities for full-service retailing in many niches.

Once you decide to become a full-service retailer, of course, coming up with inventory ideas isn't difficult. You simply stock all the accessories and parts necessary for consumers' full use of your primary products.


Not many eBay retailers consider the sale of intangibles. But intangibles such as warranties and service contracts are not only products; they are often both easy to sell and profitable. There are a number of companies that will enable you to sell warranties to your customers to cover their purchases, and at the same time provide you with a significant additional profit. Usually the warranties are provided by third-party vendors; that is, the company providing the warranty is not the wholesaler or manufacturer that provides the product. Rather, it is another company that is just in the business of providing the warranty or service contract. Thus, unless you seek out such companies, you probably will not even realize that they exist.

Keep in mind, that warranties and service contracts provided by third-party vendors may not actually provide warranties and services directly to the customers in the case of a claim. They may just pay the manufacturer to provide a replacement product or pay a repair facility to do the repairs and maintenance. That should be of no concern to you. The idea here is to provide extra protection for your customers and collect a fee for doing so from a third-party provider.

Added Value

Some retailers are what is called a value-added reseller (VAR). In many industries this is known as value-add. That is, the retailer provides some kind of value in addition to just providing the product itself. Sometimes this value is installing the product, training the buyer to use the product, or providing some other sort of service to enable the buyer to use the product. Of course, not all products need this sort of added value. But many products do. Because you should be an expert in the products you sell, you are the logical person to provide the added value. And the added value is something for which you may be able to charge and make additional profit. Indeed, the added value is in and of itself a viable product.

Common Added Value

For many products, the added value is free. This practice is prevalent in situations where the sales of the products are strictly limited to VARs (i.e., dealers) that provide the added value but sell the products at full retail prices. The products are not available anywhere at discount prices. For example, this is a common practice in the business software industry.

Sometimes the added value is a matter of customer service. Usually the added value, which you provide free, just covers getting the customer started with a product and nothing more. But just because somebody bought a product from you doesn't mean that you're obligated to provide consulting and maintenance services for the life of the product. So don't confuse the idea of value-added with customer service. Customer service is something that you provide initially at no cost to get the customer off to a good start.

For instance, let's say that you sell an electrical generator powered by a one-horsepower gasoline engine made in China. You sell quite a few of these on eBay because they are less expensive than most competing products. As a matter of customer service, you may write your own owner's manual for using this product, since the English version provided by the Chinese manufacturer is incomplete and poorly written.

Because you are an expert in this product, or should be, writing such a manual should be easy and quick for you to do. (You will, of course, have someone edit it.) This is good customer service. However, it's not really a value-added type of offering. It's not something you can easily charge a fee for, because your customers will likely feel it's something that should accompany the product without any additional payment.

On the other hand, you can provide maintenance service for this generator as part of a value-added package. For instance, you might offer a service which obligates you to provide maintenance supplies and advice for the next three years. Thus, you would send the buyer routine maintenance supplies as requested. You would also provide maintenance advice by telephone. You might include this in the price of the product-particularly if there are no discount sales of the product in the market-or you might sell a maintenance contract up front (and get your money up front too).

Part of a maintenance service could be that, at the end of the second and third year, the customer can remove the carburetor from the gasoline engine and send it into you for cleaning and tuning. For many products, the entire product can be sent in inexpensively for cleaning, adjusting, tuning, and other sorts of maintenance procedures. Obviously, for large and heavy products, this won't work well outside your locale. Yet for smaller products, there is an opportunity to provide maintenance services for the product and make extra money.

Naturally, to provide such services you have to get set up to actually perform the maintenance. So you will have to determine ahead of time exactly how you are going to do that and make it profitable.

A Value-Added Thing

Does the added value have to be a service? No. The added value can simply be another product-usually something more than an accessory-that you add to the primary product and deliver simultaneously.


Excerpted from eBay Inventory the Smart Way by Joseph T. Sinclair Jeremy Hanks Copyright © 2006 by Joseph T. Sinclair. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Meet the Author

Joseph T. Sinclair (Vallejo, CA) is the author or coauthor of eBay the Smart Way, eBay Business the Smart Way, Building Your eBay Traffic the Smart Way, and other books in the eBay the Smart Way series. Jeremy Hanks (Orem, UT) is cofounder and principal of WholesaleMarketer, which provides product sourcing services for small businesses and entrepreneurs.

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