Welcome back to our eBay series! In our last post, we discussed how to calculate the Sell Through Rate (STR) and estimated selling time for items in your inventory. Now, let’s take a step back and answer another crucial question: How do you decide if an item is even worth adding to your inventory in the first place?
1. Research the Item’s Current Performance:
Before investing in any item, you should first research how that item is currently performing on eBay.
- Completed Listings: On eBay, you can filter your search results to only show completed listings. This will give you a sense of how many listings for that item actually ended in a sale.
- Price Points: Look at the price range of the sold items. Is there a common price point where the item seems to sell more frequently?
2. Calculate the Potential STR for the Item:
Using the information from completed listings:100PotentialSTR=(NumberofSuccessfulSales/TotalCompletedListings)x100
For example, if there were 100 completed listings for a vintage toy and 60 of those listings resulted in a sale, the potential STR would be 60%.
3. Understand Carrying Costs:
Every item you add to your inventory comes with a cost, even if it doesn’t sell right away. This is known as a “carrying cost.” These costs might include:
- Storage costs: If you’re renting space or using particular storage solutions.
- Capital costs: The money you invested in the item which could have been used elsewhere.
- Insurance: If you insure your inventory.
- Depreciation: Some items may lose value over time.
To calculate the carrying cost for an item:
CarryingCost=(Storage+Capital+Insurance+Depreciation)/TimeSpan
If it costs you $5 per month to store items, your capital cost is $10 per item, insurance is $1 per month, and you expect an item to depreciate by $2 over 2 months, then:
Carrying Cost = ($5 + $10 + $1 + $2) / 2 months = $9 per month
4. Evaluate if the Purchase Makes Sense:
Now, combine your potential STR, estimated selling time (from our previous guide), and carrying cost to decide:
- Profit Margin: Ensure the selling price (minus eBay fees) minus your purchase price and carrying costs still yields a desirable profit margin.
- Inventory Turnover: With your STR and carrying costs in mind, decide how long you’re willing to have the item in your inventory. If an item has a low potential STR and high carrying cost, it might not be worth the purchase.
- Market Trends: Be aware of seasonal demand or potential changes in item popularity. An item that’s hot now might not be in a few months.
Conclusion:
Making informed decisions about what to add to your eBay inventory is just as crucial as understanding how to sell it. By doing thorough research, understanding potential STR, and calculating carrying costs, you can ensure that you’re not only making sales but profitable ones. Remember, it’s not just about what you sell, but also what you choose to stock!