The pros and cons of selling a commodity on eBay

12 Apr 2007

Corey Kossack

Corey Kossack is a Managing Partner at Game Change Ventures, focusing on partnering and consulting with startups in the areas of social media, consumer Internet and e-commerce. Corey is also an Operating Partner at Game Change Ventures' first Internet startup, Addoway, a social marketplace that helps you buy and sell with your friends and the people they know. Formerly Corey was one of the world's largest retailers on eBay, built a $1M company from scratch at age 23, has led multiple startups and received numerous awards for his entrepreneurial achievements.

When it comes down to it, I believe there are really two different types of products you can sell on eBay.

1) Hot Commodities – DVDs, iPods, or maybe a Starbucks Espresso Machine

2) Unique Products – Custom jewelry, custom clothing or maybe a twist on a popular commodity, like bundling that espresso machine with 10 lbs. of gourmet coffee…

So here’s the challenge… Commodities are currently in high demand. There is plenty of eBay data to show you that people want to buy the latest Harry Potter DVD, but how many people are selling it? With the hottest commodities, sometimes the competition is so ridiculous that no one can actually make money when they sell it. The saturation in the market causes a dip in the average selling price, and many sellers don’t fully understand their profit margins enough to realize they aren’t turning a profit when they complete the sale.

On the other hand, the custom products have no market data available to show sellers that they will actually sell well on eBay because they are CUSTOM, and no one else has tried to sell that exact product before. If you find the custom product that sells insanely well on eBay, you have struck gold. But, this isn’t always easy to come by.

So what do you do? As someone who has competed selling one of the hottest commodities for the last few years, my recommendation is to enter markets that aren’t already saturated. I once met a man who was doing very well with his eBay business selling kitchen sinks! Who would’ve thought of that?

Think outside the box. Find something people need, and see if you can give them value by having them purchase on eBay instead of at their local retail or hardware store. Or give them something they can’t find anywhere else!

That doesn’t mean you can’t make money selling commodities (you can), but if you’re going to go that route be ready for a dog fight! And be prepared to run an extremely efficient business and understand every detail of your profit margins. Without it, you’ll sink like some of the large commodity eBay sellers of the past that are no longer around…

Corey Kossack is one of eBay’s “top sellers” through his eBay store, Koss DVD. He is also author of eBay Millionaire or Bust and creator of ProfitBuilder software that maximizes profits for eBay sellers.

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