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I was recently comparing my sales against one of my much larger competitors and noticed this interesting case study emerge.
First a few preliminary facts. We both sell primarily magazines. To a certain extent, they are a little bit commoditized. There may be 5 of any given magazine issue for sale at one time. The prices generally range from $10 to $25 for exactly the same issue of a magazine.
I generally opt to be at the lower end of that price continuum and my competitor is always at the top. Even though he has almost 20 times the inventory that I do for sale (he has 35,000 items and I have 2000 items), I sell about 60% as much as he does (he has 250 reviews per month and I have 150).
Here’s the shocking stat. His “reviews as a percentage of total inventory” ratio is 0.7% and mine is 7.5 % (eg 150 reviews / 2000 items = 7.5%). I am assuming that our sales to inventory ratios are also similar. For what it’s worth my sales to inventory ratio is about double that — 15% (290 sales on 2000 items).
So, where do you all fall? What percentage of your listed inventory do you sell every month?
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It’s an interesting question, but I think it can be a loaded question.
How long have you been selling? I’ve seen sellers have high sell-through rates in their early eBay careers, but then they see their inventory grow and sell-through rate lower over time.
Why? Because not everything sells quick so inventory stacks up. Doesn’t mean they don’t make good money each month. Some items just take time to sell.
Some sellers choose to keep lean and mean by dumping inventory if it doesn’t sell in 90 days. But many long term sellers realize that everything eventually sells. As long as you have proper storage, might as well build up the inventory. No downside.
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Yeah. I know what you mean – it can be hard to comparing apples and oranges.
I’ve been selling almost continually for 5 years as a side hustle, although I recently took 6 months off when we moved from one state to another. Curiously, though, my sell through rate has remained about the same (~12-15%) while I grew my inventory from 500 to 1000 to 2200 items.
I pretty consistently source 300-500 items per month. In a slow month, I replace what sells and, in a heavy sourcing month, I add a couple hundred items to inventory.
Jay – you’re pretty transparent about your sales. If memory serves – you sell 35ish items a week (so 150 items per month) and have roughly 8000 items in inventory. So that’s 1.9%
I guess so much of it depends on how long tail your items are and, of course, whether you price high or low compared to the market.
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It’s awesome that you can sell all your items so quickly. That’s the dream store. You must have a really good eye and/or access to really sought after items.
How much do pay for your items? I often see that people who sell items quick often pay more for their items. What’s your average net profit per items?
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I usually pay between $0.25 and $1 per item. My average selling price for June was just over $10 per item and that includes a few large lots where I sold 50 or 100 (not valuable) magazines for $1.50 to $2 a piece.
The bane of my existence is whether to list an item for $12 and wait 3 years for it to sell or include it as part of a 10 item lot for $40.
But you’ve totally hit the nail on the head. It’s all about sourcing. Similar to you guys, I go to auctions, estate sales and private sellers and often buy a couple hundred magazines at a time. A third of them get thrown away, a third go into lots and a third are sold individually.
My goal is to raise the average selling price of my items from $10 to $30 – but I’m guessing I will have a harder time sourcing the quantity of stuff I’m getting now.
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Yeah, this is the endless debate we have in the community. It all depends on how you want to run your business.
To keep getting high quality inventory that sell fast, I assume you’d need to spend a lot of time scavenging and/or pay up for items.
We definitely are the poster kids for “lazy selling”. We source once or twice a month to buy a truckload of stuff. We pay as little as we can for items, seeking out items no one wants. Risk is very low. We list and forget. Stuff sells when it sells. We have consistently made enough each week to pay our bills. This buys us our time to live life.
But if you’re motivated to always be sourcing, you can be much more in control of your sales.
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From a different sales model point of view, I sell primarily new old stock auto parts and often I get multiples of the same part. I run about 3000 listings and ship 300-400 orders per month. Sounds like 10%, but since I have over 32,000 individual items in stock it’s more like 1%.
Regardless of sales model, the important thing is making enough money to justify the costs and time spent
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Yes, this is a very important point. Its the “wholesale model” or what we think of what many big Amazon sellers do.
I love the idea of finding a handful of popular SKUs, find a wholesaler with unlimited quantity, and then just sell. Re-order when I’m running low. What a life.
My fear is the wholesaler would run out of inventory, or other sellers would move in on my SKU’s and push the price down so far its not profitable. Then I’m always chasing new SKU’s. But that’s probably just the game.
Old Dad, do you have an eBay store with 32,000 individual listings? Or you have 3000 individual listings, but 32,000 items in your inventory since you have multiple quantity?
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My stock is not bought wholesale, it’s liquidation of parts stores and old stock pulled from dealers since they only go back a certain number of years. While I may get some same parts later,I don’t have any way to just order them when I run out. Sometimes prices errode due to competition, usually I just hope out until the the lowballers run out. I sold a part this weekend I have been selling for over 10 years and still have 9 left now. When they are gone I’m done with that item. My inventory mix is constantly changing, keeps me from getting bored.
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Before my current iteration of selling “paper” we used to do the wholesale model as well selling branded t-shirts (Superman, Simpsons, 100 other brands). From 2004 to 2007, we did well on eBay and got to about 300,000 a year in sales (with 30% profit margins). We started selling on Amazon as well which quickly dominated our time and we jumped to $800,000 in sales in less than a year. We had a great run for about 6 years and then the combination of more marketplace sellers and Amazon themselves competing against us gradually pushed us out of that line of products. At the end, we were still selling about 800,000 a year, but instead of 30% margins we were only getting 7% margins. It was way too much inventory risk (and work) for the amount of time were putting into it. I still have about 3000 dead stock t-shirts that I need to get up.
I guess there’s no perfect model. With paper, inventory costs are low but sourcing is hit or miss. With the wholesale model, sourcing is easy but you have to lay out big bucks for inventory and there’s always margin pressure.
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Yep, its a personal equation we each have to choose.
We really like low risk on eBay. I can’t imagine buying tens of thousands of dollars of inventory hoping it sells. But I can spend a couple hundred bucks knowing we’ll make thousands of dollars over the long term.
On the other hand, we spend tens of thousands of dollars up front on renovating buildings, hoping we’ll make money on rent. Each of our risk tolerances are different.
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Mr. Schiavo,
I have approximately 400 items in my store. In 2020 so far I have sold 280 items, so approximately 45 per month, which is 11%.
If you want this data for other folks on SL, just check out the weekly numbers/podcast thread where people post their store size, # of things they sold in the last week, etc. From there you can calculate the numbers you’re looking for.
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In January I made a big effort to boost my listings from 300 to a little over 600 by March. For April and May I sold 76 items each month — 12.6% inventory sold for each of those months. Those months also coincide with with the tsunami of sales all online sellers enjoyed. June will be done significantly, to likely 40 items sold. As Jay has pointed out, there are some many variables that affect rates of inventory turnover. When I first started selling almost 3 years ago, I was able to get high-dollar Amazon returns for relatively low prices. Think Mr Coffee Cafe Baristas bought for $15 and selling for $140. Then I was carrying low amounts of inventory but selling probably half of it each month. That source dried up and I shifted to auctions and was doing well until the pandemic hit. Much much tougher to source so I’m stalled at 600. Not sure what conclusions to reach from inventory turnover rates.
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I am very much fast nickel. I undercut on prices, pay to promote, etc. June sales are about 230 items and I have 310 listings for 400ish units. So 50% sell through this month. A normal month for me is 30% sell through so June has been great.
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