Experiment with the second Ebay store – any interesting lessons?

[Geoff]

Hello – Just posting to everyone as opposed to sending an email in case this is interesting to anyone else –

I am listening to an older episode (Scavenger Life Episode 201: No One Cares About Why You Can’t Sell On eBay) and I am curious about the results of your experiment. Specifically, the premise as I understand it for starting a second store was that you felt as though your sales maxed out at around 2500 items with your existing store, and you wanted to see if having a second store added to your overall sales.

Now I don’t think I have listened to all of the episodes but I have listened to a lot – but I do not recall hearing a conclusion, but I believe your second store is viewed more as a ‘hobby’ or ‘extra’ – and I sense anyway that you do not believe the seconds store actually increases your business (and you now have way more than 2500 items in your main store) I am curious if you have learned anything specific from your experiment with a second store about inventory and sales – do you still feel like sales kind of level off at 2500 or did you find a way to meaningfully increase sales? I know you post your numbers all of the time but just curious what you guys think from your experiences.

Just as a brief background I am just over 500 items and have been ramping up full time after losing a job and picking up my hobby as a full time business (full time yes –
building, down and up again in terms of being enough business : ) – and i have been playing around a bit with different strategies over the past several months going up to 5-6,000 dollars in sales all the way back down to 3,000 over the past few months (much higher % profit) – and as people on this forum know i am sure it can be tough. I like learning from what i see as some of the better business in this kind of stuff out there – and in particular it is interesting looking at what you and Terminal99 do and contrasting it to someone like Craigslisthunter – both styles are great business and it is fun for me trying to see the pros and cons of each while I figure out my own path.

Anyway if my question brings up any interesting thoughts i would love to hear – i tried to be specific but i guess ended up going down a little bit of a rabbit hole.
Be well,
Geoff
NorfolkGoldandSilver

[Jay]

Yes, the experiment has devolved into just having two stores. But here’s some thoughts/facts:
–We sell about as much per month with our current 5000 items inventory as we did with a 2000 item inventory. I don’t think there’s any mandated sales limits, but sales havent risen as our inventory grow.
–The big benefit of a large inventory means we can not list for several months and still have consistent sales. We like this. Constant listing is tiring.
–Our second store has about 1000 items and is in auto-pilot mode. We have not added new items for eight months. We sell between $1000-$2500/month. To me, this shows that you don’t necessarily need to be listing to be selling.

Again, unlike some sellers who are motivated to have the most efficient process to maximize their profit, we’re motivated by having a comfortable daily life. This works for us.

[Geoff]

Yea I get it – not having to list for a month sounds nice to me right about now. But staying with money and profits – one thing that I really like about the model you use in general is it requires a lot lower capital spend per item and you are generating huge returns. Some of the other ways of doing things i referenced could generate better profits for some sellers – which is great – but having such a low capital cost cannot be overstated.

Last thought – have you ever run into / thought about inviting Craigslisthunter for an interview? You conversation with Terminal99 was outstanding, and i just think you and that guy Pete getting together would be really good as well just because you guys both run such great businesses in two really different ways.

Take care,
Geoff

[Jay]

Yeah, if you put in time and have a good eye, it’s incredible how much stuff you can buy for cheap. It’s crazy when people sell wholesale and only make $1 an item. That’s a grind (but cool if it works for them!)

I know of Pete. He seems like a good guy and shares a lot of info. Can you tell me how he runs his store?

[Geoff]

Well to be clear I do not personally know him – but his average sale is about 115 dollars. He used to only have 200 – 300 items but now he usually carries 450-500 – right now its low because he is just moving stuff all at good prices. He has at least one employee always listing. Typically he is spending average 30-50 dollars on his products. He is dong 30,000 dollars to 60,000 dollars a month.

The really interesting thing is he is selling like 500 things every two months – he is just cranking. He is selling things that have higher demand and that there is a clear price point typically – and he is really good at selling at that just right price that moves and maximizes profit – almost all fixed price. He will slowly lower prices aggressively. He really pays attention to the competition and knows how to give just what it takes to move product and maximize his return.

So he is getting a great profit margin – not nearly as high as yours typically, more often. He is generating a ton of cash on a great return – but it requires a lot more capital reinvested and then in addition lots of human capital. Kind of building the empire model.

At first I thought it was a slam dunk that personally I liked his model for me – but the whole low capital think is sneaky awesome when you really think about it – so I just think it is a fascinating comparison.

[Jay]

What?! Can we break down that $30k-$60k monthly number?

–If he sells 250 each month for $115, then he grosses about $28k.
–But you say he pays an average of $40 per item. 250 x $40 =$10k COGS
–Then he has employees, so let’s say his cost is $1600 a month for a single fulltime worker at $10/hr and no benefits.

So:
$28k gross – $10k COGS – $1600 Worker = $16,400 Net Profit

I’m pretty sure he has more employees and he also has a storefront that has rent and expenses. I’d be surprised if he makes $10k a month after all expenses and extra employees are added up. That’s good money for sure, but then you’re running a real operation.

It would be fun to talk to him about his model.

[Geoff]

Yes he has a store front and a lot more employees, as well as a partner. He is very generous with the info he shares – and one of the reasons i think a conversation between you guys would be so great is he is doing the ’empire’ thing you refer to many times on your podcast.

Obviously as you know the numbers vary a lot – and i am pulling the numbers from what he shares in different places. He does not break does not break down the math like you do — but it is all there if you watch every video.

[Author]

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