Realistic low end ROI?

[Shortcut]

I think I’ve come to the conclusion that selling anything below $20 is almost not worth the fees, shipping supplies and my time. What’s everyone think of the best prices to sell at that’s worth your time and a realistic low end ROI?

[sonia]

I think that $20 profit (after COGS and ebay/ppal fees) should be my minimum. That’s about what I strive for when out sourcing, of course always looking for much higher profit items.

So why do I have so many items listed for $9.99 and under? Certainly not because I pick up items I think are going to sell for just $10.

The problem is that at sourcing time, I have imperfect information about the worth of an item. Once I’ve already purchased an item (including things of my own I decide to get rid of), I do more pricing research at various times in the process, with the most comprehensive research right as I’m listing. So what’s the minimum profit below which I will get rid of (donate) the item when I find out it isn’t worth as much as I thought it was
– before I’ve photographed it
– after photographing, but haven’t listed
– after being listed for a long time, and I’ve been reducing the price

I *think* the minimums for each of the above should be something like $15, $10, $8, though part of me wants them to be higher. But I have a really hard time keeping even keeping to these low minimums. Sigh. An ongoing struggle. Today I delisted a bunch of low-price items and it felt great.

Note: I have limited inventory space, so I keep my store to about 250 items. So any low price item that stays in the store is in some sense taking a spot that I could potentially fill with a higher profit item. If your storage space is basically infinite and your store is so big that listing fees are miniscule, the equation will be different.

[whiskey]

Okay, I’m going to play devil’s advocate to what seems to be becoming a bright line thinking process.

I think it depends on where you are in your business cycle?

It’s so easy to overvalue our time early on. I walked away from over six figures and the recognition of my peers to do this. I get valuing what I do. But I also value freedom.

With that background, here’s my two cents, which is probably worth less than that:

Early on (we are about three and a half years in to it), I will simply take your money. Five dollars profit on an instruction manual I write a quick description, take a couple pictures, and have to slide in an envelope? Thank you for your Lincoln. I like finding five dollar bills. Tupperware lids that I grab out of the free box, photograph front and back, and slip in a mylar sleeve? Thank your for your Lincoln. We reinvest every penny. We have a pool of cash that we can buy our third rental property. Sure, we have plenty of big sales. But we won’t walk away from an easy Lincoln or Hamilton. I get the mentality that our time is valuable. We are transitioning to that. But right now we are willing, no, thankful, to work morning, noon, and night, to grab the free cash that is out there. We also understand most folks don’t want to be shipping at 1030 at night because they were listing kitchen utensils til 10, but that’s life.

whiskey

PS I stopped buying shot glasses a couple of years ago– that was dumb, no margins, and took too much work to ship
PPS I get a lot of folks are better at this, but we do well with what we have. We don’t have a lot of places where we can grab awesome antique stuff.
PPS Don’t get me started on Amazon.
PPPS is there such a thing as too many PPPS’s?

[eCommerce411.us]

Interesting question, but don’t you think it is important to also consider how long it will take to make that $20 sale? How would your answer change if it took 1 month for that sale vs 1 year?

If I paid $10 for the item and sold it in 30 days for $20 and plowed my profits back into the business and purchased more $10 items and resold my inventory every month, by the end of 12 months my total sales for the year would be $10,240. Now that sounds a lot better than waiting a year to sell an item for $20

What I’m getting at is the concept of compounding. A key concept every seller should understand in building wealth and equity. If you have a car loan, mortgage, savings account… then you should already be aware of the concept through APR.

Now the above example is an over-simplification of a simple but effect concept in building wealth and equity. The more frequent periods, the higher return value. Also a concept that cautions against having stagnate and “long-tail” inventory – regardless of its cost.

[Jay]

And here’s another take. We only have so many hours in the day to photograph and list items. Let’s say that number is 30 items per day. On the other hand, there are a million items to choose from.

When we go to the thrift store, there are just mounds and mounds of stuff to choose from. We choose the best 30 items we can find. Almost everything around us is worth $5 to someone, so we focus on the items that attract us and are more valuable. The hope is we make $30 an item. As Sonia says, sometimes we miss the mark and an item will sell for $10. But sometimes we find items that sell for over $100.

It takes just as long to list an item that will sell for $5 that will sell for $100. So why start with items that we know will sell for $5 when there are plenty of items available that will sell for higher? A lot of it comes from experience. We’re so much better spotting quality items now than eight years ago.

Buying for $10 and selling for $20 quickly sounds more like the Amazon model. Selling new widgets where you just scan to list. Or selling in quantity where you list once for multiples of the same item. Different model that works for some sellers. Higher up front costs. The risk is the stuff doesn’t sell fast or other sellers push the price down.

[eCommerce411.us]

I appreciate what you’re trying to say, but you are not fully grasping the concept. I feel you are associating the concept with a business model that dictates a need for high frequency selling. This is furthest from the truth. Thinking this way is like tripping over dollars trying to pickup nickels.

I agree it takes the same about of time to list an item regardless of its price, but when you include the frequency of selling the item, your margin becomes less of an issue.

Take for example 2 sellers that have $5 to start out. First seller purchases a lamp for $5 and is confident he can sell it for $100, but it may take a year to sell. The second seller, purchases 5 pieces of clothing at $1 dollar each, with the expectation she can sell them all within 60 days (2 months) for $5 each. On a per item basis, Seller 1 has a ROI of 1900% while Seller 2 has an ROI of only 400%, less than 5x that of Seller 1. On the face of it, some people would gravitate to the higher ROI. Both sellers commit to reinvest in their inventory. At the end of a year, who is going to be better off? Due to the compounding frequency of 6x a year, Seller 2 will have sales of $3,125 compared to $100 for Seller 1. Even if it took Seller 2 six months to sell her clothing, she would still be ahead by $25. So ROI is not a singular determining factor.

It’s the same concept that is taught in personal financial planning for retirement and wealth management. The sooner you start saving, the sooner you will be financially secure. Earning 9% annually, a person that is at age 25, puts away $1200 a year ($100 month) for 30 years (age 55) will have accumulated $179,490 with only setting aside a total $36,000. A person that waits until they are 45 will have to save almost $12,000 a year or $118,000 just to equal the person that started at age 25. $36,000 vs $118,000?

The whole concept is about helping reaching one’s financial goals. Earning a respectable income, being able to quit one’s job earlier, not having debt, building equity, starting a new business, having that F*** Y** money. Whatever the case maybe. But just remember, holding out for the top dollar or selling slow moving inventory than need be, puts you further behind. You will have to list more and thus invest more into your inventory just to keep up. $36,000 vs $118,000?

So back to Salt’s original post. “…best prices to sell at that’s worth your time and a realistic low end ROI?” Depends how long it will take me to sell. I’ve been known to go from estate sale directly to an auction house in the same day because I can sell certain items quicker within 2 weeks at an auction house than I could in my store, eBay or CL.

It’s not about listing more, it’s about selling more.

[Jay]

Larry, I follow your eBay store and I just dont see your model play out. I don’t see you using the strategies your passionately profess. There’s a difference between theory and reality.

According to your ideas here, you should be making 3x the amount of money quickly that those of us who sell long tail items sell. But when I look at your store, I see an ordinary smallish eBay store that’s cool, but not a giant pipeline of cash.

I love your ideas, but can you back it up with numbers that can see since we’re all sharing info? Everyone knows our store so our numbers are transparent. Let’s go from your concepts to seeing how you do it reality.

[eCommerce411.us]

Jay, I see that you’re still not grasping the concept of compounding or not connecting the dots. You came to some unrelated conclusion based on looking at items in one of my stores and without knowing what or when I paid for an item and what my Total COG’s are. All key factors in understanding and the application of compounding.

I guess we could crudely calculate a Sell-Through Rate (STR) of each other’s store and compare numbers and argue in some way that my 39%+ vs your 12%+ is validation of the discussion, but this would be misleading taken in its entirety and says nothing of what we paid or how long we have held it.

For simplicity sake, without any numbers, let me try putting it another way that maybe better understood. The concept of compounding is not something as sellers, we decide to do or not to do. It’s applied automatically. Its affect (+ and -) is based on the frequency of sales. If your inventory level doesn’t change and you want to increase ROI to the bottom line, you increase the number of sales. Decrease ROI, do less sales. Changing the frequency of compounding.

And the reverse is true when changing the inventory levels. Increasing inventory with level sales causes lower ROI. Lowering inventory, higher ROI.

So extending this to personal finance to further help in the understanding. If a person is looking to borrow money and is looking at 2 different loans with the same interest rate and payment periods, but one has a higher APR than the other… it means the frequency (compounding) of the loan payment calculation on the one is higher than the other. All things being equal.

You are correct. Holding to a long-tail, list-it and forget-it sales practice has worked for you. It’s a given. In aggregate, you sell items for more than what you paid for them. But at what cost? (its rhetorical). Only you can answer this because you need your balance sheet and P&L statement details to answer this question.

But the practice of throwing more inventory at the wall and seeing what sticks is IMO a waste of money and feels like working harder, not smarter. I agree again, sales will increase… but at what cost? (again, rhetorical).

I prefer to be proactive in my approach in working smarter. I work with the inventory that I have and when I add to it, have answered everything I need to sell it. I actively market and watch my SEO metrics closely and react to them when I need to. From minor listing revisions to complete overhaul. In finding alternative sales channels when others don’t work out. In seriously question holding something for 18 months and lastly, not afraid to accept failure by cutting something lose at any price. Even donating it back for the price I paid for it. And yes, to bring it back to our topic, try to sell more frequently. It may sound like a lot of work, but surprisingly it takes less time in a month than listing 10 items.

So my answer to the original post… ROI per item is irrelevant without considering how long it will take to sell the item. Because it is the ROI to the bottom line that is more important than the ROI per item in building wealth and equity.

[Jay]

Larry, it sounds like your way works for you. Though when you throw around a lot of numbers and financial advice for people here, it’d be nice if they could see your numbers for themselves. I’ll let you decide if you want to share your store link and website to back up your claims. I don’t see the quantity or price of sales you discuss.

It sounds more like you’ve just a lot of personal finance books and are just slowly trying to put them into action. We’re all learning. I do get confused by comparing compounding interest to selling things quick on eBay. Let’s tell a story.

Rabbit and Turtle list 100 items on eBay.
Rabbit sells each item for $10 in a month for $1000.
Turtle sells each item for $30 over 12 months for $3000.

If Turtle waited to sell his items before he listed more, then Rabbit would be making more because he’s listing and selling items for $10 each month.

But Turtle continues to list as many items as Rabbit each month (maybe more!), they just sometimes sell slower. So even though Rabbit is possibly selling more quantity, Turtle is making more money and building up a larger pipeline of items that sell into the future. When Turtle wants to take a nap, his pipeline keeps making money while Rabbit has to keep listing.

Rabbit and Turtle each like the way they sell. The animal kingdom is happy.

[eCommerce411.us]

Jay, You’re not seeing the forest through the trees. You’re still focusing on the quick sale kick. Price and quantity of the sale. I’m focusing on the quality of the sale. What it contributes to the bottom line. I will go out on a limb, without even knowing your financials, to say that I am confident that I am more profitable than you. Why would I say that? Because of the spread between our STR is so large, I have a greater advantage right out of the gate. Likewise, your inventory at 5500+ is so large, that your margins would have to be so equally massive to out strip the benefits of my smaller inventory of 300+ items.

Why? You spend $300 a month for you store. You’re STR is anywhere from 4.4-20% (I’m being generous on the 20%). Based on your # of sales, to maintain the same level of ROI, you are paying anywhere from $1.20 – 2.0+ per item. Even before it sells. A factor to consider when sourcing. Whereas, I spend $60 a month for a store and with a STR of 30% and given the level of my sales, my cost of listing an item is less than 0.49c. So when I buy something, I figure an additional 0.49c to its cost.

Now let’s include the detriments of your large inventory with low STR. You never have disclosed your total inventory cost that I can remember, however, you often use the figure of $3 an item. So let’s use that. Average 5500 items at $3 a pop, that’s $16,500 in inventory. If you stopped adding to your inventory today, everything being equal, it will take you 5 years to sell, at a cost of $18,000. 20% over its cost. Which is fine.

Again, whereas, I will for sake of argument, match the $3 cost per item. At $900+ in inventory, it will take me 1.5 years to sell at a total cost $1080. Still 20% over its original cost, but I will have 3.5 years’ head start of using my $ for other alternative investments (Read compounding).

I believe the reason you don’t see it, is that you are seeing increase sales, although your sales are not keeping pace with the level of increased inventory. At some point in time, by continuing down this path, you are going wake up and find yourself inventory rich and cash poor. You want to see it sooner? Stop listing new items. Soon you will be robbing Peter to pay Paul.

I’m going to forgo the personal attacks and only say yes. I do have many financial books and a degree to boot. I’ve been using them in my personal and professional career for 36+ years. You can easily check my career history on the sec.gov website where I have cut my teeth in finance, managing millions of $ and poured over what seems to be thousands of financial reports and investment proposals.

I can also say that focusing on selling on eBay, or ecommerce for that matter, has only been a short journey of just over 2 years. Even though I have been selling on eBay since early 2003. Hardly a score card I would want to be judged on. This journey is not to supplement my income, only to find a suitable alternative investments. I’ve made my $ already. I’m just looking for a place for it where it will work hard for me using the tools and knowledge gained over the decades.

I do practice what I preach, both personally and professionally. And will take any opportunity to express my passion to whoever will listen and on any platform that will allow me to. How 36 years ago, not yet entered college and no assets to speak of. $98 in the bank and just under $1500 in a mutual fund account, have since, with 10 years remaining until, officially hitting retirement, have met 73% of my retirement goal, accumulated 2 houses with mortgages, 3 vacation properties (1 in Hawaii, 2 in Florida), 2 apartments, 3 fully owned vehicles (under 4 years old), currently putting 2 kids through college at $89k a year, and lastly, still able to save 10% a minimum of our income.

How do we do it? We didn’t hit the lottery. We came from blue-collar families with no rich uncles. We didn’t have 6 figure incomes. We didn’t sell a business or received large inheritances and we both have been let go of our jobs at some point in our careers. The secret… WE STARTED EARLY. We really didn’t know then, what we know now, but we followed 3 simple steps to building our wealth. We made it, we saved it, we invested it. We did what we had to do. SPOILER ALERT: It really kicked in 22 years ago when we started with $25 a month into an education fund 6 months before my first daughter was born. It was $25 I didn’t think I could afford.

These tools are not new. No secret behind it. You can even find it on Mr Mustache. But you need to understand it and do it.

My passion for finance is that it is fundamentally relevant to all that goes on in the modern world. I preach on the premise that all personal financial crises are self-inflicted. If you need to work, then work. If you need to educated yourself, then educated yourself. But stop living like life is a dress rehearsal for something better down the road. You don’t get a second chance. Do what you need to do first to secure your future for you and your family, then, and only then, can you have a choice between CHOOSING to do something then HAVING to do something… Building wealth is easy… keeping it is hard.

I think I overstated my point.

[Jay]

Yep, you overstated your point. I just look at your store. You’ve sold 12 items in May. I honestly don’t know what you’re talking about.

It’s cool. Sounds like you’ve lived a good, smart life. I applaud any kind of frugality and owning your time. I don’t think we’re going to come to any kind of agreement here.

[eCommerce411.us]

Wow, take me to the burn unit…Your depth and cracker-jack analysis doesn’t surprise me.

[Habnab]

For me, with a super-small shop (+/- 250 items) and organizational/time management issues/ADHD, I think a $20 minimum is about right, and I’d like to make a lot more per item whenever possible. For me, the ideal $20 profit item is something I paid less than $1 for or found for free, or something that just inherently interests me but isn’t super-valuable. I have friends, though, who make a great living selling anything and everything they can double their money on (even if it’s $4.) I can’t argue with their results, but I can’t replicate them either — I don’t have the time, the space, or the attention span.

• This reply was modified 7 years, 8 months ago by Habnab. Reason: forgot a parenthesis

[simplicio]

It really depends whether you are primarily limited by your time, or by your bankroll. If there aren’t enough hours in the day, I don’t want to sell stuff for $15, I have to be very selective and make every item count.

If I have time to burn and I need to get every penny I can, I want lots of quick sales, small if necessary, to get the compound interest effect. (10% profit 10 times, reinvesting the proceeds, is 159% profit).

Quick nickel/slow dime, lot stuff up vs part it out, all this stuff depends on what your constraints are. Personally I am constrained by time with a full time job and 2 small kids, so I am super picky.

[Gompers]

IMO it depends on what you’re selling and how fast those items can sell. It also depends on how close you are to the post office. It doesn’t make sense to drive to the PO to drop off a package that only netted a profit of 3 dollars. Unless you have your mailman picking up packages every day.

IMO media items are usually worth a low ROI since they are easy to list and easy to pack/ship. Some items from this category would be video games, DvD/Blue Rays, books, and music CD’s. I can usually list those items in 1 minute or less. 50% of my sales are probably from media, and these items usually sell within one month.

An example of a poor low priced item with a low ROI would be cheap jeans. Not worth the time measuring and photographing jeans that may sell for $12.

Generally, I think it’s a good idea to have a mix of low, middle, and high priced items in your store. You never know what will attract someone. A low priced ROI item may produce a sale for a higher priced item or vice versa.

Of all the sales I’ve had on ebay I’ve only had a handful of sales for items over $100 and I think I have only had one sale of an item for over $500.

Most of my sales are between the $12-$40 range. Ebay is only a part time job for me and if I had to do this full time I would need to find better high priced items.

• This reply was modified 7 years, 8 months ago by Gompers.

[Jay]

This is a good perspective. I easily get sucked into these debates about “the best way to sell on eBay”. I especially cringe when someone tells me the way I sell is wrong.

The best way to sell on eBay is whatever way you enjoy because it’s the only way you’ll keep doing it.

[ChristineR]

Hi Sonia, I think we have some similarities in our limitations and approach to Ebay if I recall correctly. My biggest limitation is listing time. Plus my wired preference for a chunk of it, rather than dribbling in listings, which I have learned is preferred by Cassini. I’m 2 years in, and I’m really trying to focus on used items selling for over $20-25. This is mainly because I don’t have time to process it all and there is an abundance available. That being said, I’m really attracted to Etsy style handmade quilts, afghans, some vintage paper items, etc. and it’s hard to pass that up. Also, I find that if an item costs more than $15-20 I really hesitate to pull the trigger on buying it. Also of importance is that Ebay has been comping all of the insertion fees on my items over 250 even though I only have a basic store, so there is really no down side to going over 250 currently without upgrading. Make sure you check and see if that is true for you too.

[sonia]

ChristineR – Thanks for the tip. I’ll check out what I’m getting charged for listings over 250.

[sonia]

Perhaps a better way to communicate what ec411 is trying to get across is to treat each investment in an item to sell the same as putting money in a savings account with a interest rate.

Let’s compare the following:

1) $150 spend on 2 green midcentury lamps that sell after four years for $600 – this is roughtly equivalent to a savings account with 35% yearly interest rate. Fantastic investment!!

2) $150 spent on an item that sells for $225 in one year – this is equivalent to 50% yearly interest rate. Much less profit, but much higher interest/return rate on investment!

(I did this using an online compound interest calculator using monthly compounding. It only works on entire years, not months, so I couldn’t incorporate the $10 item sells for $20 in a month example).

ec411 seems to be saying that investments like #2 above are better than #1. By buying an item like #2 once a year for 4 years, he can turn original $150 into $760 – much better than $600. You can’t argue with that – it’s just a mathematical fact.

However, what is missing from ec411’s argument is the accounting (and paying) for amount of time spent buying, photographing, researching, listing, packing, shipping, storing, etc. In the examples above, since I had to do them in whole years, this cost is negligible compared to the profit. But if you were instead to compare
a) an item that sells in one day for a $1 profit that translates to a 100% annual return rate
b) an item that sells in one month for a $10 profit that translates to 50% annual return rate
c) item that sells in 6 months for $50 profit which translates to 25% annual return rate,
I would always choose (c) b/c my work time is very limited. Others, depending how much they value their time and how much they enjoy various components of the process (as well as how much they are willing/able to store), will fall elsewhere on the spectrum.

The only other point I have in response to ec411’s argument is that although it seems like others on here aren’t speaking in the terminology of compounding, most are most likely taking it into account as part of their internal process of selecting inventory to buy. It’s just really hard to do a reverse compound interest calculation in your head, so our calculations are probably a bit off. But faced with having to make a choice of spending $10 on an item that sells for $20 in one month vs. one that sells for $25 in two years – of course we’ll choose the former.

ec411, I wonder if there are any rule-of-thumb examples/shortcuts to make it easier to take compounding into account at the time of purchase? Something like “50% profit in a month has an equivalent yearly return rate to X% profit in 6 months and Y% profit in 12 months.”? I could probably try and figure this out myself but I don’t feel like it at the moment 🙂

[Jay]

I still don’t get the compounding interest analogy. It’s comparing apples to oranges.

At the end of the day it’s about what each of us is doing in reality and are willing to share these numbers. This is why we try our best to be open about our numbers so new sellers have a sense of what is truly possible.

This is a fun philosophical conversation. I want people to show us what they are actually doing in their store. That’s where this old dog learns new tricks. Show me what you sold this month in this method you’re using. I’ll be the first one to say I’m wrong.

[Habnab]

I get that a person who sells things quickly (for a lower price) has more money back in hand to go out and buy *more* things that sell quickly, and so they’re turning each $1 into $10 many more times over during the course of a year than is the person who buys one thing and sits on it, waiting for it to turn into $50 over the course of that same year. I get it. That’s maybe the “compounding interest” analogy. $1 becomes $10 quickly, $10 becomes $20 quickly, and then $20 becomes $40, and then $40 becomes $80 as you re-invest, and buy and list and sell more and more.

But that method requires vastly more time and energy. More time sourcing, listing, and packing. Vastly more time. It’s a model that works for some people, like the friends I mentioned above. But for people who are essentially part-time, like myself, or people who are also running other businesses and pursuing other interests, the long-tail method works perfectly well. Different needs, different methods. I don’t think there’s the “one true way” here. Find your niche, figure out what works for you, monitor and adjust as necessary.

[Retro Treasures WV]

That’s the thing Hbnab, Ecommerce is also saying it takes LESS time to in effect micromanage your online SEO numbers and e-commerce statistics with the same small inventory.
Mind you, we do not know what E-commerce’s inventory is or what actual results he produces with this methodology because he does not share results of any kind.

[Retro Treasures WV]

I think the disconnect here is that the compounding interest philosophy mainly requires commodity items that can be analyzed statistically. Many of us sellers deal in unique one of a kind items that, through experience, we just “know” there will be a person out there who will buy a certain item at “x” price. It’s a leap of faith that can’t be fully quantified in data. J&R mainly deal in these items.

Now if you deal in say, collectible sports cards that have well established pricing structures and rarity as well as very in-depth sales history then you can EASILY apply the compounding interest method there.

And one final note, it is FUN to sell oddball items for obscene amounts of money! I wear them like badges of honor when they happen. Your financial programs can’t quantify that feeling either.

[sonia]

“I still don’t get the compounding interest analogy. It’s comparing apples to oranges.”

How is that? Money spent on inventory is an investment, just like an investment in a stock. You hope to be able to sell it at some point for a higher price. And there is a standard way of calculating returns that takes into account how much time has passed since you made the investment. It’s not a special “method” that anybody is using – it’s just the way the math works for any investment whether you want to think about it that way or not.

Maybe it will help if I explicitly state that I am personally NOT saying that you, Jay, are doing anything wrong in the way you sell. I strive to be more like you guys, not less (except for the massive storage, which is not practical for me). When you buy an item for $1 and sell it 5 years later for $30, that translates to an annual return rate of 98%!! That’s an amazingly good investment. Of course typically your things sell much more quickly, so the return rate on your investment is even higher. Don’t you prefer $1-into-$30 items that sell in one year vs. those that sell in 5 years? If your answer here is “no”, then I would be very curious as to the reason.

As far as sharing what returns folks actually get and how, that’s really interesting too, and it’s great when people share their numbers. I myself am making no claims about doing anything better than anybody else or getting a higher return, so I’m not sure what sharing my numbers would accomplish. I have shared them in the past (just too lazy recently), and they have been mediocre at best. But I keep trying to do better, and keeping in mind that time-to-sell is an important factor can only help me. If I turn out to be so bad at reselling that putting my money in an index fund or CD will yield a higher return (annual percentage yield), I’ll put my money there instead, and only resell items that I have an emotional attachment to saving/salvaging.

I just re-read ec411’s first post on this thread, and I want to clarify that the point of my posts is only to argue the point about time-to-sell being an important factor into the return equation due to compounding, and NOT that “selling more” is better than “listing more” or that long-tail items are bad in general.

OK, I will stop blathering on now. Back to work.

[Jay]

No problem Sonia. When people start waxing philosophical about eBay, at some point we need concrete examples. We all can make up numbers that prove an imaginary point.

And this is not directed at you personally Sonia, I’m always confused when people talk about how they know the perfect answer, but don’t actually put it into practice in their own life. Like if those real estate gurus really knew how to make millions of dollars, why don’t they just make millions of dollars? https://www.youtube.com/watch?v=mubCkCAEiDQ

(Bonus: google Don Lapre to see where that life leads you)

[sonia]

“I think the disconnect here is that the compounding interest philosophy mainly requires commodity items that can be analyzed statistically. ”

Sorry, I gotta disagree. Whether you sell commodity or special one-of items, you have some sense of whether it will take a few months or a few years to sell, if you’ve been at it long enough. And what your annual rate of return turns out to be at the end of every year can be calculated (although not super easily in your head).

[sonia]

“At $900+ in inventory, it will take me 1.5 years to sell at a total cost $1080. Still 20% over its original cost, but I will have 3.5 years’ head start of using my $ for other alternative investments (Read compounding).”

ec411,

You make it sound like getting this 3.5-year head start is ALWAYS better. But it’s not. It’s possible that the profit Jay makes at the end of 5 years is HIGHER than what you make in the same 5 years, b/c his long tail items sell for huge profits. If you believe that that is NOT the case, then perhaps you could educate us on how better to avoid items that take a really long time to sell for not a lot of money. In other words, nobody sets out to purchase items that take a long time to sell for not a lot of money. 🙂

To calibrate things a bit, perhaps you could comment on whether you think a $1-into-$30 item that takes 5 years to sell (100% annual rate of return on investment) is a poor investment. How about the $150 lamps that recently sold for $600 after 4 years. Do you think those were a bad investment – ie, too low of a return on their money? To me, both of these examples are great returns.

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