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07/07/2018 at 9:18 am #44675Anonymous
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Problem: the accumulation of long-tail items in inventory is causing your sell-through rate (STR: % of inventory that sells in a given period) to decline over time.
Solution: To boost your STR, you have to increase sales. To do this, you can tweak listings by lowering prices, improving descriptions, etc.
Boosting sales of newly-listed items will increase STR, but discounting newly-listed items by putting your entire inventory on sale will sacrifice profits that might come with patience. And stagnant, long-tail items will continue to be a drag on performance. So the preferable strategy for boosting STR is to increase sales of older listings.
But even within your older items, some will provide better returns for the effort–the cream of the crap, so to speak–so it’s useful to rank items based on various criteria and use “threshold” values within the rankings to identify the specific items that you’d prefer to focus on.
So, I’d like to discuss two criteria for identifying these high-reward items and two metrics that, if you track inventory in a spreadsheet or database, you can use to easily filter your data based on these criteria and customized to your own level of tolerance for slow performing items.
Potential Profit
The first criterion is potential profit. You’d like to sell high-profit items quickly, and low profit items eventually, and a metric for evaluating the “potential-profit age” of an item can be obtained from: PA/T, where:P=Potential profit (units of $, or your currency of choice)
A=Age (units of weeks)
T=Threshold profit-age (units of $-weeks)This generates an index value (dimensionless number because the units mathematically “cancel”) that identifies items that exceed a profit-age threshold value, T, chosen based on your personal tolerance. If you’re willing to sit on a $30 potential profit for 100 weeks, or a $100 profit for 30 weeks (which is the same profit-age), you’d set T=3000 (30×100). Whatever T you choose, the items who’s PA exceed the chosen T will result in a PA/T above 1.0. Applying this calculation to your inventory data will allow it to be filtered to locate items with PA/T above 1.0. You can then decide what kind of listing tweaks will improve the probability of a sale on those items.
Note that a single T can be used for all your items or assigned item-by-item. Either way, you chose the T consistent with your level of patience, and as A increases, all your items will eventually hit the threshold.
Size vs Profit
The second criterion is bulk. Space is money, and it may be acceptable to store an item the size of a refrigerator if you expect to get a $1000 profit, but no one would build a business selling refrigerator-size items netting $10. But even a $1000 profit is eroded over time by the cost of storage. So a metric for evaluating the “volume-age cost” of an item can be obtained from: VA/QP, where:V=Item volume (LxWxH, units of in^3)
A=Age of listing (units of weeks)
Q=Threshold volume-age cost (units of in^3 -weeks/$)
P=Potential profit (units of $, or your currency of choice)This generates and index value that identifies items that exceed a volume-age cost threshold, Q, chosen based on your storage return-on-investment (ROI)* expectation. With the PA/T criterion, low-profit items get a pass, because the objective is to find the maximum profit potential. VA/QP, by contrast, puts bulky, low profit-to-size ratio items to the test by measuring “value density”–if it’s big and cheap, move it out! If your storage ROI goal is $1 per ft^3 per week, you’d set Q=1,728 (1ft^3=1728in^3, because Q is in units of in^3). Whatever Q you choose, the items who’s VA/P exceed the chosen Q will result in a VA/QP above 1.0. Applying this calculation to your inventory data will allow it to be filtered to locate items with VA/QP above 1.0. You can then decide what kind of listing tweaks will improve the probability of a sale on those items.
The math may seem complicated, but it’s really only the explanation that’s complicated. Just two simple calculations: PA/T and VA/QP, designed to help identify old listings based on two criteria:
Highest profit potential
Relatively large size but low profit potentialThe metrics PA and VA/P, by themselves will rank your data by these criteria; the threshold multipliers T and Q merely allow you to convert the metric to a simple, easy to sort index–less than 1.0 or greater than 1.0. And, again, you get to choose the threshold values based on your own criteria.
*This is a simplified storage “ROI” definition, using only the item volume. A true storage ROI would consider return on cost of total volume of storage.
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07/07/2018 at 9:56 am #44678
I have never really used the following advice, except in very limited form, but a smart businessman, a guy who had a B&M gift shop for years before he started on ebay, and who continued the shop while on ebay) took this position about his ebay business:
1. Sell multi-quantity popular items sourced through wholesalers—ir well-selected, these will sell quickly and consistently and , while not high margin, will provide cash flow and fairly consistent sales.
2. Also sell antiques, used stuff sourced through auctions, flea markets etc. These have higher margins and , being long tail, will sell more slowly, but because of their margins, they are your actual profit center.
It definitely seemed to work for him.
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07/07/2018 at 10:26 am #44680
I just love this… BUT FIRST an Announcement.. We just hit the one thousand mark of items listed in our Store!!! :-). After almost a year and a half after shutting down six antique booths we have arrived at the end of the culling phase. After selling many items as we listed and making donations of tons of items we call “Ooppsies”, [items we should have never bought for various reasons, we have reached the end of the culling – sorting process. No more antique booth left overs.
Now we can move on to things that we currently buy and list almost as soon as we acquire them, and we now can start to go into our art print portfolios and a large stamp collection and also focus on art pieces we will be making ourselves.
Now to your formulas. This is great. When we first started using the database inventory management, control and auto listing program WonderLister, I knew I would need, sooner or later some data to use just for the purposes you outline. We created custom fields in the database for date we purchased, where we purchased and a few other criteria.
Now that all of our old inventory from the booths is listed, we have to begin to go back and take a look at the PA/T formula you outline. Using the custom field we created, we see that we do have some items that were acquired as far back as the summer of 2013 and those got transferred over to our current Ebay store. Now granted, even though these items are approx. 5 years old, they spent 3 of those 5 years floating in those antique booths, never selling. But we also have the date originally created in the Ebay store also.
So, now that all of that older inventory is accounted for I think it is time to maybe apply your PA/T formula. Storage is not a factor, so the PA/T will be the focus.
Now some of that 5 year old inventory may only have made it into our online venues more recently, we may have to use the “length of time” based on when it got listed online, not when we bought it and placed in one of those booths. But still this will be an interesting look into the age of our inventory vs. the potential profit reward. Some of that 5 year old invetory may be new to the online store but if it is only a $10 or $12 item, we may still wish to do some culling in those areas if it has been listed for say a year. That is where your “T” comes in. What is our threshold for wanting to give more time to sell it.
What will we do with most of that old inventory. We will most likely move it into our “Clearance” store category and then throw some 50% to 75%, or maybe even more Sales on that category and see if we can move / clear most of it out. If after a given time it is still staring back at us, then probably time to pull and donate it just as we did hundreds and hundreds of older, damaged old booth items. This will also pull us back off from the Premium store limit of 1,000 items which we just hit and leave room for some of the higher dollar items we still have in the art portfolios and the items we will be making in our studios.
So thanks for the formulas, insight and explanation. We should be able to do this very easy within WonderLister.
Mike at MDC Galleries and Fine Art.
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07/07/2018 at 12:34 pm #44684
Hi Luftmentsh,
This is really a great economics lesson for the uninitiated. I like the idea of a Potential Profit Index. I have been planning to do this informally by going through my 2+ Year Old inventory and discounting it to move it – so it is nice to have a formula to quantify what exactly I’m trying to measure if I need it.One comment/question – you mention wanting to sell high-profit items quickly, and low profit items eventually – yet I think I am the opposite. I always think about moving low profit items quickly (I consider them a “bad investment” taking up space and resources) and am willing to wait a long time to maximize profit on profitable items. Just wondering your take on this because you are very scientific in your approach and I appreciate your perspective.
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07/07/2018 at 1:14 pm #44687Anonymous
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ebaymom:
VA/QP will identify your bulky, low profit items. Compare the two items I gave in the example having the same PA: if the $30 item takes up the same space as the $100 item, say 1ft^3, it’s “value density”, V/P will be 3 times that of the $100 item. Then, yeah, you want to sell the $30 item sooner.Two different criteria to rank items. You decide how agressively to market based on your requirements expressed in your chosen Q and T. And as I say, you can assign Q and T item-by-item, or by category, etc.
These calcs are not meant to “automate” your process, merely provide a yardstick to help compare the multitudes of unique items in those jumbled bins–obviously, you have to follow your own selling strategy for what, how, when, and how much
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07/07/2018 at 4:22 pm #44691Anonymous
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ebaymom:
Boy, the window for editing posts is short! I was in line for a haircut and had to post my response before I proofed it properly.Anyway, I misspoke when I said that the $30 item had 3x the value density as the $100 item–it has 1/3 the value density, of course, but V/P for the $30 item is 3x that of the $100 item (V/P in science talk would properly be called “specific value,” which is the reciprocal of “value density”).
And I mean “quickly” in relative terms, which is why I say discounting new stuff is unwise. No, “quickly” just means that you don’t want your store to turn into the Louvre, with a huge profit potential sitting untapped. There will always come a day when you reach a breaking point and discount an item, so define T for yourself such that you’ll know when that items day has come.
Oh, and I regret choosing $30 for 100 weeks and $100 for 30 weeks as my example–some folks may get confused as to which 30 and which 100 are meant by T=30×100. For the record T=PA, the potential profit, P times the age, A.
Oh, and also for the record, I don’t have any special economic or financial knowledge–I just made all this up with my noodle, same as anybody else can do if they decide to ponder such things. I just got around to it first, I guess, so now y’all don’t have to! Unless you want to. Because I think it’s always good to ponder how to improve your business either by data analysis, sourcing options, storage systems, selling platforms–everything. All of modern science and technology exists because our ancestors took the time to ponder.
Pondering makes America great, not fear and ignorance!
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07/07/2018 at 7:22 pm #44701
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07/07/2018 at 12:43 pm #44685
Okay, let me do an experiment with this.
I have 2 ebay stores. 1 is my stuffed anchor niche store with over 9,000 items, super list it and forget it strategy. The second is a basic “general” anything & everything store that is usually hovering around 100-110 items.
Last month, I sold exactly 147 items on the niche store. With roughly 9,200 items currently available for sale on it, my STR is low.
My 2nd store sold 10 items on an active inventory that consists of 100-110 items at any given time (I have optimistic plans to expand it up to 125-150 this month). If my active inventory is 100, my STR would be 10%. I guess since it’s currently near 110, it’s slightly lower than 10% STR. Maybe 8.5-9%?
Under these business parameters, would my smaller, secondary store be considered the more successful store because the STR is higher? Or the larger store with long-tail, very low STR but overall greater number of sales?
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07/09/2018 at 10:44 am #44859
Almasty: I use STR a lot in my numbers because it is one metric on our store. Velocity. But it is only ONE metric.
A store’s success is not boiled down to one number.
For me, STR HAS to be used in conjuction with ASP. If you slash prices by 50%, and sell twice as much…was that a success?
There are really two different ways to calculate Sell Thru Rate. You can go all in and calculate your % by taking your Weekly (or Monthly) Revenue $ divided by your Inventory Value. So $ to $.
The downside to this calculation is that it doesn’t tell you WHAT the driver was if your STR % goes up or down.
By Using STR in volume in conjunction with ASP, you can now break down your metrics by volume (STR) and price (ASP).
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07/07/2018 at 12:47 pm #44686
Yes, Almasty, that is the question – what defines “Success” ? High STR? # Sales? Money?
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07/07/2018 at 4:38 pm #44692
OK, so now my head is spinning. 🙂 Thanks for the info next time I am up late in the middle of the night I am going to be thinking about T. I think my high Q’s are already painfully obvious without having to calculate anything. I’m always happy to dump those and/or give them away at a low cost.
How do you calculate STR ? Just number of sales (per week/month/YTD?) / number of listings at any given point in time? Do you do a “short term” STR ie: how many new items that were listed in a particular month that sold / all new listings per month? If THAT number is going up over time, wouldn’t it tell you that you are getting better at scavenging? I am curious about how other people calculate their STR.
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07/09/2018 at 10:48 am #44862
ebaymom: STR is just sales in a given period divided by the number of units in inventory.
You can do STR for a day/week/month…whatever. I think weekly is the shortest unit to use, and I calculate the weekly and monthly STR. But to be consistent, I always calculate in monthly terms.
For the month, just take the sales for the month / Inventory at the beginning of the month (to be 100% accurate, you should take the average inventory for the month, but I’m lazy and it doesn’t move the needle enough anyway).
For the week, I take the sales for the week / 7 * 30 / Inventory. This takes the rate of sales for the week and extrapolates it out to a month and then gets the %. This way, I can always see what my STR is (weekly or monthly) in similar terms.
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07/07/2018 at 5:08 pm #44693
Solution: To boost your STR, you have to increase sales. To do this, you can tweak listings by lowering prices, improving descriptions, etc–
This is an interesting assumption that I disagree with. Sometimes long tail is simply long tail. You cannot shorten the tail.
–With long tail items, no amount of lowering prices really matter. If no one is there to buy it at $50, no one will buy it at $5. Instead you’re waiting for the rare person who needs that weird item, and they’re the ones most likely to pay top dollar. If you sell at $5 quickly, you’ve probably sold to another seller who’s willing to wait and sell for higher (we’re those buyers).
–If it’s a popular commodity item, lowering the price will help. But that’s another game entirely. Thats the commodity game.
–Improving titles/descriptions/photos. Sure, maybe there are some older items we can improve. But a good photo is a good photo. A good title is a good description.
If:
1) inventory costs are almost nothing
2) storage isn’t a problem
3) eBay anchor lets you list 10k items a month for one monthly cost
4) and you’re making the money you need, plus extra
Then:
what is the importance of “sell through rate” for you? Do you think you’re failing? -
07/07/2018 at 5:28 pm #44694Anonymous
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So what you’re saying, Jay, is you’re willing to hold onto all “high value” items for the rest of your life rather than sell them at some discount at some point? I know that’s not true, because you guys have said so many times, and you mark stuff down all the time.
If you (and I mean everybody reading this) can’t get the price you want ever on eBay, then maybe you’re selling it on the wrong platform. Or maybe you just don’t want to sell it. And that’s fine too!
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07/07/2018 at 6:33 pm #44696
So what you’re saying, Jay, is you’re willing to hold onto all “high value” items for the rest of your life rather than sell them at some discount at some point?
Nope. Not what I said. I simply challenged your assumption that you can sell long tail items faster by simply lowering the price. Does lowering the price work for you on long tail items?
I know that’s not true, because you guys have said so many times, and you mark stuff down all the time.
We do not mark down stuff all the time. Ryanne certainly uses sales, but this actually proves my point because sales certainly do not sell stuff quicker IMHO. Personally I think sales are useless.
If you (and I mean everybody reading this) can’t get the price you want ever on eBay, then maybe you’re selling it on the wrong platform. Or maybe you just don’t want to sell it. And that’s fine too!
We dont need to hold on to items forever because everything eventually sells if we’re patient. I guess the big question is how long is too long to hold onto items before it’s uncomfortable for you?
Even our weirdest, worst choices sell within five years:
–Assume 5-cents a month to list.
–Cost us 60-cents a year
–Costs us $3 for 5 years
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–Bought item for $1
–Sell for $20
–Paypal/FVF is 13.5% = $2.7
= That’s still about $13 profit after 5 years.-
07/07/2018 at 8:04 pm #44704
Getting up to 10k listings is seriously my goal. It brings the cost of each listing down to $.03 a month.
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07/09/2018 at 10:59 am #44864
I do agree with some of your thinking here Jay, but I want to add some flavor to your numbers.
Yes, you profit $13 from a $7 investment (COGS, Listing Fees, and FVF). So a 200% Return.
But since it took 5 years, it is a 40% annual return.
Nothing to sneeze at, but much lower that what the $ return is. In your case, storage is not an extra cost, so I’m thinking you are pure here. But for many on the forum, storage does take money (and stress), so that is a factor. If someone is long tail, the returns on investment (on an annual basis) are lowered by time, and if warehousing costs are included, that will lower returns as well.
So I agree with your numbers and thought, but for those that don’t have a free warehouse solution, this is a factor in Long Tail. Many other thoughts on long tail as well, but I’m going to try and stay on track on this thread…
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07/07/2018 at 8:00 pm #44703
I’ve had items listed that have taken 10 years to sell. It’s still within my 10k listing count, so it doesn’t matter that it has taken so long to sell.
That doesn’t mean that items have to be held onto forever. Some items get damaged in storage and need to be removed. Others are just duds that need to go.
However, if an item is really unique and you have a feeling someone will eventually want it, it is best to just wait for that person to buy it. What I am seeing is that long-tail selling requires a completely different frame of mind than that required for str, numbers, business plan sort of thinking. They are just different ways of looking at having a business.
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07/07/2018 at 8:48 pm #44705
Agreed. The different way to run stores is all good.
But Luftmentsh started this thread with a bold assertion:
Problem: the accumulation of long-tail items in inventory is causing your sell-through rate (STR: % of inventory that sells in a given period) to decline over time.
Solution: To boost your STR, you have to increase sales. To do this, you can tweak listings by lowering prices, improving descriptions, etc.
I want to sell more long tail items faster. I just dont believe his/her system works, especially for the long tail items that are $30.
What is your experience? Does Luftmentsh’s assertion ring true?
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07/07/2018 at 9:49 pm #44708Anonymous
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BTW:
1. Luftmentsh is a cisgender male (for those who care about such things).
2. https://www.merriam-webster.com/dictionary/luftmensch -
07/08/2018 at 7:27 am #44715
Sales don’t matter if the person who is looking to buy the item isn’t looking at your item when the sale is going on. I only run sales because it seems to jostle the Ebay search system in general – if I go a day without a sale or with very low sales, I run a sale and sales come back like normal. Long-tail items do not go along with the run a sale or run an auction mode of selling.
TBH, I never adjust my listings at all once the item is listed, unless I made an initial mistake in the listing. After that, it’s completely hands off. I think that’s more for people with very small inventories that don’t have a lot to list. The most I do is end and sell similar in bulk. I have never had the time to adjust active listings during my history of selling on Ebay. I honestly don’t think editing a listing helps at all. I sell extremely old items in my inventory all of the time, and I did not do a thing to sell them other than perhaps ending and selling similar.
For people that don’t actively seek or hold long-tail inventories, it is very hard to imagine the sort of people that seek out the items that are present in them. In a way, we are pretty much holding onto items for that 1 person 5 years in the future that will think, “hey, I would love to have that” as a whim one day and then yay, sold. Or, tv or movie productions that have yet to be made. Collectors that don’t realize they need a specific item for their collection until they need it right at that moment, 3 years later. There’s no way to speed any of that up.
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07/07/2018 at 6:29 pm #44695Anonymous
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07/07/2018 at 6:54 pm #44698
Ha. I guess if you want to base your selling strategy on the most edge of edge cases, cool 🙂 We have sold thousands and thousands of items being patient.
What about the substance of my response?
–how long is too long to hold onto items before it’s uncomfortable for you?
–What do you thin of my 5 year cost to keep items listed?
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07/07/2018 at 6:49 pm #44697
Man, I loved those lamps!
Hi Jay, I don’t think anyone is worried about “Failing” – some people just love analyzing their numbers! I think about your comment “If you won’t buy at $50 then you aren’t going to buy at $5” ALL THE TIME, and I have for the most part stopped doing auctions and haphazardly lowering prices. (Sometimes I will RAISE the price, and then it sells – like you said, it’s just waiting for the right buyer.) I like the idea of calculating STR, for a sense of predictability and also to get a benchmark on where I’m at and if I am improving. I want a higher ASP AND a better STR – I think we all want that!
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07/07/2018 at 7:02 pm #44699
There’s a difference between “I want my Sell Through Rate to be higher” and “I can control how quickly I sell long tail items”.
I want to sell all our items quickly. I’m just comfortable with knowing I have no power to sell long tail items quickly.
As you say, lowering prices and lower priced auctions dont spur sales. Is anyone saying these things do work?
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07/07/2018 at 7:18 pm #44700
“the cream of the crap” – LOL! Love it. Very clever.
OK, now back to reading the rest of the original post.
🙂
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07/07/2018 at 9:43 pm #44707Anonymous
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Hmm, I posted somethin’ but it were et. 🙁
Here:
Ach, I love a good discussion–you can really get to the heart of matters. Thanks for all the good input.Well, sounds like my problem definition is faulty; maybe degraded STR is not a problem at all! But nobody has mentioned the glaring flaw in my PA/T criterion (and no fair claiming you knew it after I point it out):
Suppposing (just supposing, Jay) that markdowns do lead to higher sales, a $30 item marked down to $25 will certainly sell more readily than a $300 item marked down to $250, so since STR is a measure of sales units sold, not revenue or profit obtained, marking down low-price items will provide a much bigger improvement in STR than marking down high-priced items. But good work, gang, you all knew intuitively (and from experience) what works.
But note I never at any time suggested any particular definition of “quickly”. That’s up to y’all to define for yourselves.
What about VA/QP? Well, for me, I’m stuck paying $155/month for 1000 ft^3 of storage, which could be worse (and will be) in a dense urban location. So having a way to filter on items by value density is profitable, if for no other reason than to provide a good criterion for scavenging.
And look at all the great discussion it generated (que sound of Jay sighing). Yeah, STR’s been beaten to death–may it rest in pieces. I still maintain that good ‘ol numerical analysis is valueable. Jay’s clearly got a well-honed instinct for finance, logic and probability, even if he doesn’t use fancy formulas like Herr Professor Dr. Luftmentsh. But some of us have to grind out the logic the hard way.
And yes, Jay, there is a price point at which an item will sell and a price point at which it will not sell. The lamps were just a humorous device, but seriously, you guys take offers, you markdown prices; there are 10 years of podcasts in which you guys document the process, where you lose patience and adjust your price down, and on more than one occasion you acknowledge the inconsistency with your LIAFI philosophy. I’m not trying to call you out or anything, but seriously, you’re saying that if a thing doesn’t sell, you do nothing, forever and ever, amen?
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07/08/2018 at 7:47 am #44716
I seriously just glossed over the formula portion of the opening paragraph because it is irrelevant to selling long-tail. Applying this or that to an item won’t generate a sale within a week or two for true long-tail.
One strategy I have for true 1 of a kind items is pricing them low, even considering for their rarity. I actually have a lot of scarce ephemera pieces priced at 10, 15, 20 apiece f/s in order to draw in younger customers or those that are prolific collectors that don’t have a TON of money. I don’t have everything of this sort priced high.
Having items at these price levels does not spur sales any faster. People will buy items like these when they will, and sometimes they buy in quantity when they do because the prices are lower. That’s about the only advantage in this case. Still, even priced that low, 3-5 years for a sale is not uncommon.
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07/08/2018 at 8:39 am #44718
Im sorry I hijacked your thread, but I thought you made an interesting assertion about lowering prices to sell quicker. This is a great discussion.
I completely agree that Ryanne and I will do sales, take best offers, and even lower prices at times. But this is just because we’re desperate. It’s our arms flailing. It’s not a winning strategy and I don’t think it works other than psychologically making us feel like we’ve done something to spur sales on a slow week.
And yes, Jay, there is a price point at which an item will sell and a price point at which it will not sell.
What is that price point? Again, you make a bold statement so just curious if you have a bold answer 🙂
That art deco lamp was an example of us being crazy. We had it them listed for $2000. There were no comps, no tags, no labels. We were setting the market. We eventually lowered the price and sold for $600. But there was a lot of wiggle room to play with.
My main concern are the hundreds and hundreds of <$30 long tail items that we have in our inventory. No amount of 25% sales move the needle on sales. I've seen some sellers here do "blow out" sales of 50% or more on their long tail items and still just get a trickle of sales. Do you sell long tail items and play with price to sell them quickly?
- This reply was modified 5 years, 8 months ago by Jay.
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07/08/2018 at 9:21 am #44723Anonymous
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Jay,
You’re the high-priest–it’s your temple, I just worship here (no snark intended), so as far as I’m concerned your participation can never be considered hijacking. In fact, I’m honored you’re spending time on it; I’d be hurt if you just posted something like “bullshit!” and left the thread.
Indeed, I founded the discussion on an unsupported assertion. Bad form. In fact, I admit I’m too new to have data to defend one strategy or another. More bad form. But I had hoped to spark a creative discussion. I think the format of my OP also created an unintended(?) impression of someone speaking from knowledge and authority–I was trying to present it like a college paper. But sure enough, here comes professor Dedman with his red pen! And I’m always happy to have my assumptions challenged, that’s how we learn and grow, to be sure.
But I stand by my analytical methodology!
Now I have to go change out the starter on Mrs. Luftmentsh’s car–ugh.
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07/08/2018 at 9:56 am #44726
I love when people make declarations. Its even more fun to follow it through to its logical conclusion.
If the idea actually works and helps us sell better, we’ll implement it ASAP.
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07/07/2018 at 11:06 pm #44711
I think items can vary greatly in their “spread” of how much somebody might be willing to pay for them. Let’s say you have a set of mid-century flatware, and it’s super cool. But if there’s comparable stuff available for $200, you’re probably not gonna sell for $1000, even to a buyer with more money than sense. So if you have them listed for $1000…. well, somebody can always make an offer, but speaking from my experience, when a seller starts *that* high I usually figure it’s not worth the bother. In this case, a price drop would help.
Then there’s the totally unique item, which might be a painting, or an extremely rare curio. Sui generis. In theory, if you get the right buyer, the sky’s the limit – look at all the crummy art on ebay that sells for thousands. All the same, a price drop does increase the audience but there is always the possibility of a miracle buyer paying huge money.
There’s another factor, which I think of as like the “pocket money” factor. People who pay for vintagey/antiquey stuff on ebay are pretty rich. They’re not sweating whether they’re going to be able to put diesel in the tank tomorrow. So if they’re treating themselves to a cool unique item, they’re not going to overanalyze a purchase that feels like pocket money to them – maybe $50-100 – even if that item is objectively overpriced. So, no sense slashing prices on a unique long tail item down below that threshold. But if you start getting up to a level where the expenditure actually hurts a little even for an affluent person… different story.
Really the trouble with pricing long-tail stuff is you never really get any clear cut information about whether your price is too high. If it doesn’t sell for a year it could be the right buyer just never came along.
I think it’s worth repricing stuff if it has competition, but if it’s unique or somewhat unique and the price is not legible, might as well aim as high as seems reasonable.
So I would advocate a markdown sale for old items, and I do do this, but also to be very selective about what to include.
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07/08/2018 at 7:04 am #44714Anonymous
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One could always do what my Grandfather claimed to have done: he said when he’d sell a car or something, he’d place two classified ads for two, essentially identical cars, one with a high price and bogus contact info and one with the price he wanted. He claimed it worked.
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07/08/2018 at 9:05 am #44722Anonymous
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This dang wordpresser keeps eatin’ my posts!
Notwithstanding the concensus optionion that discounting price does not increase sales (never mind STR – oy!), my analytical methodology is sound and, in of itself, does not “advocate” a particular strategy. PA/T and VA/QP are merely devices to filter inventory data on the basis of specific criteria. Other metrics could be devised to filter on the basis of other criteria.
“That’s all well and good,” you say, “but pointless since nothing can be done to increase sales of the identified items or any others.”
Well, maybe not nothing. An item might not sell because of a mistake in the listing like a misspelling in the title. It happens. Jay & Ryanne mentioned an item that sat for a couple of years and turned out to have a missplelled title. And if you don’t have time to go back and review thousands of old listings (who does?), PA/T and VA/QP provide a way to spotlight old items (by your own definition of old) that meet what I think are two valid criteria for “high priority”.
So, think of it as a way to nudge you–“these items are ones that you’d like to sell for X and Y reasons, but they haven’t (after 3, 5, 7, 10 years). Maybe you it’s time to take a look and see if there’s a problem you missed.” Better to have a subset of inventory to review than every single item, no?
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07/08/2018 at 9:55 am #44725
Agreed. Your assertion makes sense as a tweaking tool, but not a game changer. Doesnt hurt to check older listings for mistakes or being able to improve a title as seller’s knowledge has improved.
But overall, we still havent a found a way to sell long tail items quickly.
SIDENOTE: when you’re posts disappear, do you see a reason why? Are you posting and then immediately clicking “edit”?
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07/08/2018 at 10:21 am #44729Anonymous
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Yeah, that’s when it happens. I seem to always notice an error right after I post and it used to be as long I changed something it would repost no problem but lately even edited posts vanish and when I try to repost it tells me it already exists.
I agree it’s no game changer (never said it was). As a couple often said “there’s no magic formula–just list!”
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07/08/2018 at 12:29 pm #44745
Yeah, Im not sure how to fix this forum posting error. We’ve tried to replicate it with our server admin and his posts never get erased. You seem to be smart and copy the post before you edit it (so you can report it). Or just wait a couple minutes before editing.
And agreed that you never explicitly said it was a game changer, but if lowering prices to sell long time items faster worked, then that would be a game changer to us.
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07/08/2018 at 10:53 am #44733
When I do have errors in my listings, customers usually tell me. There seems to be a community of people on Ebay with nothing better to do than to correct you on certain aspects of your listings. If you have an item that is location based, someone will come in and tell you it’s not where it says it is – even if the the town name is printed on the item you are selling! It is weird. I actually haven’t had customers like this in a long time, but I used to use them as my eyes for listings that needed corrections. I guess my listings are perfect now. 😉
Otherwise, I absolutely do not have the time to edit or check for errors with my older listings. I just check over what I’ve just listed quickly after I list to make sure pictures match up and the info is right in the titles. I can either put my effort into listing items, or I can do something that is not online selling based with my time. If I am in for the day with the intention of working on my ebay store, I will just list new items.
I’ve just looked at my store, and 12 out of 23 items that have sold in my main store during the past week have been listed for 2 or 2+ years. A significant amount of my inventory sold has been listed for a long time. If my items are selling, there’s no need for me to constantly be surveying them to see if they will sell. They will.
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07/08/2018 at 12:30 pm #44746
I feel there are few of us ere that hold this opinion. But we totally agree: we can spend time futzing with old items, or just list new ones.
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07/09/2018 at 11:11 am #44866
almasty: “There seems to be a community of people on Ebay with nothing better to do than to correct you on certain aspects of your listings.”
Amen on that!
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07/08/2018 at 12:55 pm #44750Anonymous
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Jay,
Then I have a serious question: You guys have built an industrial operation with storage, listing elves and everything. Your inventory is “huge” and growing, but your weekly numbers have remained basically flat for years (STR degradation). Nobody would question the success you guys have achieved (if my estimate is correct,zip you’re pulling down north of 100k from eBay + rentals), but If you have to keep feeding inventory into the firebox just to keep the train going at the same speed*, is that sustainable in the long run (assuming there is a long run)?*Analogy clarification: you do have to keep feeding fuel into the firebox to keep a train going at the same speed; but it should be a steady-state process. By analogy, you guys are feeding fuel in faster than it’s being burned. At some point, you’ll run out of room in the fire box.
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07/08/2018 at 1:39 pm #44752
I got your point with your very first post. We used a similar technique / criteria when deciding what to keep out of 3,000 plus antique booth items.
Here is something we decided to use as a screening criteria: When we saw the piles of stuff we were not going to keep or list on our new online venues, we had a conversation with our CPA. We talked about just dumping old, broken, chipped, and dirty items but he said no donate them. And the intersting thing was, he told us why. He said that many places publish a valuation guide to aide in deciding the value of donated items. He said a few of his other clients print out those lists and use it as a guide to place a value on the donated items for the tax year. He went on to say the Salvation Army list was very generous, much more so than Goodwill. Well he was right.
As we reviewed the list we saw many items, especially on the very detailed ones, were showing a donated price much higher than the prices we had on some items at the booths. We still keep those lists as guides right here on our desks. The SA list shows both a low and a high range on their whole list. He said to use a number in the middle. Boy were we surprised. So we created a spread sheet, transferred everything we didn’t think would be suitable to loist and discovered that over a thousand items had an overall average og approx. $5 to $12 per item. We racked up over $8,000 in deductions.
Now this isn’t free money and it is only applied to lowering your adjusted gross income but that still adds up to lowering your income tax bill. In J&R case or any other SL members hitting the $80,000 annualy or more this would be a big help.
The other interesting thing is that once you have that much of a tax deductible donation if you lower your tax bill to zero, which we have now for several years, the unused portion is still active and carries over and can be applied to the next years taxes.
Now given that I see some SL members offering ties, shirts, blouses for $5 to $15 dollars, you may be surprised that the tax deduction on shirts is $2.50 to $12.00 so we used $7.25 per shirt, shoes is $3.50 to $25 a pair so we used $14.25. This was more than we would be selling them for. They had more value to donate them than to go through the long process of listings them and on top of that to let them sit for 5 years to get less than what we could claim as a donation.
Some categories are crazy. Lamps range from $5 to $75 so a mid range was $40 for us. We dumped evey lamp we had at the booths at $40 each.
Now to the final point..Take J&R large inventory, if sorted by age first [anything over 5 years old], then secondary sort price [anything under say $12.50 or maybe $15], then cross reference that and see what the donated value would be.
>>> The hypotheical example… if they found a thousand [1,000 items] and the mid point donation value is $8 then that is an $8,000 donated value. At their income level that would make a dent in their adjusted gross income and hopefully lower their taxes by a good amount.I asked our CPA would having a huge donation all at one time run up a red flag and he said not in this range and besides you have a printed inventory list with a descrion and an allowed prive value that is already approved by the IRS. And you have photos to boot. He said the red flag donations are much higher that the few thousand here.
So that is a thought when deciding to screen older items and cull out old inventory. Does it have a higher value just donating it than keeping it for years and waiting for the sale. The decution becomes it’s own instant Sale redeemable come jan. first 2019.
Just another view point guys…
Mike at MDCG in Atlanta
- This reply was modified 5 years, 8 months ago by MDC Galleries & Fine Art.
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07/08/2018 at 2:09 pm #44758
I thought you could only donate items for what you paid for them? This sounds sort of weird, otherwise.
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07/09/2018 at 8:48 am #44824
Now given that I see some SL members offering ties, shirts, blouses for $5 to $15 dollars, you may be surprised that the tax deduction on shirts is $2.50 to $12.00 so we used $7.25 per shirt, shoes is $3.50 to $25 a pair so we used $14.25. This was more than we would be selling them for. They had more value to donate them than to go through the long process of listings them and on top of that to let them sit for 5 years to get less than what we could claim as a donation.
I think you have a misunderstanding of the value of a tax deduction. A $12 tax deduction is not the same value as selling a shirt for $12 cash. I’ll take the cash any day of the week! Assuming you’re in the 25% tax bracket, that $12 tax deduction has an actual value of around $3.
Also, if you are counting the donations as a business loss in order to take full advantage of the deduction, then you need to deduct the actual purchase cost – not the estimated donation valuation.
The IRS donation valuation guidelines are for donations of personal property that you paid actual retail prices for. You are technically being a tax cheat if you are taking a $12 deduction for a shirt you paid $1 for at Goodwill.
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07/09/2018 at 8:58 am #44832Anonymous
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That would be sort of a perpetual motion machine:
1. Buy item at thrift store for X
2. Donate to same store
3. Take write-off for 10X
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07/09/2018 at 8:58 am #44833
Understand.. and was talking about a one time thing to get rid of old inventory. Just saying that there are other things one can do with extremely old, unsold items, when you start to cull them out rather than just throw them away.
And everyone always says, talk with your CPA about how to properly handle old items that you are going to get rid of completely. Thanks for the details.
- This reply was modified 5 years, 8 months ago by MDC Galleries & Fine Art.
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07/08/2018 at 2:18 pm #44759
Haven’t they proven that it is effective over the long-term? They have had a store going for 10+ years. It’s still overall been buy low, sell high, sit on it until it a sale comes in.
If you have to pay $300 a month for a store that can hold 6,000 or 10,000 items, what is wrong with adding as much as possible to the store if the cost will be the same anyway?
I think what you also have to keep in mind is that their earlier years may have had items that were huge home-runs, but they have “flat lined” to maintaining the same type of sales levels with stock that isn’t as extraordinary. Or, maybe they were sourcing more in their earlier years and selling for less with more sales each week and a higher STR, but were miserable doing it because that is a sweatshop mentality as they describe. If that is the case, maybe they are doing better now with a much larger store but less focus and effort on it than when they were constantly worrying about numbers and what to add to their stores.
Selling less often for higher ASP with no need to go out sourcing all of the time = the key to staying in this business long-term without getting burnt out. No one can maintain an exuberance doing this for this long. You can’t source at thrift stores 2-5 days a week and still be greatly enjoying it 10 years later. You will either burn out or have to change in order to keep on doing this.
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07/08/2018 at 7:12 pm #44787Anonymous
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Don’t worry, I’m not challenging their business model–totes respect (Jay knows it–Jay knows much about The Luftmentsh)! I’m asking more for myself than for them.
See, I live in the city in a 1500sf house with a very little room to spare and Mrs. Luftmentsh does not like living with death piles, so I pay premium $ for storage. I can still turn a profit, but I can’t if I have to upscale to JR size without linear sales growth. So unless I move to the kuntry, I’m not sure an eBay-based business is sustainable for me.
I wanted to park a travel trailer in the back yard for storage, which would be psuedo-legal, but my dick neighbor practically had a cow when I mentioned it (yuppies–eff’em).
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07/09/2018 at 6:50 am #44806
Yeah, I get it. I’ve thought about putting a travel trailer as well in the driveway for additional storage or air b&b, but then always had the fear that someone would drive off with it in the middle of the night, haha. Or build a tiny house in the backyard and turn it into an air b&b or additional storage (whichever could make the most additional money).
I’ve seen a lot of people here talk about focusing on small items when they don’t have a lot of space. Maybe try something like that?
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07/09/2018 at 8:37 am #44820Anonymous
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Smalls are appealing, but I really just snag anything valueable that comes my way (especially if it’s free!). So at the moment I have an 11ft oak library ladder and a football kicking cage stored next to my house, and a Windjammer III motorcycle faring and a couple of sinks on the deck, to name a few…
Oh and how could I forget the brand new dealer-discard Nissan Altima front bumper and left fender sitting on the front porch?
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07/09/2018 at 8:43 am #44821
We could never focus on only Smalls. Too much good stuff out there. I couldnt pass it up.
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07/09/2018 at 9:55 am #44843
I don’t have a car, so I have to really focus on getting items back by public transportation or uber. If it doesn’t fit in my backpack, it’s not coming unless it’s worth $$$$, but even then I’ll still leave a LOT behind because I don’t want to sell it and figure out how to get it to the post office by uber. It always involves coordinating multiple people to help me bring my large box or boxes to the post office along with the normal mail that has to go out anyway. It is seriously a hassle.
The largest items I’ve brought back by uber were 2 Ikea rugs that were sold new on their website for $150 apiece, but I won them in an online auction for $10 combined. I only bought them because I really wanted them for myself, and I got a bunch of other lots of smaller items to resell at the same time. I could not imagine having to resell them and ship, or even sell locally without a car. Ugh.
Luckily, I got an incredibly nice uber driver to help tetris everything in his van, but it was still stressful. Even with the large suv van, they still barely fit. -
07/09/2018 at 12:56 pm #44888
Do you have zipcar in your area?
https://www.zipcar.com/Once you have an account, its very easy to grab a car or even small truck for a couple hours.
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07/08/2018 at 6:22 pm #44786
It’s a very good question. Simple answer is: our business has evolved over the past 10 years so its not a linear curve.
–When we started, we were 24-7 eBay. We scavenged 4-5 times a week (sometimes more). All we did was list clothes.
–Then we realized we could sell hard goods, collectibles, antiques and often make more money. This let us slow down on listing but make the same amount of money.
–A couple years ago we figured out how to hire out taking photos, meaning we had to spend even less time keeping the eBay engine running.We currently sell an average of 200 items a month. 1200 items a year. We probably list between 200-300 items a month, so our store is very slowly growing. But then we often have several months in the year when we’re traveling and doing other things and listing zero items.
Our inventory only grows when we take big jumps. Usually when we get a big haul at an auction. But I’m doubtful we’ll hit 10,000 items anytime soon.
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07/08/2018 at 11:54 pm #44801Anonymous
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Jay: I’m sure I’m not the first to suggest it, but y’all’s 2nd store seems like a great test-bed opportunity. It would require patience, but over time you could vary parameters like price point, free shipping, free returns, etc. and, with long-term data, develop a model for what really works.
You could even cross-list the same items between the two stores for a more pure experiment, although you’d probably want to use different photos and descriptions. Or not: who’s to say you and Ryanne don’t both have stores with the duplicate items and choose share photos?
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07/08/2018 at 3:00 pm #44763
almasty is correct about the amount of the deduction. The following is from the IRS web site (IRS Publication 526 (2017), Charitable Contributions):
“Inventory
If you contribute inventory (property you sell in the course of your business), the amount you can deduct is the smaller of its fair market value on the day you contributed it or its basis. The basis of contributed inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. You must remove the amount of your charitable contribution deduction from your opening inventory. It isn’t part of the cost of goods sold.If the cost of donated inventory isn’t included in your opening inventory, the inventory’s basis is zero and you can’t claim a charitable contribution deduction. Treat the inventory’s cost as you would ordinarily treat it under your method of accounting. For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year.
A special rule applies to certain donations of food inventory. See Food Inventory , later.”
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07/09/2018 at 8:55 am #44827
Boy, was I late to this party!
Gonna have to digest all this later today!
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07/09/2018 at 10:05 am #44844Anonymous
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I was wondering why our other resident numbers guy hadn’t weighed in yet. I was expecting a good strong critique from you, especially, T-Satt.
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07/09/2018 at 12:53 pm #44886
Tsatt has a strong contemporary clothing game. Those kind of items are probably very sensitive to price changes.I can see blowing out the price of his modern shirts to sell a large part of his inventory.
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07/09/2018 at 10:25 am #44852
I’m just now going to go through this. I saw the thread when I headed out the door, just now got here and looks like I have some downtime before my reports are ready to analyze…
so imma gonna lookee now!
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07/09/2018 at 12:09 pm #44872
Luftmentsh (et all): Ok, here is my overall thinking on the subjects in this thread…
I see where you are driving with PA/T and VA/QP. They are potential tools for identifying items that are “past expiration” in your initial thoughts when listing. Meaning they are getting old, taking up valuable space, and not generating revenue. “Time to reevaluate”.
As a process, I think this is important. Your formulas can do that. We do a look back each quarter, looking at the oldest items out there and deciding if they are still worth listing, need repricing/updating, or need to be donated. I think we culled 30 items last quarter. Our questions on these are “Would I buy this again today? Would I list this the same way today?”
I feel just because you bought it and listed it in the past doesn’t mean you would do it again today. And then…what do you do about it?
I say that it is easier to store cash than it is inventory. Now, you need inventory to provide consistent income. And for each of us, that is the biggest issue. I look at all these issues through the lens of someone who runs our store as a sole source of income. What is the best business decision that I can make? For us, turnover and cash flow are important. We want to continue to grow inventory, which always puts a strain on cash. Therefore, we need consistent cash flow to fund new purchases of inventory as well as for monthly bills.
So old inventory represents a cost to us each month. It isn’t generating income, it takes up space (so a cost for warehouse expense), etc. So, the longer it is sitting there taking up space, we are incurring Opportunity Cost on that investment. If I sell quick to recover our costs, I can redeploy that capital to a better investment.
Now, if I still think that the ROI on the item is worth sitting on, I sit. (this goes to the point that Luftmentsh formulas are getting at). But if not, cut bait. A large inventory isn’t necessarily a good or a bad thing. I think the key is how much profit is being generated compared to the capital invested, and there is a time factor to that investment.
If an outside investor was looking at our businesses, and wanted to loan us money for inventory, what would they look at? How fast they will recoup their initial investment, then what returns they would get for that investment. Some of us are high return, but slow to sell. Some are low return, but fast to sell. Some are in the middle.
To Jay’s point, there is only so far we can go to generate a sale. Just because we lower prices, or change titles, or edit the listing, doesn’t mean that it will DEFINITELY sell the item. But to Luftmentsh point (and ours), if the item isn’t being seen because of those issues, then it is really for sale?
This to me is the crux of the argument. Low STR isn’t always bad, and high STR isn’t always good. It is a measurement of your business. It tells you how fast things have been selling. In conjunction with ASP, it says how much revenue you are generating (and will likely generate in the future). They are data points, nothing else.
I think the true argument is: should you review old inventory? To the List It and Forget It camp…do you review your inventory to see if items should still be listed? If not, why not? Are you 100% certain that ALL items will sell the way you listed it 5 years ago? Just because item A sold that was 5 years old, doesn’t mean ALL items that are 5 years old will sell. How do we prevent our stores from looking like the hoarders we have purchased these items from?
We have been to sales where people have the most random dusty items, and they are all priced like they are made of gold. “That is worth a lot! I paid $x! It is a rare piece!” Yeah, and since it is overpriced, it is going to stay right in your garage. It isn’t really for sale. And just because it is old and you think it has value…does anyone else in the world believe that? If not, it sits in your garage (still) and isn’t going to bring you any value.
Not disparaging anyone with large stores, or that it is bad. In fact, for Jay and Ryanne (and almasty it looks like too) it works very well for them. I think it is just a good business decision to always review old items to see if they should still be in your store. If it was a bad buy, or needs repriced since the market has changed, or needs a better title since I’m better at that now…then make the change. I can’t assume that my decisions in the past are 100% correct in today’s market. If it is still a good investment, then leave it alone.
But having the review is always worthwhile.
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07/09/2018 at 1:02 pm #44889
How do we prevent our stores from looking like the hoarders we have purchased these items from?
Great question. If we had a storefront with 6000 items, we would look like dirty hoarders.
BUT we’re on the internet. 99.9999% of buyers don’t look at our total store. They do a search, and our item pops up. We can have an infinite store.
I think of each item as just a collection of search terms. The more terms we have listed, the more search terms we have out there to be found.
- This reply was modified 5 years, 8 months ago by Jay.
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07/09/2018 at 1:22 pm #44900
Jay wrote: “I think of each item as just a collection of search terms. The more terms we have listed, the more search terms we have out there to be found.”.
I think this may be the reason I am seriously thinking of taking our 30 day auto relist off of that process and changing them back to GTC. With Ebay messing around with new policy changes all the time, it creates some issues within WonderLister.
If I also take my own words to heart about Google taking it’s sweet time to crawl a listing, then keep deleting that listing is not giving Google the time it takes to find it or if it does, then someone clicks on it, they will see an ended listing not an active one, organic traffic will be of interest as we build out our own store, and we are not even sure [as you say been proven], that the end and relist as new even does really do anything, and does applying promoted campaigns whereby we pay a little extra commission to Ebay work better than having all new lisitngs every 30 days, and the final factor of changing back to GTC is just one more thing we won’t have to fiddle with.
Also toying with taking the few “Free Shipping” status off of those larger items we have and pulling that zone 8 inflated price off of those items will get us back to some sort of normalcy.
If we are supposed to be retired now and do this for fun, it is getting to be just so much to have to keep dealing with. Maybe better to leave as GTC and Calculated shipping, then work on building out our Shopify Store and getting back into the studio to create art, lamps, mirrors, clocks and of course paintings and prints. Way more fun than constantly “pushing the data” and number crunching that is beginning to be an everyday churn now.
Ryanne, As T-Satt says, any of these software pograms will not only have a learning curve to use them, but also there will be new types of issues you have never come across before and you will have to learn how to deal with them inside of the software.
Currently I have 11 listings that have evidently been moved to WonderListers “Archives”, but why, they were new listings uploaded just a week ago. To fix, I had to create an email to WonderLister, explain the situation in writing, wait for a reply. They also want us to compact the database and send along to them to examine.
I just want to start”creating again” not bird dogging databases and chasing Ebay’s leap frogging all over the place. Those leap frongs create issues in 3rd party softwae trying to keep up and manage it all. Now Etsy is also making a bunch of changes.
Ugghh… I will stay with WonderLister because it will synch and manage all 3 of our platforms evetually.. but no use creating my own headaches by bouncing all around myself.
Just me doing a bunch of thinking this morning while waiting on WL to reply for the 3rd time.
Mike at MDCG&FA
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07/09/2018 at 1:33 pm #44903
Mike: Regarding your Google results, I look at it this way:
When I’m listing on eBay, do I want to maximize eBay’s Search Results, or Google’s?
For eBay, I want to maximize what eBay wants. For your Shopify store, maximize Google’s.
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07/09/2018 at 1:31 pm #44902
Jay: I don’t mean your eBay store looking like a hoarder. I mean your warehouse/storage area.
I don’t think you guys have really had this constraint because you haven’t had to pay for storage. But as a hypothetical question: What is too much inventory for you guys? Would you like to have a warehouse of 20,000 listings (all of the same type of items you have listed now)? 50,000? When would you feel that your store is too big?
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07/09/2018 at 12:14 pm #44873
Back to a statement in the beginning…”You’d like to sell high-profit items quickly, and low profit items eventually” — I would disagree with that statement. I would rather that low profit items turn quickly. To me, the best is High Profit / High STR (obviously) and Low Profit / Low STR the worst. Between High Profit / Low STR and Low Profit / High STR… that is the rub.
This is where other factors are in play. There is a spectrum of sellers on eBay. I look at Jay and Ryanne on one end (10x ROI / 4% STR) and Cyndi AKA Amazing Taste (3-5x ROI / 90%+ STR) on the other. Like the Long Tail vs the Churn and Burn. I think we sit in the middle (5x ROI / 15% STR). The method of business has a lot of factors: Capital, availability and type of items, business goals, time to dedicate to listing.
“Right” is different for all these sellers.
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07/09/2018 at 1:28 pm #44901
I absolutely want the Low Profit items to turnover quickly. I want my bread n butter stuff to fly out the door. I don’t mind my high profit things hanging around because they bring in eyeballs and I want max dollar for them.
Haggling over $2 on a shirt is a lot different than trying to squeeze out an extra $100 on a high ticket item. I’ll go for that extra hundred any day!
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07/09/2018 at 2:01 pm #44912Anonymous
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My suppostion that “You’d like to sell high-profit items quickly, and low profit items eventually”, goes to your exact point about opportunity cost, and included the assumption (unstated, sorry) was that low profit items were also low cost items. Not much opportunity cost to sitting on a $1 item vs a $50 item. Of course that goes to another undefined assumption in my formula: is P in $ or %? $1 probably represents a higher %P, but obviously lower $P.
I take that back; it was in $, of course, so, yeah a $1 item is a $1 item, so low opportunity cost. But it will fail a VA/QP test at some point, so that’s the value of the double test.
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07/09/2018 at 2:21 pm #44923
Luftmentsh: Good point on that. True that any $1 cost item isn’t an issue, but how about 1,000 of them? This can escalate over time.
For me, high profit is in $. Very few $1 COGS sell for $100. Most are in the sub $30 range, and I think the vast majority are sub-$20. Low investment cost, but low cash return as well. For me, I would like to get those out ASAP.
Items that sell for $50 and up are ones that I can usually decide to sit on for higher $ at time of sale (all things equal in terms of demand, storage costs, etc.)
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07/09/2018 at 2:29 pm #44925Anonymous
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High volume, low $P (even if high %P) is what most SLers seem to reject–it’s the Iphone case model!
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07/09/2018 at 2:35 pm #44926
Because it is a grind, hard to scale, and less $/hr.
But I think a great place to start. Learn the ropes, low initial investment, quick results.
Then level up, both in speed of listing the High STR / Low ASP items, and then adding Low STR / High ASP items.
Get lots of singles first, before trying to hit home runs every time. Cause Dingers don’t happen that often, so be ready when they arrive.
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07/09/2018 at 2:54 pm #44931Anonymous
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I think this is the value of this kind of analysis: it really blows away the fog of selling an infinite variety of items with huge spreads in price, profit, size, demand, etc.
What should you sell? To paraphrase the great food writer Michael Pollan:
Stuff,
lots of it, not too much, mostly profitable. -
07/09/2018 at 4:33 pm #44940
Agree. For me the numbers are an independent view of how you are doing. They are what they are.
The importance of them are to see if your numbers are going to provide the income you need in the future. Or how long it will take to recoup your investment in inventory, or investment in labor. Or they can show where you are this year vs last year and you can investigate why you are better or worse.
The key to me is that you can’t expect your store to produce 1 set of results when it has performed a different set of results in the past. Plus, they show you where your risks are. If you are low STR, know that and embrace it and understand that money you pay now (for labor or inventory) will not arrive until later down the road. Also know that if you are Churn and Burn and High STR, you will have to replenish your store regularly to keep revenue coming in.
So Jay and Ryanne can double their inventory in the past few years but only have a roughly 20%-40% increase in revenue. They get that and are comfortable with that. Cyndi can Churn and Burn clothing but she knows she will have to keep working hard to keep those high numbers. And she does! (she is a machine).
But don’t list like Jay and Ryanne but expect results like Cyndi…
Know how you run, understand why, see if you like it, change if needed.
Find your version of “right”, and understand the risks and rewards.
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07/09/2018 at 1:34 pm #44904
Amen Retro!
When it is on the lower end…Move the Merch!
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07/12/2018 at 12:17 am #45198
Hi T-Satt,
Thank you for answering my question regarding STR. Now it has “clicked” with extrapolating a weekly number into monthly terms, which I wasn’t doing and that is why the numbers weren’t “making sense”, but now they do. -
07/12/2018 at 7:32 am #45211
ebaymom: Glad to help!
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