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Some thoughts I’ve been having regarding ebay strategy. If you guys have seen The Founder, this is my attempt to do a viewquake like Krock’s lawyer does: “you’re actually in the real estate business”.
We know that we make money as scavengers by leveraging a little money, a lot of time, and knowledge, into profits.
One part which I think needs more emphasis is storage space. Specifically the extent to which we are all really *in the warehouse/fulfillment business*.
So the storyline of an ebay seller goes like this: at the very beginning, people with single family houses often have a lot of storage space that is not being used for a valuable purpose:
-Basement storage rooms
-Guest bedrooms
-Garages & shedsConverting this space to ebay storage is very profitable: it costs you no additional dollars, except some extra shelving. As we know, resellable stuff can always be found for free or almost free. This makes the early days of ebay reselling a bonanza.
However, once you’ve filled up your house as much as you’re willing to, it becomes necessary to either stop growing and only buy when you have space for things (which takes a LONG time due to the nature of the long tail), or grow into more warehouse space – which starts costing money. So the equation starts to be more like a warehouse or a grocery store – how much income per square foot am I getting.
This new equation tends to make you look at turnover time/product rank, as well as physical size, much more closely. I know that, having 90% filled up my storage unit, I’m seriously considering the need to pay ANOTHER $200/mo for a second one. Until I pull the trigger on that, I’m much less willing to consider big bulky items. I look at some boxes of items I have and think: “that’s a big box for a $40 sale price”.
Does this make sense? I’m overstating the importance of physical space here a little to be provocative. But it seems overlooked relative to factors like COGS and time spent.
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I’ve always assumed that storage was one of the bottlenecks. You’re absolutely correct. Unless we spend all our time and money seeking high turnover items, then we must be okay with growing out storage. That’s definitely a choice we’ve made.
With long tail items, you must be able to store more and more to grow sales. No one I’ve met is good enough to only find items that sell immediately.
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Thanks for posting this topic. I’d love to hear more about this. If I ever manage to build my store up above a few hundred items, I’ll have to make a decision about storage outside my house. Not only is that a new fixed cost every month, it would also introduce a bunch of logistical challenges. Then yeah, if you keep growing and growing, you’re managing a warehouse. I used to manage big library stacks spaces where we had to track the locations of tens of thousands of items individually, and it’s a whole thing.
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Yeah, I’m feeling this thread. I’ve let a lot of listed stock encroach on my actual living space this past winter, so I’m trying to dial it back now and reorganize everything.
If the items in your storage unit are listed and you run out of space, then filling up another storage unit for $200 is fine. That money is working for you. I feel like you are not losing $200. If you need space for active listings, you need space.
However, if the first storage unit is full of unlisted stuff for $200, and then you add another one for $200, that money is not being used effectively. You are losing $200 or $400 a month. You can always get new stuff for cheap (if you’re willing to work hard to look for it), so why pay such a huge fee to maintain an environment for unlisted stuff?
Having unlisted stock in your house for the set price you’re paying for to live in is one thing, but having additional space that you are paying for and doing nothing with is ???
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We went all in and spent $18k all in for a building (excavating, concrete pad, building, electric). It’s much much bigger than what you’d get for $200/month, but even at that rate, it takes 7.5 years to pay it off in storage savings.
It means we had the land to build it, and it means we’re committed to selling on eBay for the long term. And if we ever stop selling on eBay, we’ve improved the value of our property. People love a huge storage building with garage doors.
I agree with Almasty that it’s a huge benefit not having inventory in your living space. And its crazy to pay for storage if you’re just storing unlisted inventory that is making you no money.
Simplicio is right that storage is a huge part of the equation for a long term eBay business the way many of us here run it.
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Nice topic, and something that’s been on my mind for a while as we prepare to move. Once we buy a new home, we’ll either repurpose an existing building (garage/etc), or build a new one to completely house the online business.
It won’t be cheap, nor will it likely happen right away, but if I can have enough space to receive, list, store and pack ebay inventory, as well as receive, prep, and pack Amazon shipments without encroaching on our living space, it will go a LONG way to both scaling up my business, and to keeping our home clutter, work, and drama free.
I’ve never really thought about it in terms of income per square foot, as I’ve yet to hit a storage limitation. I definitely understand your logic if that’s the case though. If it were me, I don’t think I’d stop buying or listing new inventory, but maybe stop buying the lower returning but storage intensive items on a go forward basis. If the potential income is there, I’ll always buy and figure out storage later.
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The only time I’d recommend storing unlisted inventory is if you needed to temprarily move out everything to reclaim your space in an orderly manner.
Say you have an overwhelmed garage and you wanted to make it a lean mean business space with dedicated storage racks and work stations. If it is already full with junk piled everywhere, how do you tackle the project?
In this case, you could rent a storage unit and move everything out. Make a commitment to being done within a month, and then spend another month if necessary listing like a madman to fill the storage area with LISTED inventory.
That would be a very effective use of a month’s storage rent.
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As is with the nature of our business I feel as though we disproportionately feel the sting of space. Most scavengers who are able to source in bulk or at a rapid rate are located near major metro areas. So naturally, space is expensive. I’ve also lived in very small quarters (studio) which required me to be extra organized and take storage to the next level. Mind you I only had about 200 items but 200 items in one bedroom which is also your living room and kitchen can be overwhelming. My rack was strategically organized with no space spared. Bigger things on bottom things hanging off it. Things stacked. Things placed on the shelf in accordance with which way the dimensions would allow for maximum utility.
I once got a glimpse into the inside of an Amazon tractor trailer it looked like Tetris on steroids. With boxes touching wall to wall and floor to ceiling. Almost as if algorithmically loaded.
One solution I’ve found to be viable is purchasing and modifying a trailer as an eBay workshop of sorts. Shelves, pull out racks on a rail system etc. DIY total would run about a couple thousand give or take depending on the size of the trailer.
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My brother works in logistics for a shipping company and they do actually use algorithms to figure out how to pack containers as tightly as possible!
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I’m very familiar with the algorithm software also – it’s pretty neat how they can fill a pallet or a truck almost to 100% efficiency with 1000’s of random boxes.
It’s also funny when the dimensions of 1 item out of the 1000s is incorrect – it can throw off everything. Even one dimension being out 1/8″ can multiply into a disaster quickly.
There are even warehouses/shipping companies now that use cameras/lasers/etc to measure each box and robots decide how to stack them on a pallet or in a truck efficiently. It’s scary and interesting at the same time how fast and efficient this technology is.
I’m sure for a few hundred million dollars, you can have the same technology for your eBay items…
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In the area I currently live in, its fairly common to purchase a retired steel shipping container for about $3000 and use it for storage. They are really tough and weather tight.
Typically they are 40 feet long by 8 feet wide and about 9 feet tall.
Many people also have them modified into workshops with electricity and extra doors.
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I’m taking over the lease of a 2 bedroom apartment in a few months once the prior lease rolls off. Original plans were to downgrade to a 1 bedroom and rent storage elsewhere, but after I did the math I arrived at a higher cost/month than renting the 2 bedroom.
I moved most of the inventory into the spare bedroom last weekend, and in the process I realized just how much space my 250 item store takes up. I’m just glad very little of it is long-tail inventory and that turnover is generally decent/good.
I must say it’s really refreshing to be able to close a door and not have to look at my eBay inventory all day, but I do wonder how long this will last me. I struggle to keep 250 items in my store at the moment, but if I ever decide to switch to more long-tail inventory I think some small warehouse space is the next step.
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Huh. I wouldn’t think that 250 items would fill an entire bedroom. What kind of items are you selling?
Either using racks for clothes or plastic bins makes storage very efficient.
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Mostly “big box” electronics where the average size is probably 18x16x5. I could be more aggressive stacking them, but I only like going 4 or 5 high depending on weight (less on the higher shelves.)
I usually move these larger units in 1-3 months, but I’m starting to consider auctioning off stuff that has been around longer to free up space.
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It is seriously like playing mental tetris – my end goal is z, but in order to get there, I need to move and configure areas like x and y.
Another issue with configuring space is looking at the time available – I could be listing, but instead I’m just moving stuff around??? Yet, just taking the time to clean and organize can actually result in a gain of space that you will need to utilize at some point in the future. So, the work is actually worth doing, even though at the time it seems pointless when you’re in the thick of the buying season and desperately need time to list!
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Glad to see I am not the only one who struggles with this. I have stuff in several different locations in my house, anything in the garage that could/will get dusty is flea market stuff, i have a guy who comes by every week to buy to take to the flea. Nicer stuff/online sales items inside and in the back bedroom. I built a few big pieces of furniture that are on wheels that hold most of my online inventory, nice and easy to get to. Also, just built another large, like 4 feet long, 3 feet wide, 3 feet tall double shelf on wheels that slides right in under my kitchen island. I am just getting ready for a big load of stuff I recently purchased to arrive. Hoping that will be enough space, but I have a feeling that back bedroom will be filling up for awhile hahahaha.
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I too struggle with this. We have a “spare” bedroom filled with my eBay stuff… and part of the common living space. But half of the eBay storage room is filled with stacks of boxes of my personal crap, which I’ve been getting rid of as I can. A lot of it is what’s left of an enormous video gaming collection I’d built up over 20 years but have been weeding through and selling on eBay for the past 4.
I continue to source varied inventory so my store isn’t populated with only one category of item. I learn more and more – from sellers like Jay and Ryanne – that diversification is key.
Storing inventory (listed and not) and shipping supplies (which spill over into the living room and garden tub in our master bathroom) and still being able to actually get to items as they sell is a genuine challenge. My shelving is overfilled to the point where things are hidden behind other items. And I’m actively working on increasing the size of my store (again, per Jay and Ryanne) in between my writing jobs, so the concern is only growing.
Once our son goes off to college in two months, I may pull a majority of the crap out of the eBay room and buy or build a bunch more shelving. Then move things back into the room in a more organized manner. But, you know, “more organized” is easier said than done!
Sorry for the long ramble.
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Since part of my background was managing warehouse space, here is one guiding principle that I would have anyone considering renting space to keep in mind.
That space you pay for is the same amount whether it is full or not. So when you rent, FILL IT UP.
When we rented our unit, we flushed our basement as much as possible so that the unit was 80% full from day 1. Now it is about 90% full, and the basement has filled back up again. We are very close to getting a second unit (right next to our current one). When we do, we will flush again and fill that sucker up.
Keep that in mind. When you rent, fill that place up and your in-house space is where new stuff goes. This way your warehouse cost is spread out over every item in there, making it easier to absorb the extra cost.
Other than that, think logistically. We keep our shipping area in our house, but we don’t want to go to a warehouse, get the item, bring it back, and THEN pack it up. For us, prepackaging helps as we know EXACTLY the weight and dimensions, and we simply print the label at the house, drive to the warehouse, find the item (SKU and Warehouse location is on the package), slap the label on and drop off at the post office on our way home. Easy.
Also, for items that are not prepackaged (clothing), the items are already in clear bags ready to ship. So when a suit sells, it is already in the clear bag, in a plastic bin, ready to drop into a Regional A box. Sweaters can go either First Class or Priority, but still ready in clear bags in a bin. Both types of packaging (poly mailers or priority tyvex) are at the warehouse, along with tape) if needed.
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I agree with you about filling up storage ASAP. But the prepackaging thing seems like a lot of upfront labour for an item that or may or may not sell.
I believe costs (time/money) on these zillions of one-of items should be kept as low as humanly possible until sale.
Also, often a buyer wants further info (some particular measurement for example). I’d hate to unpack the item just to get that.
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@Simplico: Agree on that, and this is where personal style comes in.
On Hard goods that are prepackaged, very rarely (like 1-2 times in 2 years now) has someone asked for something that we didn’t already provide in the listing or photos, including measurements. This also goes for clothing as I provide all measurements upfront. I rarely have someone ask for a measurement and if they do, it is because they haven’t read the Item Description.
Plus, we make the commitment that if it is a hard good that has to be boxed up, it WILL sell online. If there is any question about it, we keep it at the house.
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Your idea is sound and likely the best idea for most people, but if you have well established processes and have good self control then it really doesn’t matter if you use rented storage for listed or unlisted inventory.
Personally I would argue that rented storage is better for unlisted inventory. That way all of your listed inventory is near to your shipping station at all times.
Then you have a small staging area for a couple days worth of unlisted inventory at the home/office that you replenish from the rented storage. All new unlisted inventory gets cycled into the rented storage.
Of course, the problem with this method is that pesky self-control thing. I think you guys definitely do no fall into this category though.
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I’m also not a big fan of pre-packaging. I did that when I first started and had a quick turnaround on items. I maintained an inventory of 80-100 items – all prepackaged ready to go. I still have 2 of these pre-packaged items sitting on a shelf in inventory. Lol!
I like to inspect items before I pack/ship. If they are pre-packaged I feel like I am rolling the dice, especially if the item has sat for 16 months or more.
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Hi Steve,
I agree on the concept of reorganizing. Every time I’ve done it, I’ve gained more space. Included in that is combining half empty storage containers etc.
If you don’t have your items in specific labeled locations that you can access from the listing, I highly encourage you to do so, or at least start with your new listings. This enables you to fill each container to the top, regardless of what needs to be stored. It also takes away a lot of stress when an item is sold.
Organized shelving is key. I prefer to build mine from wood, so that I can make them exactly the size I prefer. It’s probably not much cheaper, than buying them premade, but having the correct size, makes it worth it to me.
I’ve also got a specific shipping area, with all the boxes and supplies in a convenient location. I’ve found this enables me to ship much quicker.
I think storage space is an issue for all of us in one form or another.
Good Luck.
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