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Completely agree. When we hit the low point this year, we were down 40% from our highs for the year, which makes me nervous. But we are now up 110% over this same time last year, so we can be happy.
Of course, we are only 33% of where I want to be, so we keep working and improving… 🙂
Always best to compare to where you were in the past, and also factor in the lessons you have learned and how you have grown.
There is no question that what you have done has worked, and that was because you started with items that people wanted and you made the listings work for you. You start there, and you will be successful. None of us will succeed in this business without that.
“–Why do those numbers help you?
–What’s the difference if you sell 17%, 22%, etc?
–What actions do you take based on what specific numbers?
–Do you think you have much control over what sells beyond scavenging quality items and providing a good listing?”All great questions. They help me get a perspective on what the business can do and where it can go by doing what we are doing…or doing things differently. So when the STR goes from 22% to 14%, like in the summer, by using our ASP (Average Selling Price), I can predict what our monthly revenue will be. With that, we can look at our fixed and variable costs and determine our monthly profit each month. And then we can see how we will live (like you say…don’t look at your Q4 numbers and expect them all year). When and how much should we throttle up or down inventory purchases? If we do, what impact does that have in our listing process? (if we don’t buy enough, we can’t sell in the future) If we increase our efficiency in listing, how will that impact our income? If we increase our ASP (buy focusing on higher dollar items), how does that impact income (and do we have to spend more to get those items?). It allows us to look at different scenarios and what impacts those have on the business.
For example, if we want to start focusing more on items with a 2X ROI but a higher ASP (so, rather than 4X shirts that I buy for $5 and sell for $20, I look at a $50 pair of jeans that I sell for $100), what capital requirements does that take, and how does that change the business when we can list those jeans in the same amount of time as the shirt? Time is a push, but capital requirements are higher, and a lower ROI, but higher return on our time.
To do this right is to break our inventory down into subcategories (shirts, jackets, shoes, collectibles, holiday, etc.) and forecast each category individually. I have to do this efficiently so it is not a time suck, but this is what I have done for 20+ years for other companies…time to make it work for us.
I have this model set up so that I can change numbers (new listings, STR, ASP, and Purchase Cost (for inventory) and what that does if we change things. Helps to run a lot of What-If Scenarios. It was what prompted me to look at our listing processes and see how we can get more efficient. If I spend $80 for a light box for Veronica to use in her studio, how does that increase the number of listings we can do, and how long before that purchase pays for itself? (It was within 1 month) How quick would SixBit pay for itself if we can eliminate time doing relisting but maintain our current velocity of a 19% STR? (less than 1 month)
Can I control the sales side? Not completely…none of us can. But I can predict it and see what it does to our numbers. And I can make sure that I am purchasing properly based on those numbers. If I see that our STR is trending down relative to the same month in past years, I can analyze what we have in inventory so see why. Is it more long tail items and I need to prepare for that in the future month’s revenue and expenditures? Or are they bad buys that I need to get rid of and avoid in the future?
Veronica is the right brain creative and got this business started. I’m the left brain analyzer and run the numbers and see how they work. We come at this differently, and that is perfect. If both partners in the business are the same…one of them isn’t needed. I think you and Ryanne are the same…
These numbers had us change from listing cycling jerseys (unless very high end), ski helmets, and kids winter boots. All items we did early on, but when I started running the numbers on these and looking at our time, we realized that it wasn’t worth it. When I looked at how many we can do based on time, the average profit, the STR, we saw that we just couldn’t make enough money each month.
And it is why I make sure that I’m as efficient as possible on shirts now, so that if I average $10.84 profit per shirt (my current average), I want to be able to list them (cradle to grave) at least 4 per hour (my current average). If I can list 6 per hour (my goal), then I can use that extra time to source more suits at $29.70 average profit, but I can only do 3 per hour. Or I can source other items. Or I can look at Amazon. Or work on a rental property. Or spend time with family.
I live on numbers…
Amen brother! We are all in!
It is unpredictable, but within a range. First is to focus and make sure we are hitting our listing goals. That is just discipline and hard work. The sales are always a flux, but within a range. Below are our STR rates for the last two years:
Jan Feb Mar Apr May Jun Jul
2016 19% 25% 18% 12% 17% 14% 10%
2017 17% 20% 23% 22% 20% 17% 14%Having this type of information helps a lot…
Yep. We relist so that we don’t fall down in search, and we know that once items are 60 days old, eBay considers them “stale” and drops them down. You dealt with that a few months ago I remember. This is where SixBit is worth the price. We can manage our relisting and “Attending” efficiently, to both gain time for listing and keep the velocity of sales.
You have a larger inventory because you built this up earlier than we did, and because you have a lower STR based on the products you sell. You made me think and I did the forecast for 2019 (like I said, Cost Accounting Geek!).
2019
New Listings – 6,000
Sales – 5,961
Annual STR – 18%
Ending Inventory – 2,837I had not done the forecast for 2019, but what I was seeing coming in 2018 will be there in 2019. We will be at stasis, with our listings and sales at the same rate. So at that, we would not grow to your level of inventory unless we:
1) Add more long tail items – requires space
2) Add an employee – being discussed now
3) Increase listing process to beyond 500/month – we look at Chris Lynn’s model, where he does 125 listing a day…on his own.So these numbers are allowing us to look at the future and decide where to do with the business. And a pivot will be coming…
“–What does Yearly STR mean?” — Yearly Sell Thru Rate. Total Items Sold / Average Inventory Level of Each Month / 12. This shows your velocity of sales by showing what percentage of inventory is selling each month (which is why I divide by 12). Right now I’m doing this on a unit sold basis, but I’m thinking to look at this in terms of dollars instead. I’m still an cost accountant…love the numbers and having them help forecast and improve the business!
“-Do you guys have a specific time frame when you are concerned that an item hasn’t sold (Three months, six months?)” – No set time at this point. I worry more on my side (clothing) than Veronica does with collectibles. We know that our average is 120 days to sell, so we keep that in our minds, but we also have to look at the seasonality of the item. If I’m listing sweaters in the Spring, I’m committing to waiting possibly a year before I worry about it. And if it has high value, I will keep until next year. If it is a low to middle brand, I will mark down to move it. If I want to have it take up space in our inventory, I want it to be worth it…
And on the Sweater discussion, with SixBit, we are now doing “winter” listings in the summer and having them scheduled for later in the year. They “might” sell in the summer, but I would rather hold on and wait for them to hit the market with a higher chance to sell. One benefit to SixBit, and it is free. We have 34 items in the pipeline now that will go online around Sept. 1.
–At what point do you take the item down even what it won’t sell at an extremely low cost? — As of now…almost never. We may take large and long tail items and put them in our garage sale (like this Saturday) for a lower-than-eBay price to see if we can sell them for good profit and not have to ship it, but we will mark things WAY DOWN and sell them online. Our thought is that even if we sell for a low price, if we net more than what it would sell at a garage sale, it is a bonus. We have already put in the work to list it, so we might as well get it out at a low price, make a buyer happy, increase feedback, and get a better ROI than at a garage sale or donating it.
Good Questions.
As of now, I see that increasing our listing process increase inventory as well as sales. My forecasts are as follows:
2017
New Listings – 4,124
Sales – 3,471
Yearly STR – 19%
Ending Inventory – 1,9102018
New Listings – 6,000
Sales – 5,155
Yearly STR – 18%
Ending Inventory – 2,788My plan is that by staying focused on eBay and getting the numbers to where we want them in 2018, improving the listing speed will also give us the ability to start other projects, whether that be expanding to Amazon, working on a rental property, or some other income stream. I’m looking to follow the FOCUS (Follow One Course Until Successful) on eBay, then add another stream onto it.
Right now, tolerance is on an item by item basis. If it is something that we think has value and will continue to retain it, we will keep the price up and hold. If the market on that items seems to be softening, we will look to move it. In the end, we say we are not trying to create a museum, we are trying to sell. If the item has value, we will hold for the sale…
Well done!
I’ll bet. I moved from there in 2003, so I’ll bet it is packed there now…
08/15/2017 at 10:58 am in reply to: Got a negative and a return request: Exercise in patience and positivity #21814“Another negative turned into a positive with communication, patience, and positivity.”
Ain’t it funny how so many problems can be resolved with that very mindset…
Well done!
08/15/2017 at 9:50 am in reply to: ebay promoted listings now available for single quantity FP listings #21810Thanks!
You guys are in my wheelhouse. I was born in Albuquerque, went to High School in Moriarty, and we lived in Conroe, TX for a while when I worked and the Ball Can Manufacturing plant…
That is a great story and a great business model.
I’m also interested in your thoughts on Amazon. We got out as the margins were too thin for the work, and with repricing bots and a flood in there, it seems that the ROI on capital and the time to shop were too difficult to maintain. We would like to get back in, but our focus is on growing the eBay business until it can support us on less time, and we spend that time on growing another business.
But you may be able to convince us to spend time on the Amazon platform!
08/15/2017 at 9:37 am in reply to: Got a negative and a return request: Exercise in patience and positivity #21806We have this trouble as well with jeans. We have noticed that the actual measurements on most Women’s Jeans are larger than the tag, mostly the waist. So as long as the actual measurements are within 2″ on the waist to the tag size, we list the tag size in the title, item specifics, and as Size in the item description, but we provide the actual measurements as well. Many buyers of specific brands know that the brands run different to the tag size.
Week of 8/6-8/12
Total Items in Store: 1,602
Items Sold: 53
Number of Items Listed This Week: 111
Total Sales: $1,294.18
Cost of Items Sold: $275.03
Highest Item Sold: $62 – 1968 World Of Barbie Double Doll Pink Trunk Carrying Case Lot w/ ClothesCompetition: Highest Priced Sale: Veronica wins the week and Veronica leads for the year 18-13.
Competition: Highest Total Sales: Troy leads the year $24.0k to $19.1kFinally getting our weekly listing numbers back closer to where we want them, and we have crossed the 1,600 barrier for the first time. I listed for 3 days this week (1 day of Admin work, 1 day of consulting, 1 day of sourcing), while Veronica listed for 5 days (1 day sourcing). Our improvements to our listing process are starting to show up, and we are getting more done per hour now. Still not done improving, but we are on the right track.
We are starting to experiment with ways to increase our ASP and Profit Per Item as well. This is requiring an increase in capital expenditures as well as a lower ROI, but if it increases the PPI and the velocity is there, it works long term. We all have the three T’s (Talent, Treasure, & Time), but Time is the only one that you can’t grow. We see that we are getting to the point of maximization (for the life we want) with the two of us for listing, so we want to increase the PPI now.
Congrats on the side gig! Sounds fun, and great to have multiple streams of income!
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