How To Make Money On eBay: What I Learned Running An eBay Store For A Month

In January Mrs. C. and I decided to start selling used toys on eBay.  Originally the idea was to have it be a store ran by one of our kids, but the nuts and bolts are a bit too difficult for them at this point in time.  We started with extra toys we wanted to get rid of around the house, then included thrift store buys.  Long term I would like to employ the kids in this endeavor so they can have some earned income to fund Roth IRAs and so that they can learn the nuts and bolt of running a business. Here’s my guide to how to make money on eBay.

Sourcing:

We created loops for the thrift stores we want to go to. We also strategically go on the busiest day, which is 50% off day for our local thrift store group.  Because of when we started we hit 2 50% off sales within the month.  The first sale we bought too many items that were too heavy or not popular enough to sell. When the average cost of an item we are buying is 50 cents, it’s really easy to buy some of the wrong things.  In general generic toys don’t do as well as licensed character toys, and items weighing over 1 pound in general should be steered away from. The vast majority of what we are buying and selling are stuffed animals.

Sourcing is certainly not a problem.  Currently our local route is plenty to keep us in stock. If we build to higher volume there are 2 other nearby routes we could incorporate in.  Unfortunately 1 of these routes does not have a half off day. We will be sourcing yard sales in the summer and see how that pans out. Currently we are on hold with adding to our inventory due to the Corona virus closing all the stores. We like going to the thrift stores on half off day anyways and usually save enough money on our personal buys to justify the trip.  On our last trip our nephew bought a bike with his own money for $1.50!

It is important to note that even though most of these thrift stores are operated by the same company, and even the same branch of that company, their pricing can vary dramatically.  For a similar sized stuffed animal the price at one store could be 50 cents, while at another store it is $2!  Often the pricing is not easy to identify so it is important to keep an eye out for it.

Shipping:

Shipping correctly is the key to making money on eBay.  Shipping is the largest cost in our business and a small mistake can lead to a big erosion of profits.  I started off buying cheap boxes in bulk.  What I didn’t realize was that the most cost effective way to ship most items is first class mail.  To ship first class the size of the item must be under 12″ in all 3 dimensions, AND must be under 16 ounces.  A 12 X 12 X 12 cardboard box weighs 13 ounces alone.  A 10 X 7.5 X 4.5 box (which I bought in bulk for 28 cents a piece) weighs 6 oz.  These boxes are WAY to heavy.  Poly mailers weigh virtually nothing and in bulk can be bought for around 5 cents a piece.  We also learned what 16 oz feels like.  If your item weighs over 16 ounces the price goes up substantially because it no longer qualifies for first class mail. a 15.9 oz item might ship for $4 to $6 depending on where it is going in the US, but a 16.1 oz item will cost $8 to $11.

eBay provides a massive discount on shipping if you use their program.  We bought a postal scale and can weigh our items and print out the postage using eBay’s tool.  We save roughly 25% on the cost of postage by going through eBay than going to the post office and paying there.  It’s also convenient to print out the labels instead of hand writing them. Dropping off at the post office is also a lot quicker with the items already being paid for.

Organization: When storing hundreds of items you need to start with a plan. I did not, and it didn’t take long for these toys to take over my house. I now have them somewhat sorted across 4 large bins I have and some drawers in my closet.  We plan on building a pole barn in the summer which will give us a ton of storage space. We aren’t building the pole barn as part of this micro business.  Our house doesn’t have a basement and we have been struggling with storage space for years.  Add in our rental house business and we really need some additional storage space.

Tracking:

I am managing this small hobby/business with a spreadsheet, shocking, I know. I keep track of each items cost, listing price, projected eBay and Paypal fees, and shipping and packaging costs.  As items sell I transfer them to another sheet and keep a running total of profit margins.

Timing:

I didn’t want this business to take over our lives, it only makes sense to do if it uses up ancillary time that we wouldn’t be doing anything else in.  At night when we are winding down I print out shipping labels and package any sales for the day.  Our post office opens at 7:30 AM and I drop the kids off at school at around 7:25 AM.  I swing by the post office on the way home, which adds less than 1/4 mile to my route.  As far as acquisitions and listings go, we spent 2 half days buying items at thrift stores and 2 half days listing items.  I’m getting faster at listing items so this should improve. When I first started I was at about 5 minutes per listing and now I’m down to about 2 minutes.

Right now I am highly involved in it, but Mrs. C will be running it mostly on her own here shortly when I go back to work.  Part of the plan of this is to have 1 more source of income that she can contribute to after leaving her job.  With me still working our plan is for this money to go towards the “wants” list of home improvements, like a backyard patio addition.

Why Make Money On eBay?:

I want to have as many sources of income as possible outside of my primary job, although small, this is scalable to at least 5X where I am currently at, and can provide a significant income of several hundred dollars per month.  Currently our income consists of:

  • John C Employer 1: Accounts for roughly 2/3 of my W2 Income on 18 month cycle
  • John C Employer 2: Accounts for roughly 1/3 of my W2 Income on 18 month cycle
  • John C Unemployment: Keeps us afloat when I’m off work, <15% of my total W2 Income
  • 2 Nephews Social Security Survivor Benefits: These are set off of their moms work record, she passed at 21 and had fairly low earnings.  They receive $448 a month each which goes away at 18.
  • Rental House 1: This house is rented to a friend who escaped a domestic violence situation, we have it rented to her at a reduced rate, but we still make money on it. After she moves it will be generating $400+ a month in cashflow.
  • Rental House 2: This is the house Mrs. C.’s mom lives in, it’s slightly cash flow positive.
  • Rental House 3: This is the house we used to live in, it is $500 per month cash flow positive.
  • Rental House 4: This is the house we finished in February, $400+ per month cash flow positive.
  • Rental Houses 5: We just finished this house at the end of March and it is over $500 per month cash flow positive. (article coming soon!)
  • Rental Houses 6 – 9: We plan to buy another 3 houses in this calendar year, each should cash flow over $400 per month.
  • Action Econ Blog: This ebbs and flows, for 2019 it was down from around $200 a month to $80 a month, but has recently rebounded back to the $200+ a month range.
  • eBay Store: $150+ per month and growing quickly. I can see us easily getting to $450 a month and possibly $1,000 a month within a year.

Additional Products To Make Money on eBay:

I like the toy selling business, however I may start selling some other odds and ends as I see spots in the market that I can make money on eBay.

The first item I’m looking into is items from nature that I can get in my backyard.  Last week the kids found a snakeskin in the garage, it was about 5 feet long and fully intact.  I threw it in the trash, and later found out that similar snake skins sell for around $15 on eBay. I also saw walnuts selling for good amounts on eBay.  We have several walnut trees on our property and at Mrs. C.’s mom’s house. The way to ship these is in a priority “If it fits it ships” box. Although not actually a nature product, we do own 1.1 miles of land that was a former railroad bed.  We find tie plates and railroad spikes all the time.  I may choose to sell some of these in larger lots that fit in a “if it fits it ships box”.

The second type of item I’m looking into is hardware supplies that typically are only sold in high bulk amounts that I could divide into smaller lots.  I was looking to buy only a few utility blades and I had no need for a 100 pack.   I ordered a pack of 7 from a guy on eBay.  He sent them in an envelope with 1 stamp.  I paid $4 for this item.  Doing the math it looks like he clears about $2 per product sold. Since these are standardized they could all be prepackaged at once and as they are purchased just need a label slapped on them.

The third type of item I still need to see if there is a market for.  I recently took over a new responsibility in my cub scout pack of creating the lead weights for the cars.  Typical lead weights that you buy in the store are difficult to break, are chunky, don’t attach well, and cost a ton.  In our pack we drill a hole in the bottom of the car and cast lead weights that fit inside that hole, then epoxy them into place.  I heat up the lead and pour it into the molds I made with the same bit that we use on the cars.

My idea would be to create a mixed bag of lead weights, with the needed drill bit as an add on option and sell them for a pack.  If I can buy the lead in bulk I can pay as little as $2 per pound.  At retail people are paying that much per ounce or more!  I made molds for the weights and can dial in their sizes for a range of .5 oz to 3 oz. each.  I could then put 10 pounds of weights and the drill bit in a “If it fits it ships box” and charge $70 for a pack to buy the set.  At an average of 2 oz per car, this works out to enough weight for 80 cars, at a price of 87 cents per car.  With roughly 43,000 cub scout packs I could see there being a market for this. I would probably also make a 5 pound option which would cover 40 cars for around $50 each. Although the unit price is higher, there is still a big savings over buying retail weights. I need to wear a half face respirator with the proper cartridges when doing this because lead fumes are toxic.

Conclusion:

Currently we have over 100 items listed on eBay and sell around 35 a month.  As our storage capacity increases and our ability to buy inventory opens back up I can see the method we are using scaling from it’s current level to at least 4X.  I enjoy making money on eBay, even if it is a relatively low dollar amount.  Having an additional source of income that is not tied to my W2 job is important, and even more so with the corona virus shutdown.  Every dollar counts!

Have you ever ran an eBay store for some side income? What did you learn?

 

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John uses the free tool Personal Capital to track his net worth and posts quarterly updates on his finances. Check out the Action Economics archives section for all past posts.

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