Elements Of An eBay Strategy - By Stephen S Alison

Strategy is an art concerned with achieving a goal. It is an art based upon devising and employing a careful plan or process towards the goal. This means that actions and efforts are pre-determined rather than haphazard. The ability to plan effectively is critical to success. Effective planning is a continuous process. It also entails learning from the outcome of previous plans in order to understand the reasons behind their failure or success. This knowledge is applied in an ongoing planning, executing, learning cycle.

The ability to change direction decisively is also crucial to success. For no matter how fine a plan may be, it cannot be perfect. There will always be some unexpected variables or some untoward events that cannot be anticipated.

For any particular endeavour such as selling on eBay, a good plan will help to bring about success, however it is not a guarantee. Consider the following potential strategy statements for your eBay online business:

• I want to be the largest online seller of eBooks;

• I have my own store selling a variety of consumables and I want to use eBay as another sales outlet;

• I want to sell only hot-selling items;

• I want to sell products with a profit margin of $10 and upwards;

• I want to sell products with a profit margin of 50% or more;

• I have a specialist knowledge in stamp collecting (philately) and I will stick to the area I know and am interested in;

• I want to pile it high and sell it fast;

• I want to maximise my profits;

• I want to make a profit but maintaining my good business reputation is more important to me than profit;

• I want to be a Power Seller;

• I don’t want to use a lot of capital so I do not want to carry a large stock or inventory;

• I want to make $52,800 a year either part-time or full-time;

• I want to make $105,600 a year either part-time or full-time;

All the above strategy statements are reasonable, valid and achievable objectives. Also several are inter-related and complementary to each other.

Here is an example of how one of the above strategies can be executed on eBay:

Let us assume that your strategy, or one of your strategies, is to make $10 profit per item sold. Let us also assume that another of your strategies is to make a gross income of $52,800 a year either part-time or full-time. We have chosen the figure $52,800 for mathematical convenience – because the figure $52,800 is easily divisible by both 12 and 22.

Why 12 and 22?

There are 22 effective listing days in the eBay calendar and there are 12 months in the Gregorian calendar (our usual calendar).

If you want you can replace this figure with $75,000, $100,000 or any figure you wish. The starting $figure does not matter and does not invalidate the concept. The concept is the same and is a sound one. The mathematical steps are the same and the reality is the same. The only difference is the $result. Let us continue.

Firstly let us break down the $52,800 into its lowest common denominator: there are 12 months in a year and there are 22 auction listing days in every month.

$52,800 divided by 12 months = $4,400 per month.

$4,400 divided by 22 = $200 per day.

Given that one of your goals is to make $10 profit per item, this means that you have to sell an average of 20 items per day ($10 x $20 = $200) to achieve this goal.

Expressed another way, in this example your strategy really means earning $200 a day selling a minimum of 20 items a day with a gross profit margin of $10 per item. That’s it.

How should you go about this?

In another article we discussed Closing Ratio (CR). Let us revise and underscore our understanding of Closing Ratio. In summary:

• A closing ratio of 25% means that 1 item was sold out of every 4 items for sale (1/4 = 25%);

• A closing ratio of 50% means that 2 items were sold out of every 4 items for sale (2/4 = 50%);

• A closing ratio of 75% means that 3 items were sold out of every 4 items for sale (3/4 = 75%);

It follows from the above that one way of achieving your daily objective of earning $200 per day is to do the following:

• Option 1: - List 80 auctions every day in any Category of your choice with an average Closing Ratio of 25% (20/80 = 25%; 20 x $10 = $200);

• Option 2: List 40 auctions every day in any Category of your choice with an average Closing Ratio of 50% (20/40 = 50%; 20 x $10 = $200);

• Option 3: List 28 auctions every day in any Category of your choice with an average Closing Ratio of 75% (21/28 = 75%; 21 x $10 = $210);

Obviously the higher the Closing Ratio and/or the higher the $profit per item sold, the fewer the auctions you must list every day.

• Experiment With Different Categories, Prices And Auction Formats;

• Do some more creative or lateral thinking. Think outside the box. For example, people who buy computers may also buy laser printers or cartridges;

• Use Arbitrage opportunities - eBay is one of several major online auction houses or markets. Your local school or village fund raising events are other potential markets. Items purchased locally can most probably be re-sold at a profit on eBay and vice-versa.

IMPORTANT NOTE: The information presented herein represents the experience and views of the Author with the subject matter at the time of publication. No warranties are made whatsoever about the amount of money, if any, that the reader will earn from following the steps described in this Article and the reader is encouraged to seek competent legal and accounting advice before engaging in any business activity.

Stephen S Alison is a retired "bean counter" who spent 26 years in middle management positions for major US financial institutions in Europe and a further 10 years as an adviser/consultant to a number of European financial institutions. He has traded successfully on eBay for over 2 years using the same strategies and tactics published in his websites:
http://www.best-online-auctions-guide.com
http://www.howtomakeyourfortuneonebay.com
http://www.learntomakeyourlivingonebay.com