Making Money Online

So you’ve decided to get serious about Trade Me and make some real money on the site. But what should you sell – and where can you find goodies at the right price to make a good profit anyway?

WHAT SHOULD YOU SELL ON TRADE ME?
For some, the answer to this question is easy: sell products that you know a lot about – and indeed, are passionate about. That could be anything, from coins of the nineteenth century to slightly used designer clothing. If you know your products well enough to be a little, um, obsessed about them, then you’ve probably already identified what’s a good deal and what’s a ripoff anyway – and often you’ll already know where to buy your specialist products for a really good price.

For others, the choice of what to sell is not so clear-cut. Many of us have passions that don’t easily lend themselves to profitable trading. Collecting the various ‘Thomas the Tank Engine’ models, for example, can be great fun and all-consuming—but the stock easily available to Kiwi collectors may not have a high resale value, at least not on Trade Me.

And that’s the point of this particular article. We’re exploring what it takes to make some reasonable dollars online, not just earn some spare change by selling off those odds and ends cluttering up your garage – or by parting with precious items that you’ve spent half your life collecting.

HOW MUCH DO YOU WANT TO EARN ONLINE?
Before you even choose what products to sell, you need to decide how much money you want to make on Trade Me – and how much time you’re prepared to devote to doing so. When we interviewed some of the top Trade Me sellers for the TRADE ME SUCCESS SECRETS book, they told us they were spending 60-70 hours a week on Trade Me related tasks, and listing 200-300 items a week. That total suggests that they were photographing and listing an average of 3-4 items per hour (not to mention wrapping and despatching perhaps one item per hour, based on selling one in every three or four items listed*).

*Across Trade Me, typically the sell-through rate averages around 25%. In other words, one in four auctions usually close successfully. That response rate is much higher for specific categories, as you’ll see later.

Of course, those top sellers were trading fulltime on the site – your goals may be somewhat more modest. Even so, you need to identify some key metrics before you decide on your product selection.

For example, if you want to earn $500 per week (before tax) from Trade Me, but are only willing to spend 20 hours a week working on auction tasks, then the following maths might apply:

  • 20 hours @ 4 items listed per hour = 80 items listed per week
  • Sell-through rate of one sold for every 4 items listed = 20 items sold per week
  • Profit required on each item to earn $500 per week = $25 each

If you’re selling one product for every four listed, then each product sold must also include a listing cost allocation for the three not sold. Those costs (within general auctions) can range from 25 cents to $5 or more per listing, depending on your selection of promotional items, subtitles and other options. So your calculations need to take those into account (x4). And then there’s the success fee of 6.9% per sale item (up to $150). All in all, you could be looking at fees totalling as much as $20 for every four items listed (and one sold).

In other words, in order to clear $25 per successful sale, you may need to earn at least $45 more than your purchase price per item. Clearly you need to choose (and then buy) your products very smartly indeed. You also need to be very careful when deciding which promotional options to choose, to minimise your costs but maximise the appeal of your auctions (for which advice, may we point you to Chapter Eleven of Trade Me Success Secrets).

CHOOSING A PRODUCT 1: THE PRICE RANGE
Continuing with our example, then, if you’re wanting to earn $45 per item, you could perhaps be looking at selling products with a perceived value of (say) $150, which you need to source for around $100 each in order to achieve your desired profit margins. That clearly rules out a wide range of products; but still leaves plenty of scope for the imaginative mind (refer to Chapter Nine of TRADE ME SUCCESS SECRETS for strategies to customise each product and thus improve its perceived value to potential purchasers).

CHOOSING A PRODUCT 2: STUFF THAT ALREADY SELLS ON TRADE ME
Every week, around 1.4 million items are listed on Trade Me. Every week, around 350,000 of those items sell. Trade Me collects and kindly reports on which items are more likely to sell than others, and you’ll find that information (updated monthly) here: http://www.trademe.co.nz/Community/SellThroughRates.aspx .

We’ve been tracking these statistics since Trade Me first started publishing them in late 2005 (just in time for the first edition of TRADE ME SUCCESS SECRETS), which was a great relief – we weren’t looking forward to crunching the numbers ourselves, which would have required looking at some fifty thousand pages (every week).

What we found in 2005 – and it’s a result that remains true today – is that Baby Gear and Mobile Phones are consistently the most sought-after categories on Trade Me. A higher proportion of products in those categories sell on a regular basis than almost anywhere else on the site.

Of course, not everybody can sell Baby Gear and Mobile Phones, certainly not all the time (and the categories would plunge in terms of success rates if everybody tried). So we recommend you look at the monthly sales results by category (through the prism of your price constraints, of course)  and decide if any of those are for you.

CHOOSING A PRODUCT 3: FINDING NEW PRODUCTS AND TRENDS

Even though online auctions can consume your every waking hour, there is, in fact, life outside Trade Me, radical though that notion might be. If you want to identify hot products and categories before they begin to become popular on Trade Me, you need to start your searching elsewhere. Ten suggestions:

1. The Trade
Manufacturers are constantly bringing out new products, as they look for ways to increase their sales and meet the evolving needs of their customers. Don’t wait for these new products to hit the public arena before you hear about them. Talk to industry experts, read trade journals, go to trade fairs and exhibitions.

2. Read
Haunt your local library, bookstore or news-stand. Some of the hottest new global offerings are written up in international news magazines such as Time, Newsweek and Business Week, especially in regular Hot Products issues. For techno-business trends, sample Wired, Fast Company and (locally) Unlimited and Idealog. For more technical products, Popular Science and Popular Mechanics provide inspiration. In the world of fashion, you’ll find the many international editions of titles such as Vogue will spark ideas. Whatever your product category, there’ll undoubtedly be international magazines serving that interest.

3. Watch TV
In particular sample some of the magazine-type shows on CNN and BBC World. You’ll get advance warning of hot trends brewing offshore. If you’re interested in the latest entertainment-related products, check out shows such as E! News Live, Entertainment Tonight and The Late Show with David Letterman.

4. Web Trends
If you’re interested in broader trend analysis, a number of global websites specialise in new trends. Inevitably, many of the trends thus uncovered are still some time away from commercial reality in New Zealand. However, for a sneak peek at some of the opportunities you might be considering for next year, visit (and, where available, sign up for newsletters at):

  • http://www.trendwatching.com/
    This site and its thousands of trend-spotters scan the US, Canada, the European Union, Japan, South Korea, India, South Africa, Australia, Brazil and 50 other nations and regions for hot, emerging consumer trends and related new business ideas. A monthly email newsletter shares these global observations, insights and new business ideas.
  • www.springwise.com
    A sister site to Trendwatching, Springwise scans the globe looking for new business-to-consumer ideas, concepts, innovations and ventures that have already proven themselves in local or regional markets, and are ready for expansion, partnership, franchising or copying.
  • www.google.com/trends/hottrends
    Search patterns, trends, and surprises — what’s hot and what’s not, according to Google. Search statistics are automatically generated based on the millions of searches conducted on Google over a given period of time: weekly, monthly and annually.

5. Closer to home: Kiwi ‘what’s hot’ lists
‘What’s Hot and What’s Not’ lists make regular appearances in many local newspapers and magazines. While some of the selected hot items are fleeting at best, bizarre at worst, others will provide the seed of an idea for a profitable product to offer on Trade Me.

6. Any and all magazines
Even weekly magazines such as the New Zealand Woman’s Weekly, Woman’s Day and New Idea are great sources of inspiration for what’s current. Squeezed in between those tantalising tales of celebrities in trouble you’ll find:

  • Advertisements about products that you could also be selling
  • Stories on common problems facing readers, which may inspire you to find or create profitable solutions
  • ‘How to’ features, eg, beauty workshops — needs found, for you to fill
  • Fashion accessories, for which you might have access to a low-cost source
  • Letters to the editor, citing problems and opportunities
  • Home and garden pictures, which can inspire you to create your own versions and sell online!

7. Mailers and advertising ephemera
Tear down that ‘No Junk Mail’ sign on your letterbox and enter the world of sell, sell, sell! Devour those advertising circulars. Pay particular attention to products that have pride of place on the cover or have a full page inside that’s all about them. Those are products that will sell strongly at retail and — if you can source them at the right price — are potential sales champions for you.

8. Network
Talk to shopkeepers and shop assistants. Ask them what’s hot in their store. Those that have been paying attention can point you towards some best-sellers — and probably some surprises. A word of warning: take any overly passionate endorsements with a grain of salt. These people are in the business of selling and may have you in their sights!

9. Searching online
Once you have an inkling of the type of product you might sell, search online via your search engine of choice. What exactly are you looking for?

  • The latest news on the product (for example, you may find that it’s just been superseded, recalled or enhanced – which can mean there’s an opportunity to buy up last week’s models at heavily discounted prices, wsell them at a not so heavy discount and make good margins)
  • Possible wholesale sources, if you plan to sell new items
  • Insider tips from those who love (or hate) the product
  • Sales figures from other markets
  • Articles or reviews on key features, benefits and failings
  • A whole range of possible insights about the product
  • Customer reviews, which tell you lots of useful info about the product (which you can use to inform your listings)
  • Tweets alerting you to hot news about product releases
  • And a whole heap of stuff you’d never find out the old-fashioned way

10. Number crunching
Many leading New Zealand retailers are public companies, and required to publish regular reports on trading patterns. Read their quarterly, half-yearly and annual reports and review any historical sales data that’s available in those reports (sometimes it’s in the accompanying commentary, explaining anomalous results). Use this information where you can to identify product categories that have been historically popular at certain key periods, eg, Christmas, Mother’s Day, Father’s Day, Valentine’s Day, Easter, etc.

CHOOSING A PRODUCT 4: WHAT ELSE?
Once you’ve identified possible products, you need to identify where to buy them, at a price that enables you make a decent margin. It’s never easy, but it is possible, as some of Trade Me’s top sellers reluctantly revealed when interviewed:

WHERE DO TOP SELLERS GET THEIR PRODUCTS?
We asked contributors to TRADE ME SUCCESS SECRETS where they get their products. They were understandably reticent — in many cases that’s the secret of their success — but we were very persuasive and managed to encourage a number of them to unlock their Book of Secrets, at least a little.

  • One of our jewellery sellers attributes a large part of her success to an ‘Aladdin’s Cave’ of goodies which she discovered when she purchased a jeweller’s estate. The acquisition included items that had been in a storage cupboard for some 30-odd years. These were shop-new but very retro. These days she also sources products from offshore (from a variety of international suppliers based in England, Europe and the Americas).
  • Another jewellery seller sources all of her products through the Internet. A lot of her ‘spare time’ is spent searching for products that no one else has, finding people with credibility and establishing good relationships with particular companies. She usually starts off purchasing a sample quantity of an item, to test the quality and the customer service of the company. If both measure up, she’ll start to build from there.
  • Another top trader, who sells toys online, has a more direct source: a large extended family (12 kids!) so there are always unwanted toys, games, clothes, appliances, etc. The normal greeting is ‘Hi, is this any good to you?’ as they walk in the door waving whatever in the air!
  • Yet another specialises in imported clothes and sexy lingerie. She reports that she does buy a little on Trade Me, but buys many of her products on eBay. Her particular niche: fashionable clothing and lingerie in larger sizes.
  • A leading Australian Trade Me seller usually manufactures his own products (which include replica posters, pins and patches, replica and novelty currency — and Kiwi Million Dollar Notes), but sometimes gathers goodies from garage sales and markets.
  • A Kiwi trader sometimes buys from ‘op shops’, and even occasionally buys sale items from shops. Her story is not atypical: many of the sellers we interviewed purchase products from local sources. A surprising number started out as hoarders, until they began drawing on their own collections to sell online. Friends’ stuff, markets and garage sales — as well as many of the other sources we identified earlier — were all fair game, and our top sellers were obviously able to make enough of a margin to make their Trade Me activities worthwhile.

As you can see from these reports from our experienced sellers, you can find resaleable products just about anywhere. If you just want to make a bit of pocket money, you don’t have to worry too much about regular sources of supply. But if you really want to build a sustainable business on Trade Me then you’ll have to put some serious effort into tracking down reliable suppliers, building relationships with those suppliers and (frankly) investing not just time but money.

For those who don’t particularly want to specialise in a single category, some other thoughts:

SOURCES OF SECOND-HAND GOODS FROM THE GENERAL PUBLIC

  • School Fairs: If you have kids, start with the schools that they attend. If you volunteer yourself for the PTA organising committee, you’ll sometimes be able to wangle first look at the goodies to be sold, before the fair is open to the public. Of course, you will have to contribute your fair share of PTA work in return for this privilege.
  • Flea Markets and Car Boot Sales: These highly localised markets attract a broad range of sellers, from the ‘clearing out the garage’ types to small-scale importers of knick-knacks from exotic destinations, but choose your purchases with care; some of these sellers you may never see again.
  • Book Fairs: For those who believe they can earn good money from books, the country’s book fairs can be an inexpensive source of stock, but you’ll have to hustle; the best offerings are usually rapidly scavenged as soon as they’re put on display.
  • Thrift Shops and Op Shops: We found 24 Salvation Army Family Stores and 20 St Vincent de Paul Society shops listed in the Yellow Pages; just some of the welfare organisations that operate these shops as community resources and worthy fundraising endeavours.
  • Antique Fairs: Visit www.huntly.net.nz/antique.html for a list of antique and collectable fairs throughout New Zealand. If you know your antiques, these fairs can be valuable, but you’d be well advised to visit some of the more out-of-the-way regions if you want to unearth truly hidden treasures.
  • Garage Sales: These humble events are always a mix of the good, the bad and the ugly. To find the real bargains, you’ll have to become one of those obnoxious individuals who turn up on the doorstep an hour before the scheduled start time. You’ll also make new acquaintances — the other earlybirds catching the worms, trudging along the same garage-sale circuits in search of the pot of gold hidden beneath the rainbow duvet.
  • Inorganic Street Collections: The last bastion of conspicuous consumption, as neighbours demonstrate their affluence by discarding perfectly functional, um, kitsch for others to drive by, sample and adopt. Or, worse, leave untouched for (gasp!) the council to haul away. Alas, this acquisition process will not provide a steady flow of saleable inventory, but can provide a few choice items for the opportunist. Note, however, that in recent years councils have tended to pass regulations to deter activity by hawkers – check out the rules in your catchment area.
  • And we would be remiss if we failed to mention the more regular supply of items that can be acquired if one is inclined to frequent the local Refuse Centre (that’s a rubbish dump with delusions of grandeur). Product quality might be an issue, but quantity and variety (certainly at a desirable pricing level) are assured.

LOCAL RETAIL OPPORTUNITIES
Trade Me is accessible to anyone with a computer and an Internet connection. As such, it’s a great shopping venue for buyers in more geographically isolated parts of New Zealand. Residents of far-flung outposts can now get access to products normally sold only in the larger metropolitan areas, while still enjoying their more pleasant lifestyles. Astute city-clicker sellers have noted this fact, and have been known to frequent their local retailers, buying discounted and sale items and reselling them online. Inexpensive products can often be found (with a certain amount of rummaging around) at stores such as:

  • The Warehouse
  • $2 Shops and other similarly named dollar stores
  • Dick Smith stores (especially their repairs and returns tables)
  • So-called ‘Category Killers’ — retailers that focus on a single product category, eg, Super Cheap Auto, Rebel Sport, Number One Shoe Warehouse

In fact, any retailer who has regular clearance sales should be on your list of potential product sources. If you know of retailers who have sales at a particular time of year (eg, Smith & Caughey’s twice-yearly events) you should add them to your calendar. New store openings are also a good source of bargain buying, but you need to be quick.

FACTORY AND OUTLET STORES
Although some ‘Factory Shops’ sell their wares at prices little different from traditional retail outlets, there are enough genuine factory shops out there to serve as a good source of products. The ideal factory shop will also be one of a kind and physically close to the factory it supports, so that few Kiwis have easy access to its lower prices.
SECOND-HAND DEALERS AND PAWNBROKERS
These classic institutions, which had the resale of second-hand goods pretty much to themselves in the days before eBay and Trade Me, can still be fertile sources of products to resell, although the dealers’ margins can mean it’s not always profitable to list them online. Second-hand dealers range in size and scope from single stores to national chains such as Cash Converters. Pawn shops occupy a lower profile in the retail sector generally, and are more likely to be found in areas bordering poorer households.

OPPORTUNISTIC EVENTS
There are, we are told, only two sure things in life: death and taxes. Estate sales, liquidations and bankruptcies are essentially the side-effects of both certainties, and while we naturally wouldn’t welcome such eventualities, they do tend to create opportunities. Typically, the recipients of deceased estates have little interest in many of the items hoarded by the dear departed, and will tend to dispose of them in bulk without worrying too much about the value of specific items. Similarly, receivers and liquidators are more interested in quitting chattels quickly than in realising optimal resale prices. Watch out for such opportunities: good profits can be made reselling the items individually.

ENDS OF LINE
We live in a disposable world of conspicuous consumption. Products with heaps of life still left in them are consigned to oblivion when new (sometimes only slightly) improved versions are introduced by manufacturers. But what happens to the old products? Where do superseded cellphones go to let their batteries run down? When the latest PlayStation rolls out the door, what happens to all those unused (but redundant) previous-generation consoles?

If you can find the right sources, perhaps some of those retired products could find new homes through your Trade Me listings. We can’t always afford the latest and greatest new product, and you could be performing a valuable public service by providing a new life to these obsolete senior citizens — and making a decent profit at the same time.

TRADE SHOWS AND CONVENTIONS
There’s nothing quite like the last day at a good trade show. Exhausted exhibitors, weary of the whole thing, just want to pack up and go home. But they’d rather not have to lug home all the products they still have on display, so they’re often willing to quit stock at a substantial discount. So if you intend to go to any tradeshow, make sure you leave it till the last day — and preferably the last afternoon. Then get ready to haggle.

RENTAL AND LEASING COMPANIES
Companies that lease out equipment, whether on a short-term or long-term basis, inevitably end up with used but often still serviceable products when the leases expire. They are bound to have existing arrangements in place to dispose of those goods, but will probably listen to a compelling alternative.

UNCLAIMED ITEMS
We’re a forgetful lot. We leave our belongings on trains and buses. We drop stuff into drycleaners or repair shops and never get around to picking them up. We send packages to the wrong addresses. We leave goods in storage. That’s why the companies reserve the right to sell unclaimed goods. To you.

CONFISCATED GOODS AUCTIONS
There’s something vaguely voyeuristic about bidding for goods that have been confiscated by police or customs. We tend to imagine all sorts of sordid tales about the former owners of these innocent household goods. Unfortunately, that morbid fascination also tends to make such auctions very popular, so bidding can be brisk for many items. Our best advice: get a catalogue in advance, if you can, and check out potential resale returns in advance. Failing that, turn up early, identify and inspect the items you could resell. If possible, work with a partner by cellphone to identify the prices such items are currently fetching on Trade Me. Subtract your costs and your margin and that’s your top bid price. Don’t bid beyond that point (sometimes easier said than done, if you happen to fall in love with a particularly choice offering).

CHARITY AUCTIONS
Auctions have always been a popular method of supporting good causes. They have become even more effective with the advent of Trade Me. Products are donated freely, all the dollars raised go towards the designated charities and everyone’s happy. Of course, not all products at the auctions achieve their maximum value. The high-profile offerings capture attention and bids, but some of the products slip through at bargain prices. That’s your cue.

TRADITIONAL AUCTIONS
While Trade Me auctions continue to draw more and more members, they’re not the only game in town. Traditional auctioneers still handle large quantities of goods, and they’re still a great place to pick up unexpected bargains. We recommend looking out for special-interest auctions (eg, those which involve the sale of complete stock and chattels of restaurants, industrial goods suppliers, contractors, etc). Typically, these auctions attract industry insiders looking for the specialist equipment available only at such auctions. The insiders generally have little interest in the everyday chattels common to all businesses — computers, fax machines, copiers, printers, desks, tables, chairs, etc — and such products can be purchased at much lower prices than if they were being sold at general office or computer-equipment auctions.

LOCAL WHOLESALERS
Where can you find genuine local wholesalers who might be willing to deal with you? You have to ask the right people. And that would be who? The local manufacturers who made the products or the local branches of multinational manufacturers for products made offshore. Specifically, you should call them up and ask for the sales department. Simply tell the person in that department that you own a retail business, and you want to sell some of their products. Ask them for a list of their wholesale distributors. They’ll have that information readily available, and should be willing to give it to you.

Next step: call the wholesalers they give you and ask about their terms — discount structure, minimum stock requirements, payment terms, etc. They’ll probably need you to set up an account, and you still have to deal with the issue of whether they will sell to a small home-based Internet business. Many of them won’t, so this research can take a great deal of time, but it is very important to your business that you do it right.

INTERNATIONAL WHOLESALERS
If you thought local wholesalers were tough to track down, just wait until you try to find genuine international wholesalers. The Internet is flooded with millions of people and organisations claiming to be wholesalers — a quick Google gave us 4,560,000 results — so you really will have to put in the hard yards. If you’ve identified a specific product you want to sell, the first steps can be the same as those we’ve suggested for dealing with local wholesalers: call the sales department at the manufacturer and find out their wholesale distributors. The next step, however, would be a lot harder: finding someone who’s willing to (a) deal with small orders; (b) ship stuff all the way over to New Zealand; and (c) overlook the fact that there’s probably someone in New Zealand who already has the distribution rights for this market.
LOCAL ONLINE AUCTION SITES
There are a small number of online auction and classified sites operating in New Zealand in competition to Trade Me. It’s fair to say these sites have been attracting relatively limited numbers of visitors and as a result the bidding on specific items is less frenzied. There may well be products listed on these sites that could be purchased cheaply and then resold on Trade Me.

INTERNATIONAL ONLINE AUCTION SITES
If you can cope with such issues as currency exchange, shipping costs and the higher risk of fraudulent activity, the world’s online auctions are a fertile source of products for you to resell locally. You should inevitably begin with eBay.com of course, and that may well occupy you enough. But eBay has many international offshoots. If you can handle languages other than English (or use the automatic translation options on Google’s browser bar plugin), you might well pick up some useful bargains on non-Anglo sites.

PRODUCT SOURCES ARE EVERYWHERE, BUT…
With a combination of knowledge, experience and imagination you can find potential product sources anywhere. But if it was easy, everyone would do it. It takes as much diligence and determination to turn an idea into a business on Trade Me as it does in any business venture.

PS That’s definitely all we have space and time for in this way-over-length article. If you want more, may we respectfully direct you to TRADE ME SUCCESS SECRETS, which covers the topic in even more detail. The second edition of this best-selling book is of course available for sale at our Trade Me store.

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3 thoughts on “Making Money Online

  1. Marianne Galanakis

    Well, that was certainly an eye opener and quite inspirational !!
    It’s made me see TradeMe in another light too.

    Well, let’s try it on a more serious basis, shall we.

    Thanks guys

    Marianne

  2. Frances Beere

    That was so interesting. A big thank you. I must have a look as I have wanted to for months to make & sell nice aprons, full and half to sell. I have this thing about them and it won’t go away.

    I have a good bit of left of material and bobs and bits. Just don’t want to end up with 25 aprons.

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