It wasn’t that long ago that the consignment business model was considered pretty much dead.  That was never really the case, but consignment selling did take a big hit when hundreds of eBay drop-off store franchise stores went out of business. It turned out that the franchise model of opening high-overhead retail stores that relied on people walking in with goods was flawed –but other types of consignment selling have been operating profitably under the radar for years –and lately, the slowing economy has spurred consignment sales once again.

The severity ot this recession has caused record unemployment, record home foreclosures and record bankruptcies. This results in people and businesses needing to raise cash or sell off goods and merchandise from bankrupt people and companies.  This is a natural market for consignment sellers.  And its happening not just on eBay. I have been attending an conference of Amazon sellers in Seattle this weekend. Yesterday I spoke with three different sellers who have made money selling goods from companies going out of business. One of them got his start on Amazon liquidating bookstore inventories on a 50/50 commission basis.

About 5 years ago I first wrote, How To Start and Run an eBay Consignment Business published by McGraw-Hill. The book is quite out-of-date, but there are still a few copies available on eBay and Amazon.  However, this week I just released a completely new book, Making Money With an Online Consignment Business. Although it focuses primarily on eBay, I also cover selling on Amazon and other venues such as Craigslist –as many consignment sellers are utilizing these additional platforms to grow their business.

Here is a link where you can read more about Money With an Online Consignment Business.

My next post will talk a little about what I learned when I visit Amazon on Monday, and I will be writing a wrap up of the SCOE Amazon Sellers Conference in Seattle for AuctionBytes.

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• Learn How To Sell on Amazon
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The Prize:  After the July 4th Holiday Weekend I will be releasing my latest book, Making Money With an Online Consignment Business ~ An eBay consignment business operations manual. The book will sell for $47 and comes with 7  bonuses, including an attorney approved consignment contract, all worth more than the book itself.

The contest: I just sent out a message to my followers on Twitter, asking them to send me a tweet with their best eBay tips in 140 characters or less (the length of a tweet message).  So far I have received quite a few and they keep coming in. There are so many good tips that I really want more. So thats why I am having this contest.

The best tips will appear in my next newsletter with hyperlinks to your twitter profile. I will select the best tip and that person will win a copy of my new book. So you get some exposure and you could win your own copy of Making Money with an Online Consignment Business.

If you are already on Twitter, just follow me and then send me your tip in a direct message. My Twitter link is: http://twitter.com/Skip_McGrath

If you are not yet on Twitter, you can join at www.twitter.com. It is fast and easy.  Once you join, just use the find people link to find me and they click to follow me. After that you will see how to send a direct message with your tip.

If you are wondering why an eBay seller should be on Twitter, look at the current issue of my newsletter where I explain how to use Twitter to drive traffic to your eBay listings.

If you want to learn how to get into the profitable consignment business on eBay, then subscribe to my newsletter and you will receive an announcement when the book is available next week.

See Also

• The Complete eBay Marketing System Updated for 2009 by Skip McGrath
  Printed training manual teaches you how to start and run a profitable eBay business. Written by a power seller who sells on eBay every day

It is a sad sign of the times, but when the economy sucks people need to raise cash. One of the ways to do this is to sell the things they have acquired over the years when times were good.  Over the past two weeks I have spoken with several eBay Drop-off Store owners.  These are folks who don’t like to share their private business information, so I agreed to withhold their names if they would be candid with me.

All of them report two interesting trends.

·        More people are coming in every day to sell stuff

·        People are bringing in better and better (more expensive) stuff

One seller from a large Southern city said he has sold four expensive watches –each over $5000 each in just the past two weeks.  Over the past year he was lucky to see one of those every other month.  Another seller reported selling an entire collection 19^th Century prints and a home-based eBay Trading Assistant in the SF Bay Area was offered and sold a large collection of vintage movie posters –the final total realized was over $10,000.

The other hot area for consignment sellers is liquidation sales.  These are businesses who need to get rid of non-performing inventory and businesses going out of business and selling off their equipment.

Steve Maxey is a double Platinum  eBay seller who build two huge eBay businesses based on working with local and national companies to help them liquidate their inventory. He recently released a report called, The Yes Program, that shows eBay sellers how to build this profitable type of eBay business.
this is not a basic “how to sell on eBay” program. It really assumes you already know the basics and want to find ways to source and sell this type of merchandise.

As for consignment selling, back in 2006, I wrote How to Start & Run an eBay Consignment Business. The book is both out-of-date and out-of-print, but there are copies on Amazon. Even though parts of the book are out of date, the basic format and selling instructions are very relevant to today’s consignment seller. I also found a few other books on consignment. Here is a link to a listing of eBay books on Amazon.

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• Official Geezer Guide To Starting an Online Business
  Legitimate online business opportunities for retired folks who need to make extra money

I have been an eBay Trading Assistant (consignment seller) since the program started about 6 years ago.  About 4 years ago I wrote a self-published book called How To Start and Run an eBay Consignment Business and then in 2006 McGraw Hill Publishing Company approached me to write the same book for the public market.

So you can find How To Start and Run an eBay Consignment Business on Amazon, at your local bookstore or from my website eBay Book Store.

Griff and I discussed some of the advantages and disadvantages of consignment selling and how some of the various eBay Drop Off stores have been struggling.  The main point I was making is that you have to market yourself all the time if you want to be a consignment seller.  A lot of the eBay drop off stores have failed because they opened in a high-traffic location and waited for people to walk in.

I have always thought the real trick was to find customers who could bring you a large supply of items rather than dealing with hundreds of customers who have one or two items.  The trick to finding these customers is to go looking for them.  Some of these sources include:

• Bankruptcy Attorneys who have to liquidate farms or businesses.
• Estate attorneys who are liquidating entire estates
• Retail stores with lots of merchandise to close out
• Corporations that are replacing equipment
• Charities looking to raise money who will provide donations from their members.

My book includes pre-written sales letters to these entities. But these letters are no good unless you send them out. As I told Griff, being a trading assistant is not a business where the world will beat a path to your door. You have to take the door to the world.

*****************

My friend Jennie Hunt just release a new, FREE, 5-part Holiday Toy Selling Tips course. It is a prelude to her annual Holiday Toy Selling Guide.  You can get the free mini-course at Holiday Toy Guide.

See Also

• Learn How To Create and Sell Real Information Products on eBay and The Internet
  This is not about selling junky 99-cent eBooks. My book teaches you how to create and sell real products with real value to readers.

In my last newsletter, I wrote an article about drop-off stores and my opinion about their continued viability in the current marketplace. Shortly after it published, I received an email from an eBay seller who manages a drop-off store.

He gave me permission to publish his email so long as he was kept anonymous. If you have not already read the article I wrote, I suggest you read it first as he references certain parts of it.

“Hi Skip,

I thought I would respond to your article on “Are eBay drop off stores still a viable business?

The situation considerably worse than what you indicate. To begin with most stores spend between $2400 and $3500 per month on rent. The two largest franchises required their franchisees to be located in a strip mall, preferably near an anchor. That can easily increase the above rent by 50%

The 33% commission is about average and correct. We were averaging approximately $140.00 per auction, and by being selective, have a sell through rate in excess of 90%. This is far higher than the average franchise store.

Most of the franchises used to require a minimum value of $50.00 but their average sales price per item have been less that from the get go and sliding down ever since. Many accept article that will only sell for $9.95.

We did enforce the $50.00 minimum, but because of a slowing volume we to have been forced to drop down to of $30.00. This in turn has dropped our average sale down, not up. In order to compensate we have had to increase our shipping charges. While on that note, in your article you failed to include the cost of shipping supplies, which is a major cost factor.

In reality, after all expenses have been taken in, break-even is over $20,000 per month. A couple of the large franchise chains even state that their stores need $40,000 in sales per month to be profitable. That may be because the initial investment is between $80,000 and $120,000 invested and a monthly royalty as well. Further, that is even before an officer’s draw. That explains why so many eBay drop off stores now closing up. In order for us to survive we had to add some office products, and packaging and shipping services.”

What our anonymous seller said is very true, the drop off stores that are still around are not solely drop-off stores. They offer other services to bring people in. Franchises don’t seem to be the way to go anymore. You can do just as well by advertising your services as an actual location. Most people who will use a consignment seller don’t expect them to have a professional store. So my advice, is to become a Trading Assistant and get listed on eBay, then look to market yourself locally. You can afford more PR if you’re not paying rent of franchise fees!

See Also

• Article from The eBay Seller’s News
  Discussion about the viability of drop-off stores in the current market
• Subscribe to The eBay Seller’s News
  The free monthly newsletter all professional eBay sellers should read.

As a newsletter publisher (eBay Sellers News), I know the value of a list.  And, having a clean list is critical to your success.  The eBay Trading Assistant Program is a very important program for eBay, eBay consignment sellers (Trading Assistants) and people who want to sell their valuable treasures on eBay but don’t know how.  But the eBay Trading Assistant list is out of date and contains thousands of non-active and unqualified sellers.

Earlier this year I wrote a book called How To Start and Run and eBay Consignment Business. Because of that I get a lot of calls and emails from people who apparently Google terms such as consignment on eBay, and get my name in the results.  They call or email me and ask me to sell their items for them, or help them find an eBay Trading Assistant.  I only sell very high value goods on consignment and only for local people so I usually can’t help them personally.  If they are sitting in front of their computer I show them how to find the page where they can locate an eBay Trading Assistant in their area.  Then they go happily off in search of an eBay consignment seller to sell their valuable goods.  If only it would end there?

What usually happens is that I get a follow up phone call or email telling me that over 50 names came up in their area and no one will return their calls or emails. This happened today to a gentleman who called me today.  (What’s sad is that he has some really wonderful, expensive and highly saleable merchandise). The problem is that so many people got excited by the TA program and signed up for the program, but in fact,most of them are not even active sellers, let alone eBay real trading assistants.

eBay needs to send every trading assistant an email and ask them: 1) are an active? 2) do they have a storefront or will they pick up goods? and 3) do they still want to be in the program?

I guarantee if eBay sent out such an email,  about one-half of the people on the list would respond.  This would greatly help clean the list.  eBay should also raise the requirement from selling 4 items a month to something more reasonable like 10 or 15 or even more.  Someone selling only 4 or 5 items a month (unless it is cars or Rolex watches) is not really an active seller. I don’t think it’s ethical for someone with that low a skill level to represent themselves as a legitimate consignment seller.  In fact it may even be a good idea to require at least Bronze eBay PowerSeller status to remain an active Trading Assistant.

eBay does list Featured Trading Assistants first, which is a good thing and I congratulate them for it.  Everyone has to start somewhere, so I don’t think the requirements to be a TA should be that high –but the integrity of the program really needs some more work.

This brings me to promotion. eBay needs to promote the TA program on the home page.  There are thousands of honest hard-working trading assistants out there and eBay needs to help consignors find them. When people call me they have usually never heard the term Trading Assistant until I explain it to them.  There needs to be a box on the eBay home page that says something like:  Find an eBay seller to sell your items. That box should go directly to a page that first explains the TA program and it should have a big button in the middle of the page that says Click here to find a seller near you.

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• Free Wholesale Search Engine for eBay sellers
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• FREE – 99 Tips for Buying and Selling on eBay. No Gimmicks – It’s really free.
  25 Tips for buyers and 74 Tips for sellers – all free. You can read online or print it out to read later.

When you accept goods that either will not sell, or will not sell at a decent price, this costs you money in eBay fees and, more importantly, in time wasted that could be used to make a profit doing something different.

Here is an example. A lady called me one day from the TA listing on eBay and said she had a large collection of Elvis collectibles. My wife, Karen, and I drove about 20 miles to meet with her. When we got there it turned out the "collectibles’ were mostly Franklin Mint plates.

I knew Elvis collectibles are always hot on eBay and I was ready to have her sign a contract and take the collection of over 40 plates home to start launching them on eBay. But, I happened to glance over at my wife and she was giving me "the look." (As you may have guessed, I am the impulsive one in the family.) Upon receiving "the look," I told the lady that I would like to take a couple of the plates with me and do some research before deciding if we would take the whole collection. To make a long store short, when I got home and went onto eBay I discovered there are literally tons of these plates for sale in auctions and very-very few of them are worth even what the lady originally paid for them. Had we taken the collection, I would have had all the time and eBay fees to list 40 auctions, pack and ships the goods, and at best I would have made $3 or $4 on each auction as my fee.

The lesson is to follow Ronald Reagan’s advice during the Cold War. "Trust – but verify." It’s okay to trust your judgment and experience, but it pays to check first to verify there is a market for the goods and they can sell at a price where the commission you will earn is worth your time.

For more tips, articles and publications about eBay selling, please visit my Web site, www.skipmcgrath.com.

The answer to the first question is the most important: You must charge enough to make a profit. To understand your profit you should first understand your costs. (This is true for any eBay business –not just the consignment business.) Remember to look at all of your costs, including advertising and marketing –how much are you spending to find goods to consign?

Look at all of your fees: PayPal, eBay, auction management fees, image hosting, and so on. Don’t forget your overhead expenses: ISP, email accounts, telephone, computer payments, office supplies. The best way to get a handle on your costs is to use an accounting program such as QuickBooks. QuickBooks can be a little complex to set up, but once it is running it will save you tons of time and allow you to fully understand the cost of doing business.

Should I charge a listing fee? My recommendation is yes. Psychologically speaking, asking the consignor to pay a fee gives the consignor an investment in the successful outcome of the auction. Also it tends to eliminate people who just want to waste your time and it will help filter out goods that probably won’t do all that well on eBay. It may also filter out the occasional seller who is just too skeptical, but in the long run your cash flow will be better and customers (consignors) will take you more seriously. An exception to this is when someone gives me something really valuable to sell or a large quantity of merchandise from a retailer or an estate sale. As I want these people coming back to me, I usually don’t charge them an up front fee.

Most Trading Assistants charge a sliding scale based on the final value of the auction. The higher the final bid, the lower the fee. In my book, How To Start & Run an eBay Consignment Business I recommend a fee schedule that starts out with a $3.00 listing fee for the first item and $1.00 for each additional item consigned at the same time. This fee is non-refundable. Then, I charge a final value fee of 30% on the first $300, 25% on the amount from $301 – $500, 10% of the value from $501 to $10,000. Anything over $10,000 I negotiate the fee.

I also recommend you charge reserve fees and category or home page feature fees up front unless you are really sure the item you are selling is in demand and will sell for a good price. If so, you can add the fees to your commission, or not, depending on the situation.

There are now over 500 eBay consignment businesses operating out of retail storefronts in various cities around the country and more are being added every week. If you would like to know what others are charging, Ina Steiner of AuctionBytes has compiled a fee comparison of 40 large consignors. Click Here to view the comparison chart.

One more thing on the subject of consignment selling: A question I frequently get is “I live in a small town. Do you think an eBay consignment business will work here?” I live in a town of 11,000 people and there are four eBay consignment sellers operating here including myself. Three of us do very well. One of them is a lady who used to own a consignment store. She does so well, she closed the store and just operates out of her house. We see her at the post office several times a week with armloads of packages to ship.

What on-line business can you start Part-time and quickly grow into a full-time business you can live on?

My name is Skip McGrath. I am an eBay Power Seller and successful web site entrepreneur. Although I have been selling on eBay successfully for over five years, last year I discovered the “perfect” eBay business. I have written it all down in my newest book: How to Start & Run An eBay Consignment Business.

Since eBay launched the Trading Assistant program, over 50,000 eBay sellers have registered as Trading Assistants to help other people sell their goods. EBay consignment businesses have started to spring up all over the United States and some of the first ones are starting to appear in Germany and the UK. There are 35 million users on eBay U.S. and 50 million worldwide…and growing every day. Yet there are still millions of people who know little about eBay or are afraid to try it. Another market is the millions of people who know about eBay, but just don’t have the time or inclination to try it.

This is the perfect business.

The biggest problem eBay sellers have is finding merchandise at a low enough price to sell on eBay. With a consignment business, people give you merchandise to sell with no risk on your part. You auction the goods on eBay and pay the consignor (the person who gave you the goods) the proceeds of the sale less your commission and fees. If something doesn’t sell, you simply return the item to the consignor.

How To Start & Run an eBay Consignment Business comes with access to a special web page that includes consignment contracts, fee schedules, pre-written advertisements and sales letters that you can download and use to promote your business.

How To Start & Run an eBay Consignment Business is available at your local bookstore and online from Barnes & Noble.com and Amazon.com. You can click on the banners below to order your copy today.

Barnes and Noble