Trying to scale up need feedback

[hilltopracing]

Hi, 

Me and my partner have been selling on eBay since 2019 more as a side hustle, netting 6k profit every year. We track the 90 day running total and we have managed to get this up from 5-6k to 9.5k in the last 3 months. We are now considering scaling up, I would prefer this to be my main income. But how do we do this? I would really appreciate some feedback particularly on what we sell and how. We would probably need 22k 90 total for me to not work elsewhere whilst my partner has a FT job, is that even doable? Profit margin is roughly 30% click through is 1% on average.  Do we need to inject money to buy a load of stock? Does more listings get more sales? We have never gone much past 325 active listings at any one point and some of those are old or not selling. 

For information we acquire used scalextric, toys etc at auctions, booties, Facebook etc, recondition them if needed and resell on. Scalextric is my main thing but I do get other things and trial whether they sell. I do worry about getting enough stock to scale up but I guess that’s another challenge. I do wonder how a seller like action slot racing gets all their stock from and they aren’t about to tell us their secrets 😊

All advice and feedback is welcome please as we aren’t business people just trying to make a go of it.

David.

[bravergrace]

I'm afraid I don't know anything about second-hand toys, so I can't advise you on where to get your stock from.

But I would advise you to be very cautious before jacking your job in.  I've done that myself - when our eBay business started to take off, first one of us gave up our job, and then the other too.

There are several dangers to relying on eBay selling, particularly in the second-hand market.  A number of factors could wreck your business overnight, no matter how hard you work.  So you need some sort of back-up plan (either in the form of savings, or other employment you could get at a pinch, or another kind of thing you could sell).

Obviously, your personal circumstances (health, age, whether you have children to provide for or a mortgage to pay) make a difference.

But, seriously, it only takes one factor to change, for your successful online business to collapse overnight.  Something like new regulations about second-hand toys needing safety checks, or another huge business entering the market and eBay giving them low fees, or even eBay banning your account for no obvious reason - and you could find yourself with a lot of worthless stock and no way of selling on eBay.

It mayn't happen, but you need to be prepared to take the risk - and ready with a back-up plan of some sort.

[therenewalworkshopltd]

Yes, it's possible to grow enough to jack the job in.

But if your nowhere near the income from this yet, then it's probably not a good idea to do so.

Maybe look at dropping to part time, to give you more time to concentrate on this.

I would however recommend that you have some savings as an emergency fund if you can possibly do this.

More listings probably will equal more sales.  But I'm afraid that it's not quite as simple as that.

I don't know your market which makes it difficult to answer.

But it depends on a lot of things.  Time of year, pricing, margins and so on.

Remember that the more listings you have, the more expensive it will be as a base cost.

"I do wonder how a seller like action slot racing gets all their stock from and they aren’t about to tell us their secrets"

Well, not a seller I know, but you could approach them and see if they are willing to mentor you.

They may not tell you exactly where they are buying from, but they could be able to help you in other ways.

Most, with the correct approach, will help people.  Just don't pester if they say no.  🙂

I see where your coming from with the concern about getting sufficient stock.  So the obvious answer to that, is expand what you are actually selling.  I'm sure that you can think of things that will fit in with what you are doing already.

Overall though, I would recommend that you grow slowly.   It's great to see things fly out really quickly, but it also brings other problems to you, such as cash flow issue, bringing sufficient stock in etc.

You also need to think about selling elsewhere.  Don't lock yourself into Ebay only.  If there is an issue with your account, you lose everything overnight.  At least with other markets, you will still have cash coming in.

Quick search and it reveals that they are also selling new.  Not sure if they are on their own website, or Ebay, but they definitely are on Amazon.  So might be worth a look.

[hilltopracing]

Thanks so much for the replies. Just to clarify I won’t be jacking my job in just yet, I’m thinking of FT and saving eBay money to then inject cash flow to buy a load of stock (currently we can’t outlay loads ….) or part time and building up. PT is my preference as it’s not so risky and doesn’t do my over trying to grow this aswell as working full time. I do also sell outside of eBay probably about 30% of my takings so I’m thinking of growing that on Facebook Etsy, direct selling etc. Thanks so much for the advice I really appreciate it 😊

[hatsford]

If you need turnover of 22k a quarter,  88k a year  you are perilously close to the VAT registration threshold of 90k on ebay sales alone.

So you need to look at the implications of that, basically you are a lot worse off if you only just clear the VAT threshold and hence have to register, than if you keep under it.

As for actually upscaling, its two things;  time, the more hours you put in to sourcing the stock, the more you will find, and secondly funding, for that once in a blue moon day when you're the only buyer at a particular auction or there is the worlds best job lot, or just to beat seasonal price fluctuations.

[nigel_paul_wright7557]

Ebay can be volatile at times, especially more recently.

There are numerous threads about sales plummeting.

In 2008 I start on ebay selling some software I wrote myself.

Sold for £30 a go and I did well from it.

In late 2017 a new seller appeared selling similar software for £4 !

Killed my sales stone dead.

Started selling USB oscilloscopes instead and sold quite a few.

Then over time the Chinese offerings crept in at very low prices killing that too.

[tabletop-hobbies]

As someone else mentioned, your target income takes you close to the VAT threshold and when dealing in second hand goods this is massive because you generally buy your stock from private individuals  and therefore can't reclaim 20% vat but you have to recover vat on what you sell and pay it to HMRC- so basically your used stuff has to increase in price by 20% to cover this.  It can still be done but it's a whopper to watch out for!

Good luck though, it can be done! 

[therenewalworkshopltd]

There are various schemes that ameliorate the cost of VAT with second hand goods.  So it's not as cut and dried as is being made out.

It's also an assumption, that the OP is buying from private individuals, there are lots of companies that deal in second hand. 

[hilltopracing]

Thanks all, we buy from auctions quite a bit so that will have vat on. Marketplace no and we get stock from eBay too but that’s private sellers so won’t count. I will defo look into all of this, even if we need to think about my partners income increasing so we can come under the threshold as I agree it would be worth having to pay vat. 

[therenewalworkshopltd]

Don't be afraid of paying VAT.  It's not as expensive as it appears to be and if you plan to grow, you will have to pay it at some point.

Look at the various schemes available.  These will help a lot if your not buying from VAT registered business etc.

But don't forget, you can still claim all the other VAT expenses.  Rent, electricity, phone, internet and any other purchases for the business.  It's even likely that you may end up with a refund on the first return, most do.

[returns_andexdisplay]

If you are looking to grow. Few things to think about

What if your account got restricted for some reason, how long could you survive?

Is ebay your only source for sales? 

Consider setting your own website up on somewhere like Shopify or Wix. Then need to consider cross listing/stock management. Getting traffic to your website but looking at some of the stock you sell likely to come up on Google

Storage, how much room do you have to grow with your current set up.