Ebay Store When To Hold When To Fold

Writen by Mitchell Allen

Tales from the Digital Trenches: Part One
On 12/6/2005, I opened up an eBay store to sell two board games. I missed the Christmas buying season, but I had a thirty-day free trial, so what the heck.
I bought advertising, posted on forums, updated my signature and wrote about the store in my blog. Over the course of 90 days, I sold four games. It was exciting, but the reality of the numbers told a different story: - - -

• Income
  • One game gave me a gross profit of 11.99 and I sold one.
  • The other game gave me a gross profit of 6.99 and I sold three of these.
  • Total gross profit = 32.96.
  • After subtracting per unit fees charged by eBay and PayPal, the adjusted gross profit = 21.53.
• Expenses
  • eBay store 15.95/month x 3 = 47.85
  • Advertising fee: 17.00
  • Total expenses: 64.85
• Net Profit/Loss
  • (43.32)

- - - On 4/6/2006, I closed the store.
I needed to sell three times as many games (assuming the same 3:1 ratio) to break even.
My solution is to focus on marketing the games through my Thumbs Up Games website, where I can eliminate the recurring expense overhead.
I learned that, if I am going to sell on eBay, the profit margin has to be larger, or the demand has to be greater.

Not a bad lesson for 43.00.

Mitchell Allen is an advocate for cross-networking: synergistically linking multiple social networks in order to increase membership exposure.
He writes for fun and profit at WritingUp.com
He maintains The Vertical Blog Tunnel Network at the social network, Ryze.com.