So you have thought about selling online but want to do some research before taking the plunge?
I used to sell online from the age of 19. It started off as my personal belongings and then took off into a business for a few years. It started slowly but in the end after five years I generated over £25,000 in sales which is not bad since throughout that time I had limited resources, finance; was working full time for some of the period; and was learning to do everything by myself; there was no help out there without paying for advice.
I am going to write a few articles based on selling online in which I feel could be helpful for those who are not sure on whether to take the plunge or not.
First of all; there are a bunch of things you should consider before making the commitment.
How much money do I have to start up?
Are you using savings or
are you budgeting what your monthly income and expenditure is; and
setting perhaps £100 a month aside to invest into stock? Starting off
with smaller products with a lower unit cost is better than starting off
investing say £100 on one item. You also want to make sure that you can
still afford your essential bills.
Do I have enough space to store the items?
You need to think about the size of the items you are purchasing and where you will store them. Items that do not expire may not sell for a few months; so do you have enough space to store items that may be sitting there for some time?
People do pay to have items kept in a warehouse rather than at their own property but at the start; this is an expense that is not necessary.
It is also good to see the items in person so you know what the quality is like.
How many others are selling the same product?
You should do your research on who your competitors are (if there are any) and at what price they sell the product at. Some buy in such a quantity that their unit price per item is very low; so they can afford to sell at say £1.99 and make an acceptable profit.
However if you are buying the same product at a higher unit price and are trying to compete by selling at £1.98; is your overall profit on that item worth all of your time and effort?
However if you are buying the same product at a higher unit price and are trying to compete by selling at £1.98; is your overall profit on that item worth all of your time and effort?
Producing a profit margin calculator on a spreadsheet like Excel will really help in deciding on pricing and potential purchases of future stock.
Is the product going to be risky?
A lot of people buy wholesale from China as it is so cheap. A lot of items I have sourced from China have been brilliant quality but there will be the odd purchases where you think ' I didn't order that!' or 'that does not look good quality like in the photo'.
A product area I would be very careful of getting into is electricals.
I have heard first hand a true story of how a cheap plug socket and charger imported from China ended up blowing up in someones house and started a fire right by a babys crib; luckily the baby was not in there at the time.
The company perhaps made £2 profit from the sale but in the end they had to pay out for damages (we are talking thousands); so in the end it ended up costing the company A LOT.
They stopped selling plugs and just sold cable leads; but half of the time they were faulty and did not even last a month.
From what I have been told; China's electrical items are not regulated like they are in the UK, which often means cheap and poor material is used that would not pass the UK's safety regulations.
Unless you know the electrical item is 100% safe and meets safety guidelines; I would not risk it for the sake of a quick sale. Quality is always better when it comes to electrics as it is against the law to sell falsely certified electrical goods; and it is very dangerous for any consumer as they can cause injury, electrical shocks and fires.
I have heard first hand a true story of how a cheap plug socket and charger imported from China ended up blowing up in someones house and started a fire right by a babys crib; luckily the baby was not in there at the time.
The company perhaps made £2 profit from the sale but in the end they had to pay out for damages (we are talking thousands); so in the end it ended up costing the company A LOT.
They stopped selling plugs and just sold cable leads; but half of the time they were faulty and did not even last a month.
From what I have been told; China's electrical items are not regulated like they are in the UK, which often means cheap and poor material is used that would not pass the UK's safety regulations.
Unless you know the electrical item is 100% safe and meets safety guidelines; I would not risk it for the sake of a quick sale. Quality is always better when it comes to electrics as it is against the law to sell falsely certified electrical goods; and it is very dangerous for any consumer as they can cause injury, electrical shocks and fires.
How much will it cost to post?
You need to look into what postage service you will be using depending on what items you are selling and where you are based. In the UK; a lot of sellers use Royal Mail. Their prices do change yearly and the sizing guidelines do change from time to time.
However they have all the information on their website:
Royal Mail size guides
Royal Mail size guides
For example:
If you are looking into sending a Pokemon card in a standard brown envelope; you can send it as a letter due to the thickness of the envelope not exceeding 0.5cm and the item not weighing any more than 100g.
However if you were to send a pokemon card deck you would potentially have to send it as a small parcel if the overall depth once all packed exceeds 2.5cm (which is the maximum depth a large letter can be).
Sometimes an item will seem like a great idea to get into but depending on size after its all packed; if it has to go as a small parcel or more the postage price can really eat into your profit or lead you into minus.
Will you be sending items internationally?
If yes; you need to make sure that your item is allowed to be sent abroad. For example, using Royal Mail you can send nail polish to other addresses in the UK but sending it internationally is prohibited.
All countries have different prices; it is best to research how much it may cost to send out to various countries and amend what countries you will accept payment from depending on what platform you are selling on.
On ebay you can choose to send internationally but can go into further options where you can untick places you do not want to send to.
You do not want to overprice on the postage as it will put potential buyers off; but you also do not want to put the price too low and end up having to pay more on postage than you expected, therefore eating into your profit.
On ebay you can choose to send internationally but can go into further options where you can untick places you do not want to send to.
You do not want to overprice on the postage as it will put potential buyers off; but you also do not want to put the price too low and end up having to pay more on postage than you expected, therefore eating into your profit.
What are the fees on the selling platforms you are considering?
Some platforms require you to pay for listings; some require you to subscribe to them to be able to sell on their platform; and some only charge you when you make a sale.
Fee's can change regularly so make sure to read the companies actual website to see what the fees are at that current time.
Examples as of 27/02/2020:
At the moment; depop lets you have unlimited listings and you only pay when you make a sale. The listings do not expire unless you have been inactive for a while; in which your account is temporarily disabled. However, when you log in again you can re-activate all your listings without having to sit there and relist.
When a sale is made; Depop automatically takes a 10% fee (calculated from your total sale price including postage) from you and then you get paid the rest.
When a sale is made; Depop automatically takes a 10% fee (calculated from your total sale price including postage) from you and then you get paid the rest.
Ebay lets private sellers put up 'Buy it now' listings for free; so you only pay the final value fee when the item sells. Ebay currently takes 10% of the final transaction value, including postage.
They normally take their money out once a month, so always make sure you leave some money aside to pay off your fees as they are not taken out automatically like Depop.
They normally take their money out once a month, so always make sure you leave some money aside to pay off your fees as they are not taken out automatically like Depop.
If you need a lot of listings, you may want to consider having an ebay shop and signing up as a business. To list under a business account; it costs per listing and the price depends on whether it is auction or a fixed price listing. This means you pay to list; even if your listing does not sell.
It is currently 30p per fixed price listing.
If you plan to list a bulk load of items; it may be cost effective to set up a shop. You usually pay a certain amount a month for a set amount of listings (there are a couple of packages to choose from so you can start with the cheapest and then upgrade if needed in the future). Currently, the cheapest package is £25 and you receive 250 free fixed price listings. Then each additional fixed price listing is 10p.
If you were to list 250 individual fixed price listings under a business account without having a shop, it would cost you £75.
It is essential to explore different platforms to find what has the best options for your type of product and stock count. If you are starting off with just a few items; delving straight into an ebay shop subscription may not be cost effective. You can always test the waters on your ebay private seller account or on Depop where you can get a feel of how the market is without having to spend too much money before you make money.
Are you self employed and will you submit for tax purposes?
The government are cracking down on people who are earning but not declaring. If your sales kick off and it looks like you can make something of it; you should consider if its enough profit that you can still have profit after paying tax. It is frustrating especially when you are starting up and spend more on costs but by law you must inform HMRC of your income or else you can pay hefty fines. You would have to submit self assessments and keep note of all your wholesale purchases; and your sales. It is a lot of work so you need to consider if it is too much hassle for what it's worth.
Interesting read, Thank you
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