Simple Steps to Building a More Profitable Business
By Steve Nye, eBay Certified Consultant
With market research, you have one of the most valuable tools to help you make your business more profitable. Take our Grow My Profits study participants, for example. These participants used HammerTap to maximize their profits and increase their sales with their current product lines. Bryan increased his sales and profits to become a PowerSeller, which was one of his goals. Tim, a Gold PowerSeller (meaning he makes at least $10,000 in sales every month) was still able to increase his sales by 40 percent!
What´s their secret? You´ve got it. Auction Research! Now they are getting into new product lines with their extra time and increased cash flow to make their business even more profitable. They are using HammerTap to build their business and make more money.
So, if you have a resolution for your business for the start of this new year, then start it off right by basing your business decisions on research. Today I am going to help you answer the following questions with HammerTap, which will lead to building a bigger and more successful eBay business:
- What is the supply and demand for my product?
- How can I enter a market (eBay Category) with a new product?
- How can I make more sales and increase profits on each sale?
What is the Supply and Demand for my Product?
I know you´re being taken back to your economics education here, but the laws of supply and demand very much exist on eBay. One step toward making more money with your auctions is to understand and follow this law. If you are trying to sell in an over-saturated market, your chances of making money are slim. Too many products and too little demand lead to low listing success rates and low sales.
You can use research to monitor the changes in supply and demand for your product. This helps you decide whether to beef up your inventory with a new shipment or to just work on liquidating the inventory you currently have.
Open HammerTap and perform a Product Search for the items you are selling. Take a look at the Findings window to determine your supply and demand.
Above are research results for Canon digital cameras. From the results section, we can determine the supply and demand. In this example, the supply is 28,407 cameras for the last 30 days. The demand is the Listing Success Rate, or in this case, 47.72%. As a seller of Canon digital cameras, what do you do with this information? Well, next month you can conduct the same search and monitor how the supply and demand are shifting. If supply is going down and demand going up, you can get another shipment of cameras and make some money. But, if it´s the opposite, you may want to look into offering another product.
You can do this for your products and start saving each monthly report to understand where the market is headed.
How can I enter a new market (eBay Category) with a new product?
One of the best ways to make your eBay business more profitable is to expand your product offering. The increased variety in your inventory makes it possible for you to sell in more eBay categories. So, when one category isn´t selling so hot, you have another revenue stream from your other products.
But how do you successfully enter a new market, or in our case, a new eBay category? Well, if you know the product you want to sell, perform the search above to determine the supply and demand over the past couple months. If the supply is low and demand high, you can easily enter the market and start making money.
But, if you don´t know what you want to sell, you need to use HammerTap to do a Category search. In my example, I am already in the "Cameras & Photo Digital Cameras Point & Shoot" category, but would like to start selling camera bags as well. So, I need to research in the "Cameras & Photo Bags, Cases & Straps For Cameras" category.
Above are my research results for "Cameras & Photo Bags, Cases & Straps For Cameras." I can quickly see the supply and demand in this category, which gives me an idea of the potential for selling products within this market. But what if I don´t know which bags will have the highest Listing Success Rate and Average Selling Price? Let´s go to the Keywords window to find which types and brands will make my business more profitable.
Above are my results from the Keywords window for camera bags. I have highlighted the two top selling brands, LowePro and Tamrac, making an average of $62.18 and $56.86 respectively. I also highlighted "AW," which is a type of LowePro camera bags.
What do you do with this information to make your business more profitable? Well, how does your cost of the product compare with the average selling price on eBay? If I sell LowePro AW bags for an average of $79.31 and a Listing Success Rate of 52%, can I make a profit? It depends on how much I can get the bags for from my product source. If you can make a decent profit, this is a product you could choose to successfully enter a new market with.
How can I enter make more sales and increase my profits on each sale?
Now that we know the supply and demand for our current products, and are now working on building our inventory, we need to also focus on simply increasing sales and profits on each sale throughout the new year. (This could be one of your resolutions—to make more money on each sale this year than you did last year.)
Making more on each sale and selling more is done through a process called Auction Optimization. Optimizing your listing is done by selecting the key listing features that bring you both the highest success rate and highest selling price. Optimizing your listing helps you find answers to the following questions:
- What auction type should I use?
- Which ending day will bring me the greatest success and profit?
- How long should my listing duration be?
- What starting price will create a bidding frenzy?
- What keywords should I use in my titles to hook buyers?
- What listing features will work, and which ones can I live without?
- Which category will give my listing the greatest amount of exposure?
Finding the answers to these questions using HammerTap will make your business more profitable. I´ll show you just one example, showing how to use the Findings window to find the best Ending Day.
The results above for Canon digital cameras show that Wednesday has the highest Listing Success Rate, 51.81%, while Monday has the highest Average Sales Price, $322.12. If my goal is to make more money, I would sell on Monday, which would give me an extra $12.89 above the average sales price.
My listing only becomes optimized when I find the perfect combination of the best Ending Day, Duration, Start Price, Category, Keywords, Listing Features, and Auction Type. This can often turn the increase of $12.89 in profit into much more.
Make research a part of your eBay New Year´s Resolutions!
I have shown you just a few ways to make a more profitable business on eBay, but the foundation of it all is MARKET RESEARCH! As the president of your eBay business, you can base your business decisions on the facts, not guesswork.
So, I invite you to make research a part of your business. Utilize the power of market research with HammerTap. Don´t worry, I won´t leave you hanging. We have some exciting education coming to you in the near future, including online video workshops and webinars which you will be able to actively participate in to help you get the most out of HammerTap!