How Much Time Should I Spend Researching My eBay Auction?

By Steve Myers, Online Marketing Consultant

It's about time. One of the questions we hear more than any other is, "How much time should I spend researching my eBay listing?" Terrific question. I have a couple good ones for you to answer.

  • How long did you spend choosing a mate?
  • How long did you shop for the shoes you're wearing?

Silly unrelated questions? Maybe, but your answers shed some light on how long to spend researching a product on eBay. You may spend years finding the love of your life. You probably don't spend over an hour or two deciding on a pair of shoes.

Why the difference? Simple. One's a decision with long-term consequences. You have more to lose if you select the wrong mate, so you want to be confident in your decision.

Knowledge Powers Predictable Success

It's works a bit the same with listing a product on eBay. Your product determines the time you spend in research.

If you have more invested, spend more time. Let's say you want to sell XBox 360 gaming consoles. I did some quick research with HammerTap in Figure 1 and found the going price on eBay for an XBox 360 is, strictly coincidentally, $360. That's less than the $399 retail price.


Figure 1 - XBox 360 Research Results

Here's four scenarios to consider.

Case 1 - You buy an unopened XBox 360 you bought at a yard sale for $50, complete with a dozen games. Hey, we yard sale fanatics can dream. It could happen. :)

Case 2 - You find a source for XBox 360 game systems at $300 each. You can make $60 per unit and still sell them below retail. The only catch is the supplier won't drop-ship the units, so you have to put cash up front.

Case 3 - A wholesaler is going out of business and closing out a lot of 100 XBox 360 game systems for $260 each. You'll make $100 each at the going price on eBay of $360, but you can only buy them 100 at a time.

Case 4 - You find a drop-shipper which will supply XBox 360's for $330. This is the only supplier you find who ships free. You'll still make $30 per unit.

Same Product, VERY Different Research

How much time would you spend researching XBox 360's? Would it matter whether it were Case 1, 2, 3, or 4?

In Case 1, you only invested $50, so you have little to lose. OK, at my house, I'd never get it away from my kids, but we'll pretend they didn't know about it. With little invested and a high selling price, I almost can't lose.

In Case 2, you have to invest $260 per unit. You have considerably more risk than in Case 1. If the unit doesn't sell, you're out your investment. At least you're out the price to relist the item until it does sell. And you have to come up with the money up front, which drains your available cash.

In Case 3, you have the largest opportunity. You could make $10,000. But you could lose a lot more.

In Case 4, you invest nothing in the product itself, since inventory is the drop-shipper's problem, not yours.

Key Deciding Factors in Determining How Much Research

How much time you invest pivots on these factors:

  • Amount and Type of Investment
  • Continued Availability
  • Net Profit Per Unit

Amount and Type of Investment

As mentioned before, when you must invest more, it makes sense that you risk more. You want to be more sure of your investment when it costs more.

The type of investment is equally important. In Case 3, we have to invest now. The supplier in Case 2 will sell one unit at a time, but you'll have to pay up front.

The drop-shipper in Case 4 doesn't give you as much profit (only $30). But in this case, the only thing you risk are the eBay fees to list it.

Continued Availability

Long-term relationships are more valuable. In my Case 1 yard-sale dream sequence, it's a one-time thing. With the close-out wholesaler, it's also a single transaction, because I can't get the deal again. Sure, it's a much larger purchase, but I can only do it once.

Case 2 - You find a source for XBox 360 game systems at $300 each. You can make $60 per unit and still sell them below retail. The only catch is the supplier won't drop-ship the units, so you have to put cash up front.

Case 3 - A wholesaler is going out of business and closing out a lot of 100 XBox 360 game systems for $260 each. You'll make $100 each at the going price on eBay of $360, but you can only buy them 100 at a time.

The supplier who won't drop-ship in Case 2 and the Case 3 supplier who will aren't one-time deals. If either prove money-makers, you might use one of these suppliers for the next several months. You may sell products dozens or even hundreds of times with them.

With continued relationships, what you're really looking for is a predictable money-making process. Spend more time up-front researching long-term opportunities. When you find a good source of profitable eBay items to list, you'll often stick with them for a long time. Maybe you're really qualifying the supplier as much as the product you want to list.

Net Profit Per Unit

The smaller the profit margin, the more you have to watch the little details. Compare Case 2 and 4 again:

Case 2 - You find a source for XBox 360 game systems at $300 each. You can make $60 per unit and still sell them below retail. The only catch is the supplier won't drop-ship the units, so you have to put cash up front.

Case 4 - You find a drop-shipper which will supply XBox 360's for $330. This is the only supplier you find who ships free. You'll still make $30 per unit.

In Case 2, you make $60, compared to the $30 you'd make in Case 4. But in Case 2, you pay the shipping cost to get the product to you. You also pay the shipping cost from you to the winning eBay bidder.

When the net profit is sufficiently large, you don't need to do as much research. In the yard-sale example, my profit is so huge, it's a no-brainer. I could do far less research because when I stand to make hundreds of dollars on one item, it's almost impossible to lose.

But I'm betting most of your auctions have much smaller profit margins. Even a few dollars per item makes a big difference for most of us. That's why auction research is so critical to your success.

Anyone who's been selling on eBay long at all probably has listed an item or two that seem like they just won't sell... ever. And each time you list it, the eBay listing fees dig further into your profits and reduce the chances of you ever breaking even on it. So how do you avoid that ever happening to you again?

Base Your eBay Success on Knowledge

You wouldn't invest your retirement fund without knowing a thing or two about the investment. In school, you greatly increase your chance of success on the big test by doing your homework. You'd never take a trip to somewhere you hadn't been before without a roadmap. We investigate so many things in life before making a move. Why should selling on eBay be any different?

Make the most of your auctions with research!

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Determining what works and what doesn't when it comes to your listings requires research. Anything less puts you at risk of not making the sale or not making as much as you could be on each sale. A research tool like HammerTap helps you bypass the costly trial and error process by quickly giving you the key information you need for profitable online auctions.

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As a bonus, you'll receive 10-lesson Power to Profit course to help you immediately see the effects research can have on your auctions. We'll also throw in selling tips from Industry Experts in our members-only Auctionography newsletter.

You owe it to yourself to take the guesswork and risk out of your auctions. Try HammerTap free for 10 days. If you are not absolutely sure you'll increase your eBay profits by the $19.95 subscription price, you're free to cancel. It costs you nothing to prove to yourself there's a more profitable way to eBay.

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