rent willbe in a mall that advertises itself widely, perhaps even on the Internet itself. That wayyou can go full circle—from online seller to brick-and-mortar merchant and back tothe Web again. Those antique dealers and other merchants who have booths in theCrown Point antique mall have each one of their booths photographed and describedonline.
Also, choose a mall that is in a convenient location. You’ll need to go there atleast once a week, if not more often, to collect money, restock inventory, and get anymail or shipments you have received. It’s a good idea to change your merchandise—orat least move things around so they are displayed differently—on a regular basis.Antique malls attract repeat customers who are always on the lookout for new items.If you move a doll from the bottom of a trunk where it’s been sitting for weeks to thetop shelf of a display case, for instance, you might suddenly find buyers for it.
You may also be asked to work in the mall by greeting customers and openingdisplay cases for them, perhaps one day a month. Be sure to read over the contractthe mall owner gives you. Make sure you know how much notice you have to give ifyou want to leave the mall. Finally, choose a mall that is open to accepting mail anddeliveries from you. You might have to pay an extra charge for this service, but if itis the only way you can get merchandise from wholesale suppliers, it is worth themonthly fee.
Caution: Evidence from my own experience, from talking to othersellers, and from scanning message boards suggests that antiquemalls are a dying breed. They’re being pushed out of business bychanges in the economy (less disposable income among much of thepopulation) and by eBay itself. Don’t expect to make a huge amountin sales from them. Instead, rent a small space in a booth and workout an agreement with the owner so you can use the address fordeliveries from your suppliers.
Starting a Drop-Off Store
An eBay drop-off store is a brick-and-mortar location that is dedicated to helpingindividuals sell on eBay. Typically, these stores are started by sellers who are espe-
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cially competent in their fields, have achieved success, and are looking for moremerchandise to sell on consignment. There are, after all, millions of people aroundthe world who have items around their households that would sell well on eBay, butwho are intimidated by the prospect of selling on the site.
There are lots of challenges with starting a drop-off store. First and foremost isthe competition. There are already a number of big operations like the Auction Dropchain (http://www.auctiondrop.com) that have franchises around the country. It’sstill possible to compete with this big chain if you are willing to provide better cus-tomer service than it does, more personalized attention, and more effective marketingin your local area. Just a few blocks from my home, an independently owned drop-offstore called Express Drop is doing just that. Owned by two women in their twenties,the store is thriving and attracting visitors from throughout the state and neighboringIndiana and Wisconsin.
A second possible obstacle is that, unless you are discriminating about what yousell, selling on consignment can be a lot of work for very little profit. You might make30 or 40 percent of each sale, but the time required to talk to customers, preparesales, and pack and ship can quickly whittle your potential profit down to a fewdollars per sale. A third challenge is that you’re opening a brick-and-mortar store, soyou have to comply with local regulations, apply for licenses and permits, and furnishyour store with signs and fixtures that make it seem to the public that walks throughthe door like you know what you’re doing. (See the section that follows, ‘‘Opening aRetail Location,’’ for more information.)
Despite all these hurdles, it may still be worthwhile to operate a drop-off store.Why? When you have a physical location, you can sell big-ticket items you mightnever handle otherwise. You don’t have to spend much (or any) time looking foritems to sell; instead, a steady stream of merchandise comes through the door. Auc-tions by David, a drop-off store located in Algonquin, Illinois, until recently soldboats, RVs, motorcycles, and other big, bulky items. Owners could literally drive theirbulky merchandise into the Auctions by David parking lot. Owner David Portugaland his staff could photograph them and sell them online. In the case of a $10,000boat, a 30 percent seller’s fee looks pretty good.
Tip: David Portugal’s top tips for would-be drop-off store operatorsinclude ﬁnding enough space, and making sure you have room togrow. Also, take the time to locate your store in a well-trafﬁckedlocation such as a major intersection. You can then put up streetsigns that will catch the attention of anyone who walks or drives by.
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When you have a drop-off store, you can’t always control what people want youto sell. They might bring you items that you know won’t fetch a high price or possiblyany bids at all. You know you might make only a profit of a few dollars on the deal.Because of this, most drop-off stores limit consignment customers to handling onlyitems that will sell for a minimum price—for example, $50. When someone comes tothe counter with an item to sell, the proprietor turns to a computer and checks eBay’sCompleted Auctions to get an idea of how much it might fetch if put up for sale.And if a buyer is dissatisfied with a consignment item you sell and asks for a return,you have to tell the customer that the item needs to be relisted and that the profitthey thought they were going to make isn’t forthcoming after all—at least not rightaway.
Opening a Retail Location
Whether you open a drop-off store, an antique store, or another shop, going ‘‘public’’with your business is a dramatic change. You’re no longer working out of the quiet ofyour home, appearing only to carry boxes to the post office on a regular basis. Now,everyone—including the city and state—knows that you’re selling on eBay for a living.You’ve got to be brave, forward-thinking, and have a clearly defined business planbecause you’re going to be confronted with lots of new challenges on the way tohopefully expanding your income. Some of those challenges are described next.
Complying with Local RegulationsA reader of my eBay books approached me at a seminar I was giving. ‘‘I wanted tostart up my own eBay business and sell out of my home. I wanted to do everythingaboveboard, so I called the city of Chicago. They told me I could sell online but thatI couldn’t store any of my inventory in my home.’’ If she couldn’t store any inventory,she didn’t understand how she could operate her business. The city of Chicago re-quires a $125 Home Occupation License to operate a business from a residence.There’s also a Second-Hand Dealer’s License ($550) required of anyone who sellsjewelry made of precious metals or gems, hardware, or coins. But whether you canlegally sell what you store apparently depends on whom you ask. The women whorun the drop-off store I mentioned earlier, Express Drop, were not told about such aregulation when they met with city inspectors and obtained their necessary licenses.They certainly store what they sell and ship out of the same premises.
The point is that there are probably similar regulations in your own city, and youshould be aware of them so you don’t break the law in the course of trying to buyand sell on eBay.
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Obtaining a Tax ID NumberIf your state charges sales tax (and at this writing, all but six U.S. states do), you’llneed to obtain a tax ID number. This number, also sometimes called a resale certifi-cate, enables you to buy or sell anything in your state legally. It doesn’t matterwhether you sell online or in a brick-and-mortar store; you need to be registered withyour state and obtain this vital piece of information. The reason for obtaining a salestax ID number is simple: it enables you to collect sales tax from buyers who arelocated in the state in which you have a physical business presence (in other words,the state in which you live) so you can report this to your state’s income tax depart-ment.
Note: At this writing, Alaska, Colorado, Delaware, Montana, New Hamp-shire, and Oregon do not charge sales tax. See Chapter 20 for more infor-mation on what a sales tax ID number is and how to get one.
Becoming a Licensed AuctioneerYou’ve probably seen traditional auctions in which a professional auctioneer—someone who is able to talk at lightning speed—goes through one item after anotherand sells them to bidders who are either physically present at the sale, calling in torepresentatives on the phone, or bidding via the Internet. This kind of traditionalauctioneering isn’t going away any time soon. However, there is no doubt that eBayhas cut into the business that goes to the traditional auction houses.
In an effort to protect traditional auction businesses and regulate eBay sellers,several states have enacted laws that require eBay sellers who sell on consignment toobtain a state auctioneer’s license. I live in a state that has just such a law in place:Illinois. Tennessee is another. Typically, you have to take a course in auctioneeringthat lasts several weeks, pass an exam, and pay a fee of several hundred dollars toobtain such a license. Not only that, but you probably have to renew the license on aperiodic basis.
Before you do anything with your consignment business, check with your state
Department of Commerce to see if these laws apply.
Getting Your Store StockedBy now, it should be clear that opening a brick-and-mortar facility is a major under-taking that requires planning and organization. You should only consider expandingto a brick-and-mortar store if the following two conditions apply:
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1. You are making a reliable, steady income on eBay or other auction sites.2. You have a steady source of merchandise to sell.
The first requirement is hard enough. But the second is the critical one, becausewithout a steady supply of merchandise that people want, you won’t achieve the goalof a reliable, steady income in the first place. Most auction sellers begin close tohome, by emptying out their attics and garages. They move on to emptying out thestorage areas of their friends and family members. Then, they make the leap of pur-chasing low-cost items that they can resell at a profit. There isn’t any single secret forfinding a steady supply of saleable items. You either have to shop your local fleamarkets, garage sales, estate sales, and wholesale shops to find not-quite-new mer-chandise, or you have to strike an agreement with a wholesale supplier to sell younew items that you can resell. There isn’t any rule of thumb, but common sensesuggests that you should be selling on eBay and other auction sites through a full yearat the very least before you think about expanding. That way you have a sense of howonline auction sales proceed through various seasons of the year; with this knowl-edge, you can plan ahead for ‘‘fat times’’ and ‘‘lean times’’ that crop up in any busi-ness.
Tip: The section ‘‘Find an Ongoing Source of Merchandise’’ in Chapter17 examines in greater detail the topic of ﬁnding a steady source ofwholesale merchandise.
Not only do you have to find merchandise to sell in your store but you also needstore fixtures as well. Fixtures are things like lights, shelves, doors, windows, a cashregister, display cases, carpeting or flooring, and anything else that makes your facil-ity look welcoming. If you have especially valuable items such as antique jewelry, likemany sellers you’ll want to have a locked display case that an employee has to openso potential buyers can inspect the goods.
Advertising the Brick-and-Mortar Way
When you open a physical location, you need to advertise it. This isn’t just an additionalburden that is placed on you, however. Having a brick-and-mortar store allows you toadvertise locally, which opens up new possibilities for finding business. When you have
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a physical location, you can take out a classified ad in your local phone book or yournewspaper. Announce that you want to buy entire estates, or that you buy antiques.When you have a store that people can visit, you gain credibility. You also have aconvenient location where buyers can drop off large-scale items like furniture—itemsthat don’t sell easily on eBay, but that you can best sell through your own storefront.
Choosing a Location, Location, LocationOne of the keys to getting your name before the public that is just as important asadvertising is choosing a good location for your store. Pick a well-traveled area, andone where parking is available. If you can locate yourself on a busy street in a townor city—and one with bus stops where people are likely to congregate—so much thebetter.
When it comes to locating your store, give some thought to a loading area: aplace where customers can easily drive up and drop off bulky and heavy merchandiselike motorcycles, riding lawn mowers, jet skis, and so forth. One of the advantages ofhaving a drop-off store is the ability to accept such merchandise on consignment.Amy Mayer and Ellen Navarro (shown in Figure 18-1), who operate the ExpressDrop store near my home in Chicago, located their store at an intersection with four-way stop signs on a main street that heads to one of the main expressways in thearea. They also have a garage where they can accept and store bulky items fromcustomers.
Placing Judicious AdvertisementsIf you are on eBay, are already an experienced seller (perhaps a PowerSeller), andhave your own website, you are way ahead of the other brick-and-mortar businesseson your street. You don’t need to suddenly start dumping large amounts of money innewspaper and magazine advertisements, billboards, or flyers distributed door-to-door around your neighborhood. Be conservative and judicious about how you wantto advertise your store. Be sure to print up a set of postcards with your business’sname and contact information and set them out on the counter of your store. Youcan hand them out to your customers, who can pass them along to others in yourlocal neighborhood.
Tip: If you can contact your local news media to tell them that you’reopen for business, you might just be able to gain some valuable (notto mention free) publicity. Because eBay drop-off stores are still rela-tively new, their very existence is considered newsworthy.
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Figure 18-1. Choose a location where you get lots of traffic and your customers can easily drop offbig merchandise.
(cid:2) Amy Meyer and Ellen Navarro, Express Drop.
Even if you rent a booth in an antique mall, you don’t necessarily have to dependon the mall’s advertising. You can place an ad on your local version of Craigslist (seeChapter 10) or in your local newspaper. If you have a booth or a space in a mall, besure to place a card with the URL of your eBay Store or website on it so that shopperscan look through a wider selection of your merchandise.
(cid:3)
Keeping Good Records
Whether you rent part of a display case in a mall or have a 3,000-square-foot ware-house that you periodically open to the public, you’ve got a whole new set of informa-tion to track carefully. Maintaining good records of your inventory, what’s been sold,and what you spent along the way can prevent you from losing or misplacing itemsand help reduce your taxes, too.
All of the expenses associated with your physical facility are items you or your tax
professional can count at tax time, including the following:
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• The rent you pay• Your utilities• Property taxes you are charged• Mileage you incur when you drive to purchase merchandise or perform other
business-related tasks
• Supplies such as price tags, lightbulbs, paint, signs, silver polish, and much more
Make sure you keep your receipts, and that you write down in a record book notonly the amount you paid but also the date the expense occurred and a brief descrip-tion of what the expense was for. (Rent, mileage, and supplies are all counted indifferent places by your tax preparer.)
Keeping track of each item in your inventory by assigning it a number and record-ing how much you paid for it helps you determine pricing. It also lets you trackmerchandise so you don’t lose anything. Having expense and inventory informationcan help you in yet another way, because you can review the information periodically(say once a month, or four times per year) so that you can purchase more wisely inthe future and determine where to spend your income. If you bought a group ofsaltshakers and napkins and only the napkins have sold, for instance, you need torethink how many saltshakers or other kitchen utensils you purchase in future. Youneed to purchase items that you’re sure you can sell, either online or in your brick-and-mortar facility.
Dealing with the Public
If you’re the shy, retiring type like me, you might have a hard time adjusting todealing in person with the public. According to the women who run the drop-offstore in my neighborhood, you need to have a thick skin. Almost every day, you getcomplaints, questions about shipments, or demands from customers who aren’tpleased with the speed of a sale or who don’t understand why something didn’t sellfor the same price it was said to be worth in that collector’s price guide.
You need to have a positive attitude, and you need to be as patient as possible, oryou’ll get complaints from your customers, which can lead to bad word-of-mouthcomments or bad feedback on eBay itself. You also have to exercise as much care aspossible when going through merchandise your customers bring you to sell; you neverknow if some rusty old cast iron truck or wooden fishing lure that seems unattractivewhen you first glance at it will turn out to sell to thousands on eBay.
Be prepared to answer a lot of questions from clients who seem to want to knoweverything about how the process works. People who shop online, or who are inter-ested in selling online, are researchers. They want to know everything about how
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everything works. They aren’t afraid of technical facts and figures, either. It’s impor-tant to train your employees so that they don’t appear less knowledgeable than thosewho call in. Provide your staff with a list of frequently asked questions, either printedon a sheet of paper or on your computer network, so they have a set of talking pointsready when they consult with your potential clients.
Dealing with Employees
You might be able to start up your drop-off store all by yourself. But sooner or later,you’re going to need to hire employees to help you. Hiring employees who will workin your store and possibly interact with the public is far different from hiring a highschool student to help with your packing after school. You need to advertise foremployees, conduct interviews, check references, provide insurance and other bene-fits, and handle payroll tax requirements.
It’s also important to train your employees to be patient with your customers,who will be likely to ask ‘‘obvious’’ or simple questions about how eBay works. Anumber of customers might want to watch sales being prepared so they can learnhow to sell on eBay themselves, or at least to understand how the process this works.Anything that can build trust among your customers will benefit you in the long run.By instructing your customers you might be showing a small number of them how tosell on eBay on their own, but for most, you’ll be showing them how much work theydon’t have to do, and only providing them with more of a reason to purchase fromyou in the future.
Tip: Teaching is another way in which you can share your experienceand expertise with others while supplementing your income, too.Many experienced eBay sellers make a few extra dollars by teachingclasses on eBay at their local community college or at seminars theyorganize themselves.
Dealing with Technical Requirements
When you are working on your auction sales at home, you really only need a singlecomputer. Some sellers use more than one machine so that they can research auc-tions on one monitor, while keeping track of their current sales and any e-mail inquir-
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ies on the other. When you run a brick-and-mortar store, you definitely need two ormore computers, and perhaps more monitors. My local eBay drop-off store has aclever two-monitor system: there are two computers at the front desk (one for eachof the proprietors) and each of the computers has two flat-screen monitors. Onemonitor points out toward the customer, and the other is visible to the proprietor.This enables the customer to see exactly what the employee sees when he or sheresearches eBay; by following the search results, they can be sure the employee isn’tgiving them false information about the probable value of an item.
It goes without saying that you’ll need to have a high-speed Internet connectionat your brick-and-mortar facility, and you’ll need to network your computers together.You’ll need firewall hardware or software to protect your network. You might need aseparate machine to process photos and to handle accounting and inventory informa-tion. In short, you need a small-scale computer network at your store; if you can setup and maintain it, so much the better, but if you can’t or don’t have the time, it’sworth the extra expense to hire a consultant to provide the technical expertise youneed.
Opening a Warehouse
Storage space—or rather, the lack of it—is the bane of many successful eBay sellers.When your merchandise starts to overrun your living space and boxes are piled up inthe hallways, it’s time to find a storage facility. For many of the biggest and mostsuccessful eBay sellers, that means building or renting a warehouse—a place with aloading dock, lots of room for storage and packing, and possibly even office spacewhere you can do your eBay-related computer work.
For some eBay businesses, a warehouse is a necessity. Businesses like ReadyMedical (http://stores.ebay.com/READY-MEDICAL) use a 40,000-square-foot ware-house in California to store lots of medical equipment, much of it bulky and heavy.Their showroom is displayed in Figure 18-2.
The Gold and Titanium level PowerSellers on eBay need warehouses simply be-cause they move thousands of items each month. Kevin Harmon, a PowerSeller whosells DVDs and other entertainment-related merchandise through the eBay Store In-flatable Madness, uses a warehouse for office as well as storage and shipping space.
If you’re looking for a warehouse, try to find one that has:
• A loading dock• A location near an airport or major post office hub, so shipping can be expe-
dited
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Figure 18-2. A warehouse makes it easy to move large items.
(cid:2) Lisa Vanesco. Ready Medical.
• An office area•
Plenty of parking space for you and your employees
Once you move your staff, your merchandise, and your equipment into your ware-house, you don’t want to be moving into a new facility any time soon. So make sureyou find a facility that is bigger than you need initially and that gives you room togrow. Once you have a physical base of operations, you are able to continue yourbusiness’s expansion toward new venues. And it makes sense to start close to home;some local venues for reaching customers—trade shows, flea markets, and traditionalauctions—are described in Chapter 19.
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Trade Shows, Flea Markets, andOther Offline Sales Venues
Even the most dedicated and obsessed computer wonk needs to get out and breathesome fresh air once in a while. It might seem incongruous to discuss such old-fashioned sales venues as flea markets and real-world auctions. But I’ve been sur-prised by hearing from some eBay sellers that, for certain types of merchandise, theygo to a traditional auction house, or they attend the local flea market.
Expanding your business beyond eBay is all about matching your merchandise tothe proper venue. When you have bulky items like bookcases and chairs that will fitin your car but would be hard to ship through eBay, the flea market might be thequickest way to get rid of them. Flea markets can be a good place to find merchan-dise, too; you can use the knowledge you’ve gained online to pick up items at fleamarkets that will be most likely to sell. And you just might realize higher prices forwhat you have to sell in the real world than you would online, where there is a wealthof sales information and many other items for sale. My mother, an experienced fleamarket seller for many years, knew she could sell a set of ‘‘Flow Blue’’ plates by W.H.Grindley for $50 to $75 each at the flea market. However, when she gave them tome to sell on eBay, we couldn’t sell any for more than $40 or $45.
For many sellers, trade shows provide a good source of merchandise to sell oneBay and online auctions. But trade shows can be difficult to find. And when you gothere, it can be bewildering to find merchants with items that might sell online. Inthis chapter, you’ll learn some tricks of the trade that will help you utilize trade showsand other offline venues to your best advantage.
Working the Trade Show Scene
No matter what kind of merchandise you buy and sell, you need to know about anytrade shows that are held in your area of business. A trade show is a big gathering
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that brings together businesspeople who sell similar products. The show lets the busi-nesspeople compare notes, display their wares, and hopefully find new customers forwhat they have to sell. Trade shows are, in fact, specifically set up to attract buyerswho are looking for wholesale suppliers. For the most part, the buyers are representa-tives of retail stores. But eBay sellers can attend as well, either to display what theyhave or to find additional supplies of merchandise to sell.
Note: You might have to demonstrate (by providing your business name,contact information, and a tax ID number) that you are a legitimate busi-nessperson who is in the trade to attend a trade show. Most trade showsare intended for wholesale, business-to-business transactions only ratherthan retail sales.
Many of the biggest trade shows, such as the Consumer Electronics Show, areheld in popular convention centers like Las Vegas and Chicago. If you live in one ofthose areas, you’re lucky; otherwise, you’ll have to do some traveling and planningahead. First, you need to find trade shows. This isn’t always easy. Trade shows don’talways advertise in the local paper. You might check with the convention bureau inyour area, or trade journals in your field of business, to find them. You can also lookon the Web for sites like TSNN.com (http://www.tsnn.com), which collect namesand dates of a variety of trade shows. However, websites aren’t always comprehen-sive, so you need to do some searching on your own, too.
Once you find a trade show you’re interested in, take a two-person approach.Team up with someone at home who is on a computer that is connected to theInternet. Go to the trade show and have your cell phone handy. Write down thenames and model numbers of items you are interested in, and report back to yourpartner. Ask your partner to look up the items on eBay and see if there is muchdemand for them. When you find a particular model or color that people like, talk tothe vendor.
You don’t necessarily have to visit a trade show expecting to make purchases,either. Trade shows are also terrific locations for doing research on products youmight want to sell online. You learn who the hottest manufacturers are and discovernew products you never knew existed. If you are looking for merchandise, however,make sure you get off the beaten path. Keep in mind that the biggest manufacturersalready have individual sellers who carry their products on eBay. If you’re just startingout, it’s also a good idea to visit the booths of small, little-known businesses that
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aren’t yet on eBay. You might discover a product that isn’t being sold on the auctionsite, and you might become the first distributor for it.
If you are primarily interested in selling rather than buying, you’ve need to employsome tried-and-true, one-on-one sales techniques. Meeting people at a trade show islike selling to them on the Web because you need to answer questions, invite them tolearn more about you, or otherwise interact with them in a minute or less, or they’llmove on to the next display. You have to do a hard sell: greet visitors and ask ques-tions that are specific: ‘‘What kinds of