The reality of making money reselling on eBay...

Summary

In this video, Mill explains the importance of understanding profit margins for resellers, particularly those using platforms like eBay. She emphasizes how crucial it is to calculate profits accurately and set personal metrics, which can differ based on living expenses and business costs. Mill discusses the challenges of low-profit items and walks through a process to calculate desired earnings, using examples of how many items must be sold at various profit levels. She encourages resellers to know their metrics and adjust their sourcing to grow a sustainable business.

Takeaways

• 💼 **Profit Importance**: Understanding profit margins is crucial for resellers to ensure business sustainability and growth.
• 🔢 **Metrics Definition**: Metrics refer to the numerical goals and boundaries set for a store, influenced by personal and business costs.
• 📈 **Setting Goals**: Resellers should establish annual profit goals and break them down into weekly and daily targets to guide their sourcing and selling activities.
• 🛍️ **Sales to Profit Conversion**: Typically, only 25-35% of sales translate to actual profit, necessitating high sales volumes to meet profit goals.
• 📉 **Daily Sales Calculation**: Calculate the number of items needed to be sold daily to achieve desired profit margins at various profit points per item.
• 🔍 **eBay Calculator Usage**: Utilize the eBay calculator to determine profit margins on items, adjusting for costs and eBay fees.
• 💸 **Cost of Goods Awareness**: Track the average cost of goods to better understand and manage inventory expenses.
• 📦 **Additional Business Costs**: Consider all business costs, including storage, shipping supplies, and operational expenses, not just the direct cost of goods and eBay fees.
• 🚫 **Walking Away**: Learn to avoid low-profit items that don't meet your metrics to maintain a profitable and sustainable store.
• 📈 **Growth Through Quality**: Focus on listing items that meet or exceed your profit metrics to improve the overall profitability and quality of your store's offerings.

Q & A

What is the main purpose of the video?

The main purpose of the video is to explain the importance of understanding profit margins for resellers and how to calculate profit for each item sold, particularly for those selling on eBay.

What does the term 'metrics' refer to in the context of this video?

In this video, 'metrics' refers to the personal boundaries and profit targets that resellers set for their store to ensure profitability. It includes setting profit margins for each item and determining how many items need to be sold to achieve financial goals.

Why is it important for resellers to know their own metrics?

It's important because each reseller has different living costs, business expenses, and sources for inventory. Knowing their metrics helps them avoid selling low-profit items and ensures they build a sustainable, profitable business tailored to their personal and business needs.

What are some factors that affect a reseller’s profit margins?

Factors include cost of goods, shipping fees, eBay fees, and promoted listings fees. Other business expenses like storage costs, employee wages, packaging materials, and other overheads also impact profit margins.

How much in sales do you need to generate to make a $100,000 profit per year?

To make a $100,000 profit in a year, resellers need to generate approximately $300,000 in sales, as most businesses make between 25% and 35% of their sales as actual profit.

How can the eBay calculator help resellers?

The eBay calculator helps resellers estimate their profit on each sale by factoring in costs such as the sale price, shipping, eBay fees, and promoted listing fees. It helps resellers determine whether their items are hitting their desired profit margins.

Why is it necessary to track shipping costs on an average basis?

Tracking shipping costs on an average basis helps resellers estimate their expenses more accurately. Shipping costs can vary, so using a monthly average provides a more consistent figure to use when calculating profit margins.

Why should resellers avoid filling their store with low-profit items?

Filling a store with low-profit items means the reseller would need to sell a large number of items to reach their profit goals, which can be time-consuming and inefficient. Higher profit margins allow the reseller to meet their income goals with fewer sales.

How can resellers improve their profitability over time?

Resellers can improve profitability by consistently sourcing higher-quality items that meet their profit metrics, learning to walk away from low-profit items, and adjusting their store’s inventory to focus on higher-margin products.

What should resellers consider when setting their minimum profit margin for each item?

Resellers should consider their personal and business expenses, their ability to source items, and the overall profitability of their store. They need to ensure that their minimum profit margin covers not only their direct costs but also overhead expenses, and that it helps them achieve their financial goals.