Pros and Cons of Bulk Reselling
Are you cut out to be a bulk reseller on eBay? Let’s take a quick look at the pros and cons of this particular business model.
What are the advantages to buying and selling in bulk? Here are a few of the things that resellers like about this particular type of business:
High profit margins. When you buy in bulk, you buy at a high discount. (Or you should, if you do your job right.) Assuming that you pick the right merchandise, you can still command a fair price when you resell that merchandise on eBay. Buying low and selling high is one of the key ways to make big bucks in business—which is one of the prime appeals of this business model.
Consistency. When you’re selling the same type of item week-in and week-out, you don’t have to reinvent any wheels. You set up your business around the inventory you buy, and then settle back and let things pretty much run themselves. No need to worry about what surprises might come up tomorrow.
Efficient item listing. Part of that consistency is the fact that you’ll probably be able to create similar auction listings for all the items in your inventory. This depends somewhat on the assortment you purchase, of course, but if you buy 100 model 8520-B DVD players, you don’t have to write 100 different descriptions. Create the item listing once; then copy that description for each additional listing you run. The same thing goes for photographs: Take one photo and reuse it in multiple auctions. This is less true if you have 1,000 pairs of shoes in all different colors and styles, but there still will be some similarities.
Efficient packing and shipping. The similarities definitely continue over into the packing and shipping process. If you have 500 tee shirts of the same general shape and size, you’ll quickly learn the best way to pack and ship those shirts. That means you can customize your packing operation to efficiently pack all those shirts and buy a large quantity of boxes (or envelopes) at as cheap a price as you can find. You don’t have to worry about stocking multiple types of boxes for multiple items; one type of box will do it.
Additional sales through an eBay Store. Naturally, you’re not going to put all 1,000 baby rattles on auction at once; you’ll spread out the auctions over a multiple-week (or multiple-month) period. That doesn’t mean you can’t sell those items that aren’t yet up for auction, however. Open an eBay Store and list all your excess inventory; you can generate sales without having to run individual auctions for all the items.
As you can see, the primary benefits of the bulk reseller model are profit and efficiency—which itself translates into profits, in terms of time savings. It’s a big operation, with potentially big returns.
Okay, so if bulk reselling is so great, why doesn’t every eBay seller do it? That’s because this business model offers some very significant challenges, including
It’s a big inventory commitment. This is not the type of business you just dabble in. You can’t test the waters by selling a shirt or two. You have to dive in head first and order 100 or 500 or 1,000 units of a single type of item. That’s a big commitment—and a big risk. What do you do, after all, if those 1,000 coffee mugs don’t sell?
It’s a big space commitment. All that inventory has to go somewhere. Just where are you going to store a pallet of sporting goods, or a container of men’s briefs, or a gross of pots and pans? If you live in a small (and already crowded) house or apartment, buying in bulk may be physically impractical. And if you choose to rent additional warehousing space, that’s another cost of doing business you need to factor into the equation.
It’s a big financial commitment. Here’s the show stopper for a lot of sellers. Buying in bulk requires spending big bucks up front. Do you have the $11,000 it takes to buy a full pallet of closeout electronics, or even the $750 it takes to buy a lot of 50 leather jackets? You have to spend money to make money, but what if you don’t have the money to spend? You don’t want to get in over your head to buy a few month’s worth of inventory. If your funds are limited, bulk reselling may be out of the question.
It’s a big financial risk. Buying in bulk is also out of the question if you can’t afford to lose that money. Again, what do you do if all those DVD players don’t sell? Once you make the investment, you’re stuck with the merchandise, even (and especially) if no one wants to buy it. If you can’t afford to lose that $1,000 (or $5,000 or $10,000), then you shouldn’t spend it in the first place.
It’s a challenge to manage. Even if you can afford to buy in bulk, you might not be up to the management challenge. Do you have the systems (computer or otherwise) set up to track 500 or 1,000 different units of inventory? Can you identify which units have sold and which haven’t? Inventory management is a bit of a science, and it requires an organized mind and some technical know-how. If you’re not that organized (or don’t want to invest in a computerized solution), you’ll quickly get buried under the work.
You’re tied into a single category for an extended period of time—even if the category cools down. Here’s another risk. When you buy a lot of 1,000 pairs of designer boots, you’re going to be selling boots for a good long time. What do you do if the fashion trends change a month into your endeavor—and you still have two months’ worth of inventory left? This long-term inventory commitment makes you somewhat of a slow-moving reseller; you won’t be able to jump on and off the fast trends and evolving product life cycles. You definitely don’t want to invest in a product with a short shelf life—commodity products are safer!
No guarantee of future supply. When you finally run through your supply of 10,000 no-name golf balls, what do you sell next? Chances are your original supplier has no more of what you originally purchased, which means you need to source another product for your next bulk purchase. If you like long-term consistency in your business dealings, bulk reselling is less than ideal.
Okay, you get the picture—bulk reselling requires a big commitment, period. You’re taking a big chance when you buy a lot of anything. Not only do you have to manage all that inventory, you’re betting that you can actually sell it all before the product trends shift. That may not always be possible. But then, for some resellers, it’s the gamble that makes this business fun!