Ecommerce is a fast-growing industry, accounting for 18% of all retail sales in 2020. It’s no surprise then that people are rushing to invest in this industry.
Starting a successful ecommerce business on platforms such as eBay can be a very lucrative venture. But sellers sometimes get stumped when they learn about the several options available for selling on eBay.
There are a number of different business models sellers employ on eBay: dropshipping, wholesale, thrift, liquidation, and handmade crafts. A lot of sellers, especially intermediate, and medium-sized eBay sellers, opt for the wholesale model, mainly due to the discounted cost of the items.
In this article, we will discuss the pros and cons of wholesale selling on eBay, and how to start a wholesale business on eBay.
Pros and Cons of eBay wholesaling
Apart from the discounted cost of inventory when buying in bulk, the wholesale model also affords the seller a certain model of convenience because it involves dealing with only one type of item or a limited item category.
It also makes it easier to create item listings since you can use that same description for any other listing of that item you make.
However, wholesale selling on eBay has its own disadvantages, such as the need for a large amount of storage to store inventory. This presents problems with inventory management and puts the seller at risk of overstocking.
Wholesale selling on eBay requires a lot of capital to get started. Sellers have to put in steep amounts of cash upfront to work with this model.
This model may not be the best option for beginning or cash-strapped sellers. Dropshipping and Thrift store flipping are other business models that are relatively more low-risk and don’t need a lot of capital to start.
However, if you have a bit of cash to spare and are not so risk-averse, wholesale selling may be just right for you. Read on to find out how you can build a profitable wholesale business on eBay.
How to Start a wholesale business on eBay
Wholesale selling involves buying items in bulk from wholesale suppliers to resell in smaller quantities. Before starting a wholesale business, there are certain factors you need to consider, such as:
- Time: The amount of time you are able to invest will determine how quickly your business grows and how soon you will be able to scale up.
- Storage Space: Wholesale selling takes up a lot of storage space and you might find yourself needing multiple warehouses as your business grows. If you are unable to provide space by yourself, you may need to outsource that part of your business.
- Costs: As we mentioned earlier, wholesale selling demands a lot of capital. You are going to weigh all the costs, including storage, shipping, packing costs, and so on. You should be able to buy items for much less than you can sell them for.
- Research: Careful, in-depth research is crucial for selling on eBay, regardless of the model. You should conduct market and product research to find out the best products to employ and the appropriate strategies to employ in selling them.
- Diversity: This is another factor you need to keep in mind when starting a wholesale business on eBay. You need to consider whether you want to focus on one single product, a category of products, or different items.
There are three main steps in starting and running a wholesale business on eBay:
1. Finding products that sell on eBay
Running a successful eBay business is less about finding products at good discounts and more about stocking products that are certain to sell. This is where validating your product ideas comes in. Before going ahead to buy stock, you should make sure to validate the item’s demand, competition, and selling price.
In this aspect of your business, you are better off working with actual statistics and market trends, instead of solely relying on your interest in the product. To be a successful retailer on eBay, you need to sell what the buyers want, not what you think they want.
To start out, look for products with high demand and low competition. This is crucial since a high-demand product is sure to sell and low competition means you don’t have to lose your profit margin in an effort to beat other online sellers selling that same product.
Validating is the part of wholesale selling where you usually need to invest a lot of time to find the right product. But ZIK Analytics allows you to cut this time in half. ZIK makes it easy to research the demand and competition for any product you search for. You can join ZIK today by clicking here.
You get the statistics for any product you search for automatically. ZIK Analytics shows the sell-through rate and overall sale earnings in the last thirty days for the selected product. It also presents you with the percentage of successful listings and the average product price.
The sell-through rate helps you gauge the demand for the product and the number of successful listings validates the competitiveness of that category. You can even check which sellers have the most market share.
Validating the product beforehand allows you to feel safe when buying it in bulk. The statistics show that the items will sell and your business will be profitable.
2. Sourcing these products from wholesale suppliers
After validating your product ideas, you will then need to figure out finding genuine wholesale suppliers to source them from. There are numerous genuine wholesale suppliers you can source wholesale from, such as:
- Alibaba: Alibaba is a Chinese e-commerce company owned by the Alibaba Group. It is the largest B2B platform for wholesale trade globally. Alibaba provides you with a diverse range of items you can purchase in bulk at discounted rates and wholesale prices. The suppliers are vetted and grouped into different categories based on their trustworthiness. An escrow system is also provided to secure your transactions. Also, Alibaba is free to use.
- Inventory Source: Created way back in 2003, Inventory Source is an innovative solution designed for automating dropshipping. It also provides you with an integrated network of over 230 dropship-friendly suppliers. The directory covers a diverse range of high-quality products in different categories.
- Worldwide Brands: Worldwide Brands has helped retailers locate approved wholesale suppliers and manufacturers since 2001. Their directory provides a list of wholesale suppliers that sell products in more than 20 niches. Worldwide Brands is a premium service and a one-time payment of $299 gives you lifetime access.
- Wholesale Central: Wholesale Central gives you access to their complete directory of wholesale suppliers completely free of charge. It provides a list of suppliers under several categories.
You can use Wholesale Central to find the right supplier for your product without even signing up. The website design is a bit bare, but if you’re looking for functionality over design, Wholesale Central might be right for you.
- Costco: Also known as Costco Wholesale, Costco is a popular American company that operates via a membership model. Costco was the fifth largest retailer in the world in 2020, according to the National Retail Federation.
Products are sold in bulk at heavily discounted rates to members of the Costco Club. Costco offers a wide product range that many wholesale distributors will be interested in. Apart from wholesale suppliers, you can also source your products directly from the manufacturer, especially if you’re selling branded products.
You should make sure to check the quality before ordering any product. You can order only 2-3 pieces to check the quality of the product and to make sure you’re getting the very best. Also, you should only work with trusted, verified suppliers that will ship the products without delay.
The key to a successful wholesale business is finding a trustworthy and reliable supplier that offers you lower prices than the competition.
3. Storing these products and fulfilling the orders
You then need a place to store the products after finding the right product and the right supplier. For a start, this can be a free room in your house, your basement, your garage, or anywhere clean and dry. After a while, you may require specialized warehousing and inventory management.
You also need supplies to fulfill orders, such as boxes, shipping slips, bubble wrap, stickers, envelopes, and so on. After acquiring supplies, you are then ready to fulfill orders. If you are up to it, you can fulfill orders by yourself, but you can also use a fulfillment center such as https://www.shipbob.com or even Amazon FBA. These fulfillment centers store your products, package them, and ship them to your customers when you get orders.
Reselling items bought in bulk on eBay is a profitable business model that can earn you a comfortable side income. It all starts with choosing a winning product, finding the right supplier, storing these products, and fulfilling the orders. Once you find a winning strategy, you should double down on it and dedicate enough time and money to seeing your business grow. You should be ready to use automation and third-party fulfillment service as your scale of operation expands.
What are the characteristics of wholesale products to look out for?
There are certain characteristics that define a profitable wholesale product, such as a low level of competition, good profit margins, uniqueness, and high and constant demand.
Is reselling on eBay profitable?
Yes. Reselling on eBay can be very profitable. It depends on the product niche and the price point. If you can buy in-demand items at low prices and sell them for profit, you can set up a successful retail business.