Running a Consignment Business on eBay

Running an eBay consignment business is just like running your own auctionswith the additional responsibility of finding clients who have merchandise they want you to sell. Let's take a look at what a typical consignment business involves.

Finding Clients

To sell items on consignment, you first have to find some clients. Now, if you have a drop-off location, you can sit behind your counter and wait for your clients to come to you. (Although a little advertising and promotion probably wouldn't hurt, of course.) If you're running your consignment business out of your home, however, how do you obtain new clients?

Note

Many consignment sellers try to avoid reselling low-priced items, for the simple reason that there's not enough money in these transactions to make them worth their while. eBay recommends using a Trading Assistant for items over $50 only; other TAs set their lower limit at $100. Whatever limit you set, you don't want to waste your time selling a lot of $5 and $10 itemswhen you could be reselling items for $100 or more.

First, you should make your business known to other members of your community. Get some business cards made and pass them outand don't forget to tack them up on any bulletin board you find. Consider advertising in local newspapers, if the rates are affordable. And remember to talk yourself up to everyone you meetword-of-mouth is often the best promotion.

You'll probably need to do some targeted hunting for business. Make up some flyers and hand them out to anyone running a garage sale or yard sale; there's always something left at the end of the sale that you could sell on eBay. Another good source of consignment business is small businesses and manufacturers in your area. Almost every local manufacturer or business has liquidated, refurbished, or returned products it needs to somehow dispose ofand you can help with this problem. You'd be surprised how eager these companies are to get rid of old merchandise just taking up space in their warehouses.

Finally, make sure you're a registered member of the Trading Assistant program so that you're listed in eBay's Trading Assistant Directory. This directory is the way a large number of customers find a Trading Assistant near them.

Advertising Your Business Online

You should advertise your consignment business in all your regular eBay auctions. You can do this by adding eBay's Trading Assistant button, as shown in Figure 13.2, and linking it back to your eBay Trading Assistant page. To do this, you'll need to know your Trading Assistant number (found at the end of the URL for your TA listing) and a little bit of HTML. Here's the code:

[View full width]
 <a href="http://contact.ebay.com/ws1/eBayISAPI.dll?TradingAssistant&page=profile&profileId  =XXXXX"> <img src="/books/2/947/1/html/2/http://pics.ebaystatic.com/aw/pics/trading_assistant2_88x33.gif"vspace="5"  border="0" height="33" width="88"> </a> 

Figure 13.2. Add a Trading Assistant button to all your eBay auction listings.

Replace XXXXX with your Trading Assistant number, and the button will be added. Anyone clicking on the button will be taken directly to your eBay TA page.

You can also advertise your TA business on any web page you might have, using eBay's Trading Assistant logo, shown in Figure 13.3. Just add this code to your web page:

 <a href="http://contact.ebay.com/ws1/eBayISAPI.dll?ShowMemberToMemberDetails&member=XXXXX"> <img src="/books/2/947/1/html/2/http://pics.ebay.com/aw/pics/tradingAssistant/taLogo_100x100.gif"> </a> 

Figure 13.3. Add a Trading Assistant logo to any web page.

Again, replace XXXXX with your Trading Assistant number, so anyone clicking on the logo can go directly to your eBay TA page.

Taking Possession of the Merchandise

When you agree to sell an item for a client, you need to take that item into your possession. You're in the consignment business, after all; you need to have the item in your possession in order to sell it. Plus, if you don't have it, you don't know for sure that it existsor that your client hasn't disposed of it elsewhere. Remember, it's your name on the eBay auction; you'll be held responsible if the item isn't actually available for sale.

If you're running your consignment business out of your home, you'll probably make your initial contact with a client over the phone. One phone call is all it takes to get a feel for the client, find out what he or she wants to sell, and determine whether it's worth your time. You should also take this opportunity to tell your prospective client about you and your business, discuss fees, and work out any other details. Then, if all goes well on the phone, you can arrange for the client to drop off the merchandiseor for you to pick it up.

While you can try to get all your clients to drop off their items at your home, chances are you'll have to do some merchandise pickup yourself. Going to a stranger's home can get a little dicey, so you'll want to play it as safe as you can. If you have a relative who happens to play football, take him along with you. Otherwise, judge the location carefully, and if you're at all nervous, arrange to meet the client at a neutral (and safer) location, like a local coffee-house or fast-food joint.

Managing the Auction Process

Once you have the merchandise in your possession, selling it is just like running any auction. You'll need to do a little research to learn more about the item and determine the appropriate starting price. You'll also need to photograph the item and write the item listing. There's nothing special you need to do at this point.

Note

You don't have to accept everything that your clients want you to sell. It's okay to turn away goods that you think you'll have a hard time selling or that you think are worth considerably less than the client doesor that you think may have been obtained illegally.

Packing and Shippingand Settling with the Client

At the end of the auction, you receive payment just as you would with any other auction. (The payment comes to you, not to your client!) Then you pack and ship the item, and get ready to settle things up with your client.

Once you've received payment from the buyer, you need to figure your fees and create an invoice for the client. Start with the final selling price, subtract your commission, subtract all the eBay and PayPal fees, and the balance is what you pay the client. If it's an occasional client, cut a check right then (or within the time frame specified in your contract). If you have an ongoing relationship, you may want to arrange payment for all that client's auctions at the end of each month.