Flip vs Buy and Hold.....some math

This is the constant question poking in my brain.  I don't think anyone short of Alan Greenspan could get the answer correct.....and he likely can't.  

It's the question that forms the very bedrock of your business model.  Do I charge less and burn that inventory out (aka WalMart), or do I charge more and make more profit for less work while risking holding onto an item for awhile and having to store it (aka Tiffany's jewelry)?  Which one makes more sense for me?

I'm a geek when it comes to breaking down things to their simplest form.  It helps me understand things.  Granted, nothing is black and white.  There are always shades of gray.........about 50 to be exact, right?

Well, I've finally put some rough work into the details.  Let's assume (yes, I'm about to make an ass out of you and me) that we have an average profit of $10 if we can unload an item in a month.  And, let's assume we will make $25 in profit if that same item is priced higher and doesn't sell for an average of 4 months.  Which is better?

I buy my shirts for $3, but let's use $5 for ease.  If I sell that first shirt for a $10 profit, I can now buy 2 shirts.  Provided I get them listed quickly, that next month I should make $10 on 2 shirts, or $20.  Now, flip it again and it's $40.  Again, and it's $80.  So, 4 months later, I have netted $150 in profit, right?  Seems like a no-brainer vs letting the item sit for $25.  After all, $150 beats $25 hands down.

Oops.  Look a little deeper.  What is your time worth to you?  It will take significantly longer to pack and ship 1+2+4+8 items (15 items total).  To make the same $150 the 15 shirts made me, I only need to sell 6 shirts at $25.  All I need to do is build my inventory up while I sit around waiting.  If it takes me an average of a half hour to source, list, pack, and ship each item (random time here, but worth knowing about yourself someday), that's 7.5 hrs for the 15 items vs only 3 hrs for the 6 items.  Translate that to an hourly wage, and we have $20/hr for the $10 profit model vs $50/hr for the $25 model.  Assuming 40 hours/week is all you want/can work, we have an income of $800/wk vs $2000/wk.

Look, I'm being overly simplistic here, but one person can only work so much.  There's only so much time in a day.  The difference here is working hard vs working smart.  The only trick is:  Are you buying items that can net you both $10 or $25 depending on how long you choose to wait?

I guess that's a topic for another blog post.....

Make Today Count!
Chip

Search Ranking Conspiracy?

I have been reading a lot about eBay and it's search engine, Cassini.  I will summarize what I've read someday after it all digests.  This may be the quickest way to insanity!  But, of course, like fools we read all we can anyway....knowing it will only serve to raise our anxiety levels.

Well, lately that has been happening to me.  I have been reading about search rankings, and found a theory called Rolling Blackouts.  This theory explains, however unproven, that eBay could possibly be rotating who is visible in their search engine.  This also can feel like it explains why our sales suddenly shut down for a few days and then come back.  None of this is proven, of course, and eBay would NEVER admit to any of this. But, one can't help but wonder.

Last weekend, for the first time since I've been reselling on eBay (I started in November 2012) I didn't make one single sale.  Neither Saturday nor Sunday!  It had to rolling blackouts, right?  Well, that or August's doldrums.  So, I decided to check it the only way I know how.....by looking up my items myself.  Yep, all there.  And, then I thought that if eBay put me on some rolling blackout there's no way they'd show it to me. Of course all my listings would show up to me.  And, of course, they'd appear high in the rankings, right?

How do you get around this?  Call a friend.  Someone that doesn't live close to you.  I have a friend in eastern Florida and another in northern Idaho.  I called them both.  I live in St. Louis, MO.  Can't get a lot farther away that those two spots.  I had them look up the same items I was looking up to see if we both got the same results in search rankings.  (This was actually really fun!)

I figured I would find my item ranked #6 out of 140 or something, and my friend would find it ranked #130 out of the same 140.  Nope.  She found it exactly where I did..........and ranked high.   Hmmmmm.  Now what?

I suppose it can't be a rolling blackout killing my sales, can it?  The point of all this is to tell you that I don't know how much there is to any of this conspiracy theory.  I'd really like to believe it because I'd like to have something to blame for poor sales.  But, the fact is, it's all likely a coincidence timed with a slow sales period.....summer.

But, rest assured, I'm going to overthink this stuff now that I'm back in the saddle and pushing again.  However, I can't get past the feeling that I'm trying to sell sand in the Sahara right now.  Lol.  Either way.........

Make today count!
Chip