Selling Retail

It's easy to get excited by the apparent profits to be made online. "Profits" are especially good while you are selling stuff you have accumulated, gotten free, etc. When you start to make or buy things to sell life gets much more difficult.

Look up the numbers for Amazone and you will see their actual profits are around 1%. I read a book once that compared overhead to having a Tyanosaurus rex chained in your front yard. It's always hungry and demanding to be fed.

Even worse, overhead gets paid first and every cent spent comes right out of your pocket. Buy ten items and sell five of them for 100% markup. Now you have your money back, less taxes, costs of sales, and fullfilment costs. If any break, get returned, etc. it decreases your net.

The point of the above rant is that you need to watch every penny right from the beginning. In my case that started when I needed to set my shipping charges on Ebay. I would like to use flat rate shipping. That way I can have my system automatically send an invoice to the buyer without any intervention on my part. That seems good.

However, some shipping costs depend on how far the package has to travel. That means I need the buyers zipcode before I can calculate shipping. That creates more email and delay.

Eddica is a company that sells postage systems to make it easier to handle the postage part of the business. Potentially you save money because of the efficiency their system gives you. That is no doubt true, if you do enough volume to justify the expense. What that volume is will take some research to determine. In any case, the increase in overhead to pay for more efficient mailing makes the overhead treadmill run a little faster.

As an additional incentive, but at the price of even more complexity, I know from selling postcards a few years ago that it may be possible to provide better quality shipping than your competitors and make some extra profit. I did the research on shipping postcards and found that with bulk purchase of the right supplies I could make an extra fifty cents per card sold and still get rave feedback about how I shipped the cards. Of course, since I still have lots of the materials left, it was really a net loss from a cash flow standpoint.

If you want to profit long term in the online selling game I think you have to get on top of your overhead right from the start and work hard to keep it as low a possible.

Think especially long and hard before you hire help! That is probably the single most dangerous decision in your business development.