If you’ve read my ‘about me’ section, you know how I landed in online resale in the first place (if not, check it out here ABOUT ME). I won’t bore you then with starting from the absolute beginning, but I would like to summarize those early years, the mentality I had is what is especially worth noting as it had such a pervasive effect. More importantly, perhaps, is what it took to finally kick me out of that mental mush and push me from operating a mildly profitable but far from optimized side gig into generating a remarkable income stream that quickly soared past my expectations. To understand how I optimized my business, you first need to understand what was so sub-optimal.
It’s funny to me that I hold a business administration degree and yet was such a knuckle head at running my business for the first few years. Part of the issue was I didn’t see myself as running a business at all, it started out as a hobby, just a side thing I did in-between caring for my two little girls (FYI I now have four girls, I have a serious thing for compounding if you haven’t noticed:). Anyway, I decidedly did NOT have any entrepreneurial spirit in me, I was a go-with-the-flow, think-tightly-inside-the-box kind of person. I had zero long term plans or vision for what I was doing because it wasn’t a business in my mind, resale was just something I was experimenting with and I happened to be really enjoying it. In those early years I sourced slowly and listed equally slowly. By nature I am ultra risk-averse so this method of slow learning and miniscule financial investment suited me well. I think besides inventory (tiny bits here and there), a lap top, and shipping supplies, I really had no other costs. That is truly one of the beauties of online resale, the low entry cost, though the learning curve can feel steep. Well, as noted above, the entrepreneurial brain cells in my head were in deep comatose-sleep mode. How was this affecting my profitability and what would it take to awaken the entrepreneur in me that was capable of so much more?
My over-arching mentality with my resale business went something like this (pay close attention here): What is the least amount I would be happy with for this item? I paid 5$, hmm, I guess I would be happy if I could get at least 11$. And so, armed with this well-thought out plan, I would list that item for 11$ auction style. If it happened to sell for more, say 12.31$, I would mentally notch a few more happy tally marks. Most of the time, my items sold for the starting price – the minimum I had decided ahead of time I would be happy with and I accepted that tacitly. So basically I set the bar super low so it would be easily attained. Herein lies…
Problem # 1: I was afraid to aim high.
Unfortunately, I had a second problem. I would call it a general sense of self-deprecation.
Problem # 2: I did not place an appropriate value on myself, my talent, or my time, and as a result it was impossible to properly value the merchandise I sold.
And to finish off my issue-laden list, the go-with-the-flow/ don’t question status-quo mentality that typified me was crushing my ability to do well.
Problem # 3: I lacked a working knowledge of how to research the market both ahead of purchasing items and at the time of listing them for sale. I trusted the marketplace to do my job for me, to accurately assess and pay me for the value of my items with no dynamic input from me. I’ll explain what I mean by dynamic input below.
So you see all the problems stacked against me and it would have been a sad story if that was the end, but hold on tight, we’re about to go for a party ride, which strangely enough starts with a baby romper.
I can picture that darling little romper outfit even now. It was a Baby Gap pale gray color with pastel purple dragonfly print. Size 3-6 months, not the easiest size to sell but such a cute item, and at the fantastic bargain price of .99 cents it was an easy decision. I wasn’t completely ignorant in those days and did look at similar sold items on the resale platform. The exact same item (same size and everything) happened to just sell a day or two before I was listing mine, and wow, it sold for like $15.00! I thought, great, there is no risk here. Blaring sirens shouId have been going off in my brain at this point, but all was silent. I proceeded to list auction style starting at .99 cents plus shipping. And then I watched and waited as a new ship, the “S.S. Disappointment”, came slicing through my naivete. The other item had people in a bidding war, of course the same thing was going to happen to my item. Oh I got a bidding war alright, all the way up from .99 cents to $1.04. Wait, what??!! That’s not fair, injustice of all injustices!! I had the same item, same size, I started at the same starting price, just a day or two after that other person’s item sold for an amazing price. What gives? My heart sank that day as I packed up that dragonfly outfit and shipped it to a thrilled buyer who knew they scored an awesome deal. I knew it was worth more than $1.04, I knew if I had started the price at say $10.00 I probably would have gotten a bid – or at the very least I would rather have tried, failed, and slowly reduced the price than give it away for nothing. I am so thankful, in retrospect, for that inflection point in my selling career. Here are the priceless take-aways.
Lesson 1: The past does not always or accurately predict the future. Combine market research with common sense. Yes, sometimes auctions can take off and do amazing, but that is actually quite rare in most fashion listings. The smart play is to over-ask on your price and give lots of room for negotiation. Additionally, allow for dynamic input, which may look like intuiting an item will do better than what you see similar items selling for due to specific features not present in those other items or due to the impression those other items were underpriced, or due to current supply/scarcity of that item. Brain cells must be fully engaged and the more puzzle pieces you take into consideration the better your pricing will be.(Problem # 3: solved)
Lesson 2: My time, talent, and merchandise are valuable commodities. If they weren’t, I wouldn’t care when items sell far below the value I perceive they have. In other words, I now believe strongly in the value I bring to the market as a seller and I price accordingly. So should you! (Problem #2: solved)
Lesson 3: I’m throwing “what is the least amount I would be happy with” in the TRASH CAN and replacing it with “what is the MOST profit I could possibly extract out of each and every item?” (Problem #1: solved!)
Everything changed that year, my third full year of resale, and it’s been a wonderful journey ever since. I’ve just passed the nine-year milestone and I’m so much more pleased with the outcome since making these needed shifts in thinking. There are plenty of road-blocks that get jettisoned at your head in resale, it’s a rapidly changing game, but you have to start with sound business practices or the foundation you’re trying to build on is wobbly and subject to collapse. It goes straight back to the idea of controlling what you can control. You can’t make one person buy one thing you have for sale, but you can control what you have for sale, how much volume you list, how the listings appear, the information they contain, the attractiveness of pictures, and very importantly, the pricing you set. Operating under these new lessons learned, my profit margins saw marked improvement. I felt appropriately rewarded for the time and talent I was pouring into my work. The additional cash-flow allowed for even more inventory purchases which fueled sustained growth. The exciting part is there are always new ways to optimize your resale business once you have a solid foundation. There are new brands to discover, new trends to get ahead of, marginal gains to take advantage of, all this sounds like the start of another post:) In the meantime, I hope this post helps you kick sluggish selling to the curb for good! Don’t be so tentative with that profit pedal, push it to the floor and enjoy the ride!