Post by papilio28570 on Jan 2, 2013 18:45:05 GMT -8
Here is an old thread from 2010 where Clark was considering quitting his day job to pursue an Ebay sales outlet. It is still a very interesting read and I wonder if folks are willing to follow up now after 2 years have elapsed. I notice that Chris's 'NorCal Butterfly' store is no longer around. Did his business morph into a separate web store or did his Ebay venture grow old or fail? Did Clark ever quit his day job? Have opinions changed?
www.insectnet.com/cgi/dcforum/dcboard.cgi?az=read_count&om=2152&forum=DCForumID1
I, for one, still have my Ebay store , and though I cannot quit my day job yet, it is growing, and growing well. I keep meticulous records, and so, to answer Clark's original question, "What percent net profit?", I can answer 56.61% profit margin after all expenses. I have been rolling that into additional stock material, so, no, I cannot yet support my family with the proceeds from sales. But, by rolling the profit into additional supply, my income nets out to zero profit and thus no taxes to be paid. Eventually, I will keep a net profit upon which I will be subject to income tax.
I just completed my second year on Ebay. My first year was a break even year. There was no profit after expenses because my prices were too cheap. I knew what I had paid for my bugs, and largely I set the price according to what I assumed the market would bear. You think to yourself, 'Hell's fire! I wouldn't pay that much for this butterfly!", so you setthe price to what "feels right" and that leads to zero profit.
I have learned that to have a successful business model, you have have a successful business plan. I learned this from running my own landscaping company. After my first Ebay year, I took another look at the way I was doing business and realized I never guaranteed myself a profit. I just thought I was making a profit. The same applies to an Ebay store. I believe most Ebay ventures fail because people set their prices too low to assure an average profit margin by year's end. That was my problem the first year.
You must lock in a profit in your pricing.
I prefer to shop at stores where the price is known and specimen quality is assured rather than bother with bidding. Yes, I do bid on auction material, but as others have written before, I simply enter my max bid as my first bid and leave the rest to God.
The advantage of an Ebay store is access to a world wide market. I'm in North Carolina and sell to buyers in South Africa, Australia, all over Europe, etc. That would be near impossible with a brick & mortar store, unless of course you had an good web site to go along with it. But you are also tied down all day manning the counter at the brick & mortar store.
It normally takes about 5 years for a business to build to a point where it becomes able to "live off". It would be wise to keep your day job until the Ebay store grows large enough to set you free.
I think my prices are very high. I think that because I know what I paid for the bugs. But when you factor in the rest of Clark's original question, "After all expenses, fees, and commissions are you making a net profit?", you realize that these must be factored into your price as well.
It took data collection during the first year, by maintaining all information on a spreadsheet, to get the information I needed to establish profitable prices in my store. To give an example of the power of this information, I sold only 9 more domes in 2012 than I did in 2011, yet, I made over 50% more money.
I learned that price does not matter in the insect business. You only need to look at what people are paying for some butterflies out there. The Japanese are notorious for paying high prices...and these are collectors. The retail market for home decor is in the multibillions annually and that is just in the USA.
Clark showed us one of his creations in the Butterfly Art forum. It was absolutely beautiful. There is a market for this type of artwork. All you need to do is show your artwork to the world and just like in my landscape business, word will get around and people will seek you out.
One key is to have a piece of artwork that you can economically reproduce in a timely manner. I only assemble my domes as the orders come in. I temporarily assemble a proposed dome for a photo shoot and get a picture for the Ebay store. I found that some domes I thought were gorgeous simply would not sell and recently cleared 40+ dome pictures from my store that had been there for two years without a sale.
Some here may recall I had a dome with a male & female pair of Polyura dehanii sulthan for $700. It sold after 8 months in the store and cost me 20 cents per month to maintain it in the store. That is not to brag, but to illustrate that price does not matter as I said before. The price was determined by my original cost, a predetermined profit margin considering overhead, and an additional "rarity" fee considering my prospects of obtaining another pair at a reasonable price.
This same principle can be applied to framed insects or insects enclosed in glass cases, or insects in Riker Mounts. You must lock in a reasonable profit before you offer it for sale. That begs the definition of "reasonable profit" which really equates to what your time is worth and the value of money you have tied up in material waiting for a sale.
Anyway, thought I would resurrect this thread for a follow up discussion and add my two cents now that I have a little Ebay experience.
Before I forget, let me provide some figures to give an idea of what the numbers crunch down to as a percentage of gross sales:
Cost of material...16.44% (average)
Shipping fees.......11.95% (free shipping in USA; half rate elsewhere
Ebay fees.............11.5%
PayPal fees..........3.5%
Naturally, the next evolution would appear to be eliminating free shipping, but for now, while trying to grow a clientele base, it is a plus for attracting buyers and also the shipping is actually already factored into the price anyway. The logical thing to do is simply increase the price of the item while maintaining the free shipping which makes shoppers believe they are getting a deal to start with.
www.insectnet.com/cgi/dcforum/dcboard.cgi?az=read_count&om=2152&forum=DCForumID1
I, for one, still have my Ebay store , and though I cannot quit my day job yet, it is growing, and growing well. I keep meticulous records, and so, to answer Clark's original question, "What percent net profit?", I can answer 56.61% profit margin after all expenses. I have been rolling that into additional stock material, so, no, I cannot yet support my family with the proceeds from sales. But, by rolling the profit into additional supply, my income nets out to zero profit and thus no taxes to be paid. Eventually, I will keep a net profit upon which I will be subject to income tax.
I just completed my second year on Ebay. My first year was a break even year. There was no profit after expenses because my prices were too cheap. I knew what I had paid for my bugs, and largely I set the price according to what I assumed the market would bear. You think to yourself, 'Hell's fire! I wouldn't pay that much for this butterfly!", so you setthe price to what "feels right" and that leads to zero profit.
I have learned that to have a successful business model, you have have a successful business plan. I learned this from running my own landscaping company. After my first Ebay year, I took another look at the way I was doing business and realized I never guaranteed myself a profit. I just thought I was making a profit. The same applies to an Ebay store. I believe most Ebay ventures fail because people set their prices too low to assure an average profit margin by year's end. That was my problem the first year.
You must lock in a profit in your pricing.
I prefer to shop at stores where the price is known and specimen quality is assured rather than bother with bidding. Yes, I do bid on auction material, but as others have written before, I simply enter my max bid as my first bid and leave the rest to God.
The advantage of an Ebay store is access to a world wide market. I'm in North Carolina and sell to buyers in South Africa, Australia, all over Europe, etc. That would be near impossible with a brick & mortar store, unless of course you had an good web site to go along with it. But you are also tied down all day manning the counter at the brick & mortar store.
It normally takes about 5 years for a business to build to a point where it becomes able to "live off". It would be wise to keep your day job until the Ebay store grows large enough to set you free.
I think my prices are very high. I think that because I know what I paid for the bugs. But when you factor in the rest of Clark's original question, "After all expenses, fees, and commissions are you making a net profit?", you realize that these must be factored into your price as well.
It took data collection during the first year, by maintaining all information on a spreadsheet, to get the information I needed to establish profitable prices in my store. To give an example of the power of this information, I sold only 9 more domes in 2012 than I did in 2011, yet, I made over 50% more money.
I learned that price does not matter in the insect business. You only need to look at what people are paying for some butterflies out there. The Japanese are notorious for paying high prices...and these are collectors. The retail market for home decor is in the multibillions annually and that is just in the USA.
Clark showed us one of his creations in the Butterfly Art forum. It was absolutely beautiful. There is a market for this type of artwork. All you need to do is show your artwork to the world and just like in my landscape business, word will get around and people will seek you out.
One key is to have a piece of artwork that you can economically reproduce in a timely manner. I only assemble my domes as the orders come in. I temporarily assemble a proposed dome for a photo shoot and get a picture for the Ebay store. I found that some domes I thought were gorgeous simply would not sell and recently cleared 40+ dome pictures from my store that had been there for two years without a sale.
Some here may recall I had a dome with a male & female pair of Polyura dehanii sulthan for $700. It sold after 8 months in the store and cost me 20 cents per month to maintain it in the store. That is not to brag, but to illustrate that price does not matter as I said before. The price was determined by my original cost, a predetermined profit margin considering overhead, and an additional "rarity" fee considering my prospects of obtaining another pair at a reasonable price.
This same principle can be applied to framed insects or insects enclosed in glass cases, or insects in Riker Mounts. You must lock in a reasonable profit before you offer it for sale. That begs the definition of "reasonable profit" which really equates to what your time is worth and the value of money you have tied up in material waiting for a sale.
Anyway, thought I would resurrect this thread for a follow up discussion and add my two cents now that I have a little Ebay experience.
Before I forget, let me provide some figures to give an idea of what the numbers crunch down to as a percentage of gross sales:
Cost of material...16.44% (average)
Shipping fees.......11.95% (free shipping in USA; half rate elsewhere
Ebay fees.............11.5%
PayPal fees..........3.5%
Naturally, the next evolution would appear to be eliminating free shipping, but for now, while trying to grow a clientele base, it is a plus for attracting buyers and also the shipping is actually already factored into the price anyway. The logical thing to do is simply increase the price of the item while maintaining the free shipping which makes shoppers believe they are getting a deal to start with.
. Never managed to understand this!!