Often, the most vexing question facing anyone who wants to launch a business as an eBay seller is: What should I sell?
More difficult still: How can I raise the money to buy wholesale inventory?
Both those questions are answered for those sellers who become eBay trading assistants. A trading assistant, or TA, is someone who sells other peoples' goods on eBay.
A TA's clients bring them all manner of items — jewelry, sporting goods, clothes, toys — and he or she handles the eBay sale. Trading assistants earn a percentage of the final auction price; the more inventory a TA handles, the more money they make.
The beauty of being a TA is that it requires little upfront investment — the clients supply the inventory. So there's minimal financial risk. In a sense, being a trading assistant is the American dream. With just a business card, a place to store merchandise, and a willingness to hustle, someone of modest means can build a lucrative career.
But success as a TA does require some skills and knowledge. To explore this career, Ecommerce Guide spoke with Christopher Spencer, author of
The eBay Entrepreneur: The Definitive Guide to Starting Your Own eBay Trading Assistant Business. (Kaplan Publishing, available September 2006). Spencer runs his own thriving eBay trading assistant business in Burbank, California.
Prior to the book's September release, he's offering 500 free downloads of the book. (You can request a free download here.) He's distributing free electronic copies because he hopes to incorporate reader feedback prior to the print publication.
Tools and Skills a Trading Assistant Needs
1) Overall knowledge of eBay
A trading assistant must be savvy about all aspects of eBay selling, from listing procedures to average prices. Spencer recommends that prospective TAs pick up a book about eBay. "The most popular are Marsha Collier's Starting an eBay Business for Dummies and eBay for Dummies," he says. He also points to eBay's free advice page. [http://pages.ebay.com/education/] (Spencer's own book doesn't cover the basics of selling on eBay; it focuses on starting a TA business.) In particular, a seller must be adept at using keywords in their eBay listing.
2) Some Retailing Abilities
There's a bit of retailing involved in being a Trading Assistant, Spencer notes. Skills like effective merchandizing and knowledge of product display are important. "In the same way you run a retail store, you have to display your merchandize properly to get people interested," he says.
3) Competency as a Photographer
"Taking a good picture is probably responsible for a vast majority of the success of your sales," Spencer says. "Having good photos will go a long way to sell the merchandise."
4) Getting Listed with eBay as a Trading Assistant
Trading Assistants who register with eBay are listed in the auction giant's Trading Assistant Directory. Being listed here builds a TA's credibility (which helps build a client base). To be listed in the Directory, a seller must have sold at least 10 items in the last 90 days; have a feedback score of 100 or higher; and have 97% or higher positive feedback.
For registered TAs, eBay provides marketing materials like flyer templates and press kits, and also offers training.
5) People Skills
Spencer calls good interpersonal skills "the secret to success" as an eBay trading assistant. "You need to be willing and able to accommodate the needs of many different types of people," he says. "If you're somebody who likes people, and enjoys working with and interacting with people, you'll find that eBay trading assistant work is very rewarding."
(On the other hand, Spencer knows of one eBay TA who's deaf, and does all his work through e-mail; so variations are possible.)
Clients and Commissions
Building a client base is perhaps the toughest part of getting started. Most of your clients will come from your local area. In Spencer's own successful TA business, most of his clients come from a 5-10 mile vicinity.
Building a client base is, not surprisingly, all about networking. Armed with a business card, a hustling TA works in all possible venues to get the word out. "I've done all kinds of different things, including taking flyers downtown and handing them out on a busy Saturday."
Over time these efforts start to "snowball." When word of mouth combines with ongoing marketing efforts a TA acquires a truly active client base.
But, Spencer cautions, patience is needed. Several months are needed (perhaps longer) to build a client base. "Don't give up until the fat lady sings," he says.
Indeed, some of a TA's marketing efforts don't pay off right away, but Spencer notes that people stay aware of advertisements, and keep them tucked away for future use.
One advantage of being a busy, sought-after TA: you can raise your commission rates.
The commissions that TAs charge vary greatly, ranging "from five to 50 percent" of the total sale, Spencer says.
Rates in the five percent range are charged typically for big-ticket items like autos. The hefty 50 percent commissions are garnered usually only by TAs in smaller communities with little competition. However, some TAs earn close to 50 percent "because people are used to paying 50 percent to a consignment shop."
Among the many factors TAs take into account when setting commission rates are "how much time do you have to spend, and how much do you want make after expenses?" A TA with a storefront typically must charge a higher commission than one who works from home, because of the higher overhead.
In Spencer's own business, he charges:
38% of the first $500
25% of the next $500
15% of any amount over $1,000
He charges no upfront fee, and sets no minimum price in his eBay listings.
Whatever the commission, being an eBay trading assistant is "definitely not a get-rich quick scheme," Spencer says. "If you put a logical amount of time into it, you can expect to make a better than average income."
He knows one TA who handles $70-90,000 a month in auction sales, though that's on the high end of the TA scale. Spencer himself handles about $400,000 a year in eBay sales, he says.
Open A Store — or Not?
There are a number of ways to run a TA business, depending on your needs and finances:
1) Work from Home
Clearly the cheapest way to launch, selling from home requires just an Internet connection and a digital camera. Making this easier still, UPS picks up packages at residences.
However, working from home often means a TA must travel to clients' homes to pick up items. Many clients (especially affluent clients with high-priced items) are unwilling to visit someone's home to drop off.
Another potential difficulty: family distractions can be a real problem. "Working from home in an unsupportive environment is a recipe for failure," Spencer says.
"If you have a family at home, you want to structure your time so that you're not obsessive, taking up the entire day selling on eBay," he says. "It requires some discipline."
2) Work From an Existing Store
For those sellers who already own a storefront, opening a basic drop-off center within this store requires minimal extra expense.
As a marketing technique, a TA with a storefront can offer to handle clients' eBay auctions for no commission, as long as those clients agree to spend the profits at the TA's own storefront.
3) A Simple (Or Elaborate) Drop Off Store
Having a physical storefront provides storage space, and it also allows you to ask clients to come to you, instead of having to travel to them. However, many affluent people still expect you to come to them. (If you want an advantage over your competitors, you must be willing to travel to pick up, whether or not you have a storefront.)
Opening a drop-off store is a huge commitment — "It's like a marriage," Spencer notes. Along with the hefty overhead, having a storefront means spending long hours in a retail store.
For TAs who are just starting out, Spencer advises them to delay opening an expensive storefront — sell part time and learn the business before taking the plunge.
"In the trading assistant world, you have to look at your market share — how likely are you to be able to generate a lot of business, and what happens when somebody opens up a shingle next store?," Spencer says.
Also important: "What's your exit plan if you find you're not enjoying it?"
Established eBay Sellers: Tricks of the Trade
The reason that Spencer doesn't set a minimum price on his eBay listings is, simply, "because we want everything to sell."
One of the problems facing a TA are clients who feel certain that their item will sell for a high amount - far higher than its actual market value. Perhaps the client is sentimentally attached to the item (but needs to sell it anyway). Or the client bought it for $250, and he can't face the fact that it's now worth about $90.
In Spencer's early days as a TA, he ran into difficulties with clients like this. Problems arose because, "I was failing to articulate what it is we do — I didn't really explain it well enough."
But now he makes it very clear to clients: they should only drop off items they have "no emotional or financial attachment to whatsoever."
As Spencer defines his TA business: "We are not profit maximizers; we are liquidators."
He quotes one of his satisfied clients, for whom he sold a bunch of electronics gear totaling about $25,000. This amount was less than the client originally paid for the gear. But, the client noted, "It's better to sell the stuff now, when it's still in use, rather than keep it sitting around collecting dust."
Obstacles — and Success
As TAs begin to build their business, hurdles appear. Chief among these is getting too busy - especially for TAs who haven't hired help. "You have to be selective of the merchandise you accept, and if you say 'no,' [to a client] at least give clients other options to have people sell the stuff for them."
Be aware, Spencer says: "Nothing is worse than a bad impression. So make certain that when you do take merchandise on, the quality of service you give is as high as possible — or you'll never see that person again, and that will result in a bad reputation."
A TA's biggest obstacle, he notes, is often him or her self. Being a TA is a self-directed business, so an entrepreneur's own motivation becomes the deciding factor in their success.
In Spencer's experience, many new TAs "obsess and grind away at all these problems, 'what about this, and what about that?' — it's what we call 'the Obvious Analysis Paralysis,'" he says, with a laugh.
"In reality, you kind of build your way into it. You start out small, you learn it, play around with it, try it and eventually you build into it."
"Personal motivation, self-motivation, is really the key," adds Spencer.
James Maguire is a contributor to ECommerce-Guide.com. His column appears every Monday.
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