Lessons Learned: How to Avoid Losing Money On an Ebay Sale
Imagine this scenario: You’re feeling proud of yourself because you found a great item that you feel sure is going to sell quickly and bring in some good money. You sourced it cheaply. You took high quality photographs and put together a strong listing. Now all you have to do is sit back and wait for the right buyer to come along.
And the right buyer does come along and pays your full asking price. Woohoo! You can see dollar signs. You package your item for shipping. You take the measurements of the box, weigh it (it’s pretty heavy), and then use the Ebay app to calculate shipping … only to find out that the shipping cost is $64. Wait, what?!? But you only listed it for $45 and charged $12 for shipping. Then there are Ebay’s fees. So you went through all of that work only to lose $25.
This happened to me early on, and it’s a lesson I’ll never forget. In fact, it fundamentally changed the way I handle pricing and shipping items from that point forward.
Reasons why you might lose money on a sale
You neglect to estimate the shipping cost up front.
When you list an item on Ebay, you have to choose how much you want to charge the buyer for shipping. You have three options:
The buyer pays the full shipping cost
The buyer pays a flat fee set by you
You offer free shipping
Ebay will automatically estimate the shipping cost at the time of listing. However, if you don’t put in the actual measurements and weight of your package, it will make assumptions that are sometimes wildly off. You may think something is going to ship for $8 and then find out that the cost is actually $18.
It isn’t realistic to measure and weigh every item at the time of listing, but you may want to do that in the beginning, until you get a feel for how much things are likely to cost. It doesn’t have to be exact.
You select the wrong shipping service.
USPS is the default shipping service on Ebay, but you can also select UPS or Fed Ex. I learned that the hard way, but once I did, it was a game changer.
One of my early sales was an infant car seat base that I had sourced for free through NextDoor. I was excited because I knew it would sell quickly. I listed it for $60 and it sold in two days. I spent an inordinate amount of time packing it in a large box with lots of padding to ensure it would arrive undamaged. Then I calculated my shipping cost … $72.48! I wanted to cry. How could that be? And how was anyone making money on Ebay if shipping a large or heavy item cost more than you could possibly sell it for?
At some point after that I figured out that while the default shipping service is always USPS, Ebay also allows you to select UPS or Fed Ex, and they are much cheaper for large or heavy items. So that car seat base that cost $72.48 to ship via USPS would have cost around $30 to ship via Fed Ex.
USPS is the best choice for smaller items, but UPS and Fed Ex are the better choices for large and heavy items. Always check. I took the hit, but now you don’t have to!
You accept an offer without considering all of your costs.
Ebay allows buyers to make you an offer that is below your list price, and you can accept it, reject it, or make a counter offer. When you are new to reselling, your excitement can get the better of you, and you may be tempted to accept offers immediately. But I would encourage you to slow down and take your time in figuring out whether that offer is actually going to work for you financially.
Ebay gives you 48 hours to consider offers, and once a buyer has submitted an offer, they cannot walk away from it. So take the time to calculate how much your profit will be if you accept the offer. And don’t be afraid to make a counter offer. This is business and no one’s feelings will get hurt.
You paid too much when you sourced the item.
In my post titled “My First 10 Sales” I tell a story about a time I lost money because I paid $20 for a rain coat that only sold for $35. When you factor in fees and shipping, those numbers just don’t work. Before buying anything to add to your inventory, you have to consider how much you can sell it for.
How you handle losing money makes all the difference.
The truth is that you will lose money on some sales, especially early on. I am sharing my lessons learned here so that you can minimize the number of times that happens. But when it does happen, the way you handle it will determine whether you have staying power as a reseller or whether you throw in the towel.
Your attitude matters.
Losing money on a sale is a total bummer, there’s no spinning it any other way. I lost money on my third sale, and then again several sales later (and quite a few sales after that). When that happened, I really started to doubt myself. I thought that maybe I had made a mistake in trying my hand as a reseller. Maybe there was no money to be made for a regular person like me. Maybe people who were finding success were doing something totally different than I was, or maybe they magically had access to better shipping rates than I did. Seriously, that thought crossed my mind.
But I made the decision not to give up. And like so many things in life, that decision made all the difference. Each time I lost money on a sale, I decided to use it as a learning experience, an opportunity to problem solve. Each time I thought about giving up, I took a look at what I had built, and decided that I wanted to keep building.
The truth is that finding success in reselling takes time and a lot of trial and error. It’s not a way to get rich quick, and you won’t find success right away. But if you are the kind of person who can stick with it and use mistakes as learning opportunities, then you will eventually find success. And you will surely have some fun along the way!
Mistakes are an opportunity to change your systems.
I talk a lot on this blog about setting up systems. At this point I see losing money on sales as a failure in my systems. I either didn’t source things correctly (my sourcing system), accepted a bad offer (my pricing system), or didn’t select the best shipping option (my shipping system).
I have made plenty of mistakes along the way, and you will, too. But I use every mistake as an opportunity to fix my systems. For example, I keep a spreadsheet where I track all relevant information about each listing and sale, including shipping costs. Because I have been reselling for more than a year-and-a-half, I have some good data on shipping costs. Now when I list an item, I can refer back to my spreadsheet to find shipping costs of similar items that have sold in the past.
Final Thoughts
Losing money on a sale is really disappointing. But rather than throwing in the towel, you can use it as an opportunity to be curious and understand why it happened. Your attitude will make all the difference. It’s important not to beat yourself up as you’re getting started as a reseller. You will make mistakes - everyone does. I would encourage you to use each mistake as a learning opportunity. Your reselling journey will be full of lessons, from listing items people actually want to buy to how much you should pay when you’re sourcing. One of the things I enjoy about reselling is that there’s always something new to learn. The most successful resellers are the ones who are able to stay flexible and curious!