Why an eBay Product Supplier is Like a Rock Band


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One of the questions I get asked the most is “Where do I find the best supplier for products to sell on eBay?”

Although at first glance this question looks self-explanatory, it is full of assumptions and myths. When I ask the same people to explain exactly what they want from a supplier, the summarised list goes something like this…

I want a local supplier, preferably in driving distance from me who stocks the top selling high volume, high profit eBay items.

This is like Sony Music asking “Where do I find the best band that has all the best selling songs?”  They simply don’t exist.  Most bands never get a top 100 hit or even a top 1000 hit, less than .005% of bands produce a top 1000 song. And of all the bands who do actually make a song which becomes a chart topper, most can’t do it twice, never mind 3 times.

The same goes with an eBay product manufacturer / supplier, they might have 1 product which is making high profits on eBay but are very unlikely to have 2.

Here is the big problem with the local single supplier strategy. For the last ten years I have read literally every book on eBay on the market , been to well over 100 eBay and internet seminars all over the world, networked with thousands of eBay sellers, interviewed some of the owners of the largest eBay businesses on the planet, personally coached and advised and helped thousands of business owners all over the world through my courses, books and articles , spoken for eBay on their top seller panel and have never ever met anybody who is selling New products on eBay that genuinely makes a 6  figure income and does not import products from countries like China.

Here is why.

Lets say widget x sells on average on eBay in say the USA for $50 and the supplier in China sells them for $15.  If a US supplier purchases these and imports them, they usually put at least a 100% markup on the landed cost of the item i.e (cost + shipping / posting to the USA).

Lets say postage from China to the USA was $5.  This means the item cost $15 + $5 (postage) = landed cost of $20

Then they add their 100% mark up ($20) and sell the item to you for $40 + tax + shipping to your house.

Now you only have less than $10 of profit left and you still have pay nearly %10 for eBay / Paypal fees when the item is sold leaving a net profit of less than $5 for a product which cost you over $40.

My next question I ask people is “Why don’t you simply just import the item yourself?” Immediately I see the fear in their eyes. Most people think it is incredibly difficult to import items however it is hardly any different than emailing grandma Svena in Sweden and asking her to post you a spare part for your Volvo.

Sure, you might have to send a couple of emails to negotiate the price or the minimum order quantity but how hard is that if it means you can quit your job forever and make more money from home than you did from your job?

What I do and what I teach is to always go to the source for every product so you make the most money for every sale i.e work smart, not hard. You can also take help of ebay app to sell your items.

In the example above, if you import the item yourself you would make $35 per sale and if the item sells on average 20 times per month, you would make $700 per month for this one product compared to $100 if you purchased it locally.

Love to hear your comments

To your success

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Neil Waterhouse

About the author

Neil Waterhouse is the author of “Million Dollar eBay Business from Home – A Step By Step Guide” and an eBay Multi-Million Dollar Seller.

In 2009 Neil was recognized by eBay and asked to speak on the Top Seller Panel. Through Neil’s seminars, books, articles and consulting, Neil has helped over 100,000 people grow they eBay businesses. Neil is the CEO of Waterhouse Research, a research company which finds which products on eBay are making eBay sellers over 100% profit as well as providing a list of the top 100 product suppliers. For more informtion,  see http://www.waterhouseresearch.com

For more information on Neil Waterhouse,  see https://www.neilwaterhouse.com

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5 Responses to Why an eBay Product Supplier is Like a Rock Band

  1. Fabio says:

    Importing seems more attractive than dropshipping. The dropshipping margins are very small, similar to the math mentioned in your article above while using local suppliers.

    • Hi Fabio, yes margins are smaller with drop shipping however you are not limited with how many items you can list by cash flow.

      To import, on average you need to outlay around $36,000 for inventory to produce around $1000 per week after all expenses. This is due to the fact of how long it takes to order items from say China, have them shipped to your country, list them on eBay, sell them, put the money back in the bank, then reorder and start the process again. This is called a stock turn.

      For every extra $1000 profit you wish to make per week, you need to outlay another 36K. Many people do not have the cash flow to do this.

      With drop shipping, yes you make lower margins however you can list unlimited amounts of items as you are always cash flow positive i.e. you get paid before you purchase items.

      For this reason, people who do not have the cash flow to import can make much more money drop shipping and then later on if they wish, they can import their top selling dropship items.

  2. Anthony says:

    Hi Neil, In a few of your videos you mention employing overseas assistants to help run your businesses. Please could you write a post or do a video on how to find a trustworthy overseas assistant. Many thanks, Anthony

  3. Janina says:

    Hi Neil,

    Thanks for the explanation – the money differences. I have to admit that I have some fear running about importing from overseas, but after reading this I have just overcome my fear. I guess the worst that can happen is I might make a few mistakes, but I will learn from them.

    I have my first coaching session with you tomorrow and I am very keen to build a dropshipping business first as i do like the fact that a large cashflow is not needed to get a business up and running.

    Regards
    Janina

  4. Jead Rangihaeata says:

    Hi Neil
    l have imported containers from China before, back in 2005, l knew nothing about online marketing then. but lm quite happy to start of with drop shipping for now an build up the cash flow first ….

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