How to Make Money At
Internet Auctions
An Industry Is Born
The internet has given rise to a great new breed of commerce: online auctions. Once, auctions could only be held sporadically, at specific days and times and at different locations. The expenses of an auction were great since the auction house would have to place expensive newspaper ads to attract buyers. This, of course, meant that the sellers would have to pay a high fee to sell their products. NO MORE! With the advent of online auctions, you can both buy and sell over the internet inexpensively. Not to mention, you have a much larger universe of buyers and sellers participating.
A cottage industry has also sprung up, with people making money (sometimes lots of money) by selling at online auctions. A woman in Florida buys used printers from different companies and individuals in her area and offers them at auction on EBAY. A man in Alabama sells information products on several auction sites. Several individuals and companies assemble and sell computers at auction. Hundreds or millions (if not billions) of dollars worth of transactions are taking place every year through online auctions.
Getting Your Share
So how can you participate in this frenzy of capitalism? Simple. The same rules apply here as in any other buyer-seller transaction taking place - buy low and sell high! When you are selling at auction, that CAN be difficult, but it is exactly what you must do if you are to be successful.
The man in Alabama who sells information products either wrote these products himself, or he bought the rights to them. I don't know which. But each time he sells another report, it is PURE PROFIT for him. The woman who sells printers has people and companies who are willing to sell her their used equipment at bargain prices. She then re-sells them at auction. She does not make a fortune on each printer sold, but she sells a LOT of printers! Like 30 or 40 per week. At $20 or $30 per printer, that adds up to tidy sum!
The first thing you need to do is to find a product to sell. It needs to meet the following criteria:
This package is full of wholesale sources (just surf around, you'll find hundreds of them) and there are many more sources to be found online. Try using the following keywords at your favorite search engine (ie. Yahoo.com): Wholesale, closeout, excess merchandise, etc. It may take a few tries to find TRUE wholesale sources, but the end result will be worth it. Two good sources to start with are:
Some Products You Can Sell
Computer Products: Always popular. If you have the knowledge, you can build computer systems out of parts and then sell them at auction. No soldering is involved, and this is not as hard as it sounds. To find out more about how to do this, check out the book "Upgrading And Repairing PC's". The author's last name is Mueller and the publisher is QUE. This should be available at most bookstores. You can find it online at Amazon.com.
Information: A great product, since it can cost you very little to create. If you happen to be knowledgable about a particular subject, you can write up a report and sell it at auction. Recently, a man wrote a report about buying government land (yes, there is STILL some available) and offered 100 for auction at a minimum price of $9.95. I don't know how many he ended up selling (since he might have sold at several auctions) but the 100 he offered on EBAY were snapped up in a matter of days. That means he made roughly $1000 of PURE PROFIT for his time and effort. The information products that will sell best will appeal to someone's GREED. The people who bought that report on government land were hoping to get nice land from Uncle Sam dirt cheap. While that may or may not be the case, he certainly sold a LOT of reports! As long as you don't lie about anything, you will be fine. For instance, don't tell people that they could get land from the government at $5 per acre. Instead, use a phrase like "Government land is STILL available - for those who know HOW to apply for it!". Let people's imaginations do the rest.
Used Items: If you have a source through whom you can acquire used (whatever) at bargain prices, you can offer those items at auction. FuncoLand has made an entire business out of buying and selling used video game cartridges. You can do the same, online. Just remember, you have to buy LOW.
Cable Equipment: This is my gift to you. I was thinking of doing this myself, but I don't have the time right now to do it. I have not seen anyone else doing it, so act fast if this interests you! The rewards go to those who get there FIRST. You have probably seen ads for cable equipment in various magazines. Specifically for DESCRAMBLERS. These are devices which you attach to your cable line to descramble the Pay-TV channels for free. To actually use these devices to avoid paying your cable company their monthly fee is illegal, however SELLING THEM IS PERFECTLY LEGAL! And there are thousands of people buying these things each week. Again, you have to BUY LOW. For wholesale sources, go to your bookstore (or library) and pick up the magazine "Nuts & Volts". This magazine is for people in the electronics industry. Last copy I saw had at least 40 different ads for wholesale descramblers. Buy them from these sources and sell them at auction. You should make a nice profit! One word of caution, though - NEVER sell one of these to someone who lives in the same state as you do. I'm not exactly sure why this is, but none of the companies advertising will make sales in their home state. This is probably to avoid prosecution. Just follow their example and you should be fine.
Other Ideas: The best way to get ideas of what to sell is to check out these auctions (see the links below) and see what other people are selling. Pay attention to the final bid price of each item. This will give you a good idea of what these items actually sell for. Then, see if you can find a cheap source of these items. If you can, then you've got a winner!
Protecting Your Investment
Of course, you will want to protect yourself from having to sell a product for less than the price you paid for it. No problem. All you have to do is sell your product with a RESERVE. A reserve is simply a price you set when placing your item which you must get before you will actually complete your transaction and sell your product. On EBAY (and most similar auctions) bidders will not know what the reserve price is - they will only be able to tell if the reserve price has been met yet.
Let's say you put together a barebones computer system. The parts cost you $175, and you spent an hour putting the system together. You think it is worth at least $275 and might even go for more. You will not be so eager to sell if the high bidder bids only $150 since you will lose money (not to mention your time). So you set a reserve price of $204.75. This equals your original investment of $175 for the parts, $20 for your time to assemble it and $9.75 to cover the 5% fee that you will have to pay the auction site for selling your product. (Shipping is a separate cost, which is never included in the bid price. No commission is paid to the auction site for shipping and shipping costs are always above and beyond what the final bid is.)
You never want to set your reserve too high, since bidders will soon figure out that your prices are unreasonable and will simply not bother to bid on your items. In the example above, your reserve is reasonable. To figure out what you reserve should be always figure:
Cost Of the Item +
A REASONABLE amount for your time +
The Auction Fee____________________
= YOUR RESERVE
Another method you can use (at least on ebay) is to set a minimum bid for your items. With a reserve, the bidding may start at $1 (again, you are not obligated to complete the transaction unless the "reserve" is met) but with a minimum bid your reserve is out in the open for all to see. In the example above, the minimum bid would be $204.75. I do not recommend this, since it will be harder to get the bidding "started". It's purely psychological, but people are more apt to bid if they think they can get something for next to nothing. Once the bidding is started, however, the auction takes on a life of it's own. Minimum bids are suited to cheaper items where a large quantity is offered. If you are offering an information report, and you want at least $7.00 per report, and you are selling 100 of them, then you should use a minimum bid. Otherwise, use the reserve method.
Customer Service: The Idiots, The Franks & The Cranks
All online auctions require you to accept e-mail from potential bidders to answer questions about your product. These inquiries fit into three categories: The Idiots, The Franks and The Cranks.
The Idiots: These inquiries are from extremely stupid people. They haven't a clue about real life or commerce. It is surprising they have the brain capacity to breathe on their own! One of these inquiries may go something like this:
Mr. Seller, I'm poor and I really would like it if you would sell me your $2000 computer system for 50 cents. Could you do it? PLEASE?????
Be polite when dealing with these people, but be firm. You don't want to sell them your product, but you do not want to be insulting either. Just respond as best you can, and use simple words. Usually, they will go away and will not bother you again.
The Franks: These are people with legitimate questions. They may be technical in nature. Or, maybe you forgot to list the shipping cost for an item, and the bidder wants to know how much the shipping charge will be. Reply to these inquiries promptly and professionally.
The Cranks: Some people are never happy unless they have something to complain about. You could sell them gold for $1 per ounce, and they would complain about the packaging the gold was shipped in. It is best to ignore a crank, unless they keep sending you more e-mail. If that is the case, reply politely, but firmly. Don't give them any ammunition. They are looking for an argument, and there is no way to win with such people.
Where To Sell Your Merchandise
Below are some links to some of the best sites to sell your merchandise. Check them out!
EBAY: Simply the BEST auction site on the internet! Anyone can buy or sell here, but you must be a registered user. Registration is free and easy. One of the nicest features is "user feedback". This allows you to see what other people have said about a particular buyer or seller before you deal with them. They group feedback comments into positive, negative and neutral, so you can make an easy decision even if the user has hundreds of pieces of feedback. Some sellers have THOUSANDS of pieces of feedback. If this all sounds confusing, check out their site. It explains everything. At any given time, there are at least tens of thousands of items available to bid on, including everything imaginable.
Box Lot: Very similar to EBAY (some would call it a clone) but without all of the traffic. Fewer buyers and sellers make it a little less interesting, but that also means fewer bidders. If you find an item you like, you can usually get a great deal here!
Auction Nation: A great site if you are a seller. Buyers can also get some great deals. This site is a facilitator, they make their money by charging a fee to the sellers. The one bad feature is that they charge nothing to list an item, the seller pays only if the item actually sells - so you will see all sorts of "Get-Rich-Quick" garbage all over their site. You can try using their search feature to get around this.
This list should give you a good idea of the types of auctions out there. There are hundreds of other online auctions, far too many to list here. There many listed on the Master Index page just under this heading or you can search for them on Yahoo, Lycos, or any other search engine. Of the people I know who use online auctions, they tend to stick with EBAY. So do I. I think you will too. (Just a note: we are not affiliated with EBAY, nor do we receive any sort of compensation or commission from them).
The best strategy for making money with online auctions is to start out slowly. Visit as many auctions as you can and get a feel for what works and what does not. Place one or two items up for bid, and see how it goes. Once you have the basic knowledge down pat, then auction as many items as you can! Stay honest and be fair when dealing with people and you can't go wrong!
We wish you the best of luck in all your online endeavors!