Building An eBay Consignment Business

I got an email earlier this week from a Mastermind subscriber asking a question about eBay consignment. Because this is a subject everyone can learn from, I decided to write a longer answer and use it for a newsletter article.

Before I get into the article, a little bit of background for those of you who didn't get the CD. The January Mastermind interview was about doing eBay consignment. Skip McGrath and I spent a ninety minutes discussing our experiences as consignment sellers. One of the points we made was to never sell an item on consignment without having it in your possession.

Here's the email I got from Bruce. . .

This is actually a great question. In fact I think my newsletter readers will learn from it so I'll do a really long detailed answer.

A few months ago one of my friends gave a man some money to tile her kitchen. He told her he needed money upfront so he could buy the material and then left. She has never seen him again.

This is rather common. In fact, there used to be a group of people who went around the country scamming homeowners by knocking on their doors and saying they are working on the neighbor's home and have extra material.

Think about it. They are called con men. Con stands for confidence. They instill confidence in their victims in order to build rapport and trust. Basically they lie.

Because they are able to instill confidence, people never check their references.

You, on the other hand, don't need to lie to instill confidence because you are not trying to rip people off.

You can instill confidence by showing people results of your past auctions. In the interview, Skip and I say the best place to start your eBay consignment business is with people you know - your friends, family, neighbors, and coworkers.

Another great place to start is organizations. For example, I belong to train clubs, and my sister goes to a church in her neighborhood. About 60% of my consignment sales come from train club members. Over half of my sisters sales come from church members.

The rest of our sales come from referrals. My referrals are word of mouth. Simply put, a club member tells another member about my service.

My sister also relies on word of mouth, and bulletin board posts at her church. She has even taken it a little farther by paying people at the Sunday service. She gives them a check in an envelope and includes a few business cards.

After the service, the churchgoers socialize and there is a group who rotates hosting luncheons. By paying people before the service, they are more likely to talk about the check while socializing afterwards.

Think about the service you provide. You convert unwanted items into cash with little effort on the owner's part. They just give you the stuff and you give them a check a few weeks later.

Of course they are going to talk about you. Make it easy for them to refer new people to you.

My sister does this with the business cards included with the checks. The checks are given out at the service to increase the chances people will mention them during the after church social activities.

This is called target farming. Addressing a specific group of people who have something in common and are easy to reach.

Once you have done a few eBay consignment sales, put together a testimonial book. Print out some of your better eBay auctions and ask the owners to write you a simple note of thanks mentioning the item. Put the pages together in a three binder along with your contract and inventory forms.

Think about the homeowner scams again. These people show up with notebooks, tape measures, blank contracts, and work trucks. They look and act like construction workers.

When you show up to pick up consignment items, you should look and act like a responsible, knowledgeable eBay seller. With your testimonials, examples of prior auctions, and contracts you are a professional.

You should also take packing materials and a plastic tub to hold the items. I use clear tubs with interlocking tops available at Home Depot for about five dollars each.

There are two other points I need to make. When I show up at someone's door, I have my binder and tub with packing paper. I know from qualifying people on the phone I am interested in selling their items.

That's the first relevant point. Prequalification. When someone calls about my eBay consignment services, I find out what they have, and, if the items are unfamiliar, search eBay for similar items.

While I am on the phone, I also explain my fees and policies for eBay consignment sales.

By doing these two things - finding out if the items are worth selling, and explaining my consignment policies, I screen out a majority of people who call about consigning things.

So when I show up at someone's door, I already know the items are worth selling. They already know my policies.

This is the second point. I show up fully expecting the owner to sign the contract and inventory sheets and allow me to take the items away with me.

There is no discussion on my fees, or whether I will be allowed to remove the items. That was done on the phone.

Now, you might think I am losing opportunities by screening out people I could talk into using my services in person.

The truth is I am. I am a pretty good salesman and surely could do more work if I tried harder.

But, I don't have to try harder because I get enough people who will agree to my terms.

Even more important, I only want to deal with agreeable people. Looking back on my eBay consignments, the people I had to convince are the ones who later complained.

In one case I had a guy reluctantly agree to my terms, and then after I paid him he went around telling others I sold his items for less than they were worth.

While most of the other club members knew this guy as a difficult whiner, I am sure this cost me consignments because he added the element of doubt.

Skip and I both refuse to do eBay consignments for people who will not readily agree to our terms.

I will bring one more thing up and then finish this article because it's getting long.

The new-agers talk about the theory of abundance. I don't remember the exact words, but it's something like, "there is an abundance of health, wealth, and happiness in the world, and all that is needed is believing in abundance along with making a minimum effort to capture your share."

When we are talking about eBay consignment, there really is an abundance of items out there. Everyone has things they don't use and would quickly exchange for cash.

Last week a guy who owns a shoe store asked me if listing shoes that don't sell on eBay was a good idea. One of my neighbors asked about selling his NASCAR collectibles on eBay, and I got four telephone calls for my services.

That's six people in one week. I don't do any advertising anymore. What do you think would happen if I started advertising again?

Anyway, I am going to end this now. I am not accepting new subscribers into the eBay Mastermind series, so if you are not already a subscriber you cannot get a copy of the interview with Skip.

You can however, get a copy of my bestselling eBay consignment ebook. The book explains how I built my consignment business and comes with the contracts and inventory forms you'll need.

New articles about Antiques, Collectibles, or eBay are regularly added to this section of the site. You can see previous articles in the column on the left. This is not a replacement for my regular emailed newsletter. The newsletter is usually two to three times as long and focuses on making money on eBay and/or achieving success in the antiques and collectibles business. Only about a third of the articles sent out as newsletters are posted on the site, so to avoid missing an issue sign up now using the blue box in the upper right hand corner of this web page.

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Terry Gibbs has taught over 7,000 people how to make a good living on eBay. Terry's most recent eBay instruction manual is The Auction Revolution . The Auction Revolution is your guide to eBay and beyond. Here on Iwantcollectibles.com, you will learn about buying and selling antiques and collectibles, and about eBay.

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