Should I Focus in a Niche in my eBay Business?

Many times I've heard people debating:

Should we focus in a particular niche of items when selling in eBay? Or should we expand the scale with as many diversified items as possible?

Before going into the discussion about eBay, let's take a look at the real world first.

When you go shopping in a mall, trying to look for some decoration candles. You shop around and find a shop specializing in hundreds of candle items. No wonder you'll dash in see what interest you. However, you may not notice that a gift shop just next to the candle shop also sells quite a number of pretty candles good for decoration. Seems like there's an obvious advantage for a specialized shop, focusing in particular niche, isn't it?

Not really. We have an assumption that the specialized shop hits the demand well and therefore, it can absorb a lot of sales. But how big is the demand for candles? Is it good enough to support the operations of the shop? Are there many people looking for candles throughout the whole year? Or is the demand seasonal? Is it more vulnerable if selling one type of item only?

How about the more diversified gift shop? It may not catch the demand for decoration candles well. But they may have attracted a lot more of customers who don't have a very strict shopping target. They may not know what exactly they want until they walk around the shop. They may search for a card holder at the beginning, but end up with a purchase of few more photo frames they don't expect. Besides, different items may have different demand at different times. A more diversified shop is definitely more sustainable throughout the year with a more stable sales.

OK, now back to the eBay world. Is it the same as the real world? First, you have to think about: how do people get into a listing or an eBay store? Do they "walk" around eBay before they can find the items they need, just like you walk around a shopping mall? Most of the time not. They do by searching. If they are interested in some decoration candles, they may start by typing the keyword "decoration candles". Then hundreds of related listings shown. Do they know if these listings come from a niche shop, selling candles only? No, of course not. Even when they've clicked in the listing, they'll not know until they further click to the seller's eBay store.

But what a big deal if the customer goes in a non-niche shop? If he thinks the item is good and reasonable, if he believes the seller is trustable based on the feedback profile, he's very likely to buy.

So you can see, the advantage of attracting particular demand for a niche market in the real world may not apply in eBay. However, the advantage of a diversified shop in the real world can exist in eBay on the contrary.

Image that a candle buyer clicks in a listing of candle which interests him. Then he finds some cross promotional boxes showing some other interesting items. He may keep clicking and see what he can buy from the same seller at the same time, probably with certain combined shipping discount. Just the same as the real world.

Have you determined how you should set up your sales strategy?

Stay Closed with the Market Demand for Growing Your eBay Business

If you have followed my advice and started selling some of your own customized items in eBay, you should have got some positive results already. But in order to keep your business growing, you need to stay closed with the market trend and demand. You cannot just stick to the same old items without any change with the market and expect you can sustain for long.

There are no fixed rules how to know what's hot in the market. As long as you stay closed with the market yourself, you will know what's hot to sell.

One of my ways to know the trend is to take a look at the Yahoo home page. See what's in the "Today's Top Searches". E.g. at the time of this writing, this is the top 10:

1. The Girls Next Door
2. Sondra Locke
3. Jennifer Lopez
4. Dinner Recipes
5. 2010 Mazda 3
6. NASCAR
7. Neil Patrick Harris
8. Free Ecards
9. Income Tax Credits
10. Health Insurance

Just click and take a look. Or modify your searches as "The Girls Next Door Mousepad", "NASCAR Clocks", etc.. You may find some items related to these searches, e.g.:

http://www.plushliving.net/mousepads.html
http://www.buydirectusa.com/shop/nascar-clocks/index.shtml

See if there are something similar you can create for your own sales.

Another way to know what's hot in the market is to read the news. Pay attention to the top news, events, people, etc. One simple example is Barack Obama over the past few months. You don't have to do a professional research before you know how crazy the items were sold as long as it was related to him. Again, do some searches like "Obama Gifts", "Barack Obama Items", etc.. See what people are selling and see how you could follow the tread quickly:

http://barackobamagifts.com/index.htm
http://www.democratnationalcommittee.com/candidates/barack_obama.htm

The third way I do the most is to see what hot movies are coming up which people are talking about a lot. For example, one of the movies people are talking about a lot is the "Angels and Demons" by Tom Hanks coming up in a few months. Most people will be attracted by the concept of Ambigram as it may be the first time they hear about it. On the early teaser poster from the movie, there was no Tom Hanks. You can only see Ambigram displaying in the background, indicating that Ambigrams will be playing a critical role in this blockbuster movie.

So you know what to do, don't you? Try to search "Ambigram Items", "Ambigram Gifts" in Yahoo or Google and see if you can start selling something for the coming demand:

http://www.giftamax.com/Market/SearchResult.aspx?key=ambigram
http://www.wowgiftmart.com/ambigram.html

So these are some simple strategies that I'm using all the time. Spend some time every week for little researches. That should definitely help your business grow a lot.

Deciding What to Sell in eBay

Simply speaking, everything can sell in eBay. It all depends on the balance between demand and supply, i.e. the price strategy. If you are already selling certain products in other places, e.g. your own local shop, you can just do a simple research in eBay and see if eBay is a proper platform for your business.

Let's say you're selling computer accessories products. You think you have a very good source of USB drive. Then let's do a research in eBay and see how the demand is. Take a look at this example: you type in a key word "USB drive 2gb" in eBay search and notice that most people are selling around US$30.

Now you can have a rough idea how much a 2GB USB drive can sell in eBay. Including shipping, it costs around US$30. If you find out that you can make a decent profit from your current supplier, you're very likely to make a profit in eBay.

Or course, item cost is one thing. You also need to consider the cost you have to pay back to eBay, Paypal and the shipping cost. Don't expect every item will sell when you post in eBay. So you have to estimate your sales conversion rate. Certain profits from the sold items will be allocated to cover those not sold. I will show you some calculations about all these budget preparation based on the real sales records from an eBay account in some future articles.

How Can People Sell for Less Than Wholesale in eBay?

Well, you cannot sell for less than wholesale if you are drop shipping. Forget about it.

At the beginning, I felt frustrated as everybody did. I saw a popular auction for a name brand of digital cameras for less than I could even get it for at any drop shipper. How could they do that?

There could be tens of reasons. Perhaps the seller bought thousands of products from an overseas source and therefore, he can still get a very decent profit when he sells at a very low price. Perhaps the seller was selling at loss for some items as a way to advertise his other items. Perhaps the seller worked at the factory and got a great deal on reconditioned items.

The answer is: DO NOT TRY TO USE DROP SHIPPING FOR POPULAR NAME BRAND DIGITAL CAMERAS, OR IPODS, or things like that. You can never compete with the big retailers.

Then what should you sell? The answer is: unique items that your customers cannot find the exactly same ones from other places easily. You can define your profit margin freely without the need to worry about the price war out there.

How to find such items? Just take a look at this company first: Wow Gift Mart

Try to get some ideas on your own first. I'm going to share more detail and experience at a later time. Have fun.