eBay Consignment Business

Many people across the country are starting this new type of small financial venture called an eBay consignment business. Entrepreneurs engage in this kind of business usually run it from the comfort of their homes, but there are some who still prefers doing the actual selling from a real business location. This business is really catching on to everyone because the vast majority of the product that one sells actually costs absolutely nothing. When there is no real overhead, then a small business is worth taking a closer look.

The first step to starting an eBay consignment business is to learn every little detail about eBay. Exposing one self to every aspect of the website, and how each and every auction works is a good start. There is a need to know what items get better bids, and which items to avoid. Also, it helps to understand all the fees, costs, and expenses that eBay charges. This component of the whole process is very important and should not be overlooked.

Once the budding entrepreneur feels that they are already adept in eBay processes, then that might be the time to really start looking at the consignment business. An eBay consignment business is where business-minded individual take their eBay experience and expertise, and use it to sell other people’s items on eBay. This sounds easy enough, but there are still some things to seriously consider.

Once a decision has been rendered to to get started, there is a need to decide if actual work will be done in an office or from home. Their are advantages both ways. The advantage for an office is walk in traffic, and the ability to sell items from a physical address. The advantages of being at home is that there will definitely be smaller or even zero overhead.

There is also an important aspect of marketing and promotion. The entrepreneur needs to drum up their business on their own through word or mouth, flyers, and lots of business cards. Once they have determined that a good number of clients are interested, then they can go ahead now and get the proper business permits and the like to open up a shop.

The basic business model is really simple. The business owner obtain items from others (consignors), find out what these product owners are willing to take for the item, do a little research, photograph the item and write an eye-catching description. The entrepreneur then add their service fee, usually paid upfront and nonrefundable even if the item does not sell, and post the item up for bid on eBay. It is the entrepreneur's responsibility to make sure that the correct reserve on eBay is placed so that the consignor is assured of getting the right amount. Once this happens, the entrepreneur collects the money and ship the item. When the transaction is complete, then they pay their consignors.

Although entrepreneurs will make money on the service fees they charge, the best source of income usually will come from the various bargains that they will come across. There are certain items that will sell on eBay very well. Once these entrepreneurs are familiar with eBay, they will know what those items are. When those items present themselves to through customers, then the entrepreneur should make an offer to buy the product outright. Sometimes consignors are perfectly happy with the offer, and other times they want them to be auctioned off. It is up to consignors which way they go. That said, a vast number of the consignors will opt to sell the item on the spot.

An eBay consignment business can be a very legitimate business, and many do this small business part time for extra income. Regardless of the intentions, an entrepreneur who wants to engage in this kind of business should make sure that they have a number of items to get started. Sometimes, these can be found while cleaning up the house, garage, and other avenues of a similar nature. Generally, everyone has some eBay treasure around in their home to get started.

Based on the experience of several companies engage in eBay consignment, here are just a few of the tested guidelines in the industry:

1. Signing a Contract
   
   Before accepting any item, draw up a consignment contract. This contract protects not only the business owner but the consignor as well in case of disputes. This document should outline the particulars of the consignor, the item(s) and auction terms. An ordinary consignment contract usually has four main sections and a section for internal accounting and bookkeeping information.
   
   
   • Consignor Information:
     List the name, address, phone number(s), email address, driver's license number of consignor.
   • Item Information:
     Title of item(s), age, model number, serial number
     Condition (new, used, antique, reviewers sample)
     Defects or deficiencies
     Cost, new (if known)
   • Auction Specifics:
     Format (auction, fixed price, store)
     Number of days to list
     Which online site (eBay, Amazon, Yahoo Auctions, Abidon, Austin Auctions, Froogle, etc.) to list
     Starting price, reserve price, buy-it-now price
     Enhancements to listing (bold, gallery shot, highlights, more)
   • Auction Terms:
     Consignment Terms
     B-N-P charges a sliding commission rate based on final value realized.
     Auction fees (enhancements, listing, final value, etc)
     Disposition of item if it doesn't sell (return to consignor, relist, and try a different online site).
2. Knowing the Identity of Consignor
   
   For the business owner's own protection, both personally and financially, they should know the identity of the consignor. Recording the driver's license number on the consignment contract is a good start. This little extra step may deter someone from using the company to sell stolen goods.
3. Parts Is Parts
   
   The business owner needs to ensure that they have all the correct parts when taking consigned goods. They should check first before listing and obtain all user documentation including owner's manuals. These documents will tell which accessories such as power cords, cables, adapters, discs, and parts are needed. If the consignor cannot find them, the entrepreneur may want to go online and research the items. They can offer to purchase, at consignor's cost, the replacement manuals or parts. If the consignor declines, it is the job of the entrepreneur to inform them that this will decrease the final value realized and list it in the item description.
4. Make Sure the Item Works
   
   If the item is electronic or mechanical, the business owner may want to try it out to see that it performs as specified. Plug those in vacuums, print test pages, record on VCR tapes, charge up the phones and even change the monitors. It is not a good practice to take the word of the consignor at face value. It is the entrepreneur who the customer will deal with; it is the entrepreneur who takes their money and it is the entrepreneur who will receive the negative feedback.
   
   Also, the merchandise should be clean and smell clean. When taking clothing or linen items, the entrepreneur can ask the consignor to have the item dry-cleaned or offer to have it done for them, at their expense. Clean means no spots, stains, frays or tears. All hooks, buttons, zippers should work. Collectibles, jewelry, furniture, books, craft items should be clean and free from dust, lint, pet hair before accepting the offer.
5. Research and Authenticate
   
   If applicable, the entrepreneur may need to get a history of the item. It could be as simple as "I bought this camera, used it for a family vacation and then decided I wanted to go digital." If this is not available, research like items such as year of manufacture, any problems with the units, number sold, etc. These will all help in writing description and help with bidder questions.
   
   Appraisals on jewelry and antiques are very helpful. the entrepreneur could show these in their listing. Coins should be graded. Certificates of Authenticity (COA) do not carry much weight when it comes to autographed items. Reputable members of UACC (Universal Autograph Collectors Club), TMS (The Manuscript Society) and PADA (Professional Autograph Dealers Association) will not issue a COA. Instead, they will issue an appraisal or note stating that in their experience the item is authentic and is valued at a certain price range.
6. Set Consignor Expectations
   
   The most important thing an entrepreneur must do in a consignment auction is to set consignor expectations. The consignor or product owner need to be objective so that they can work through the obstacles of what they paid for an item, what they think it is worth, what someone told them they could get for it and whatever sentimental value is attached to an item.
   
   Grandma's crystal vase is probably worth more sentimentally than financially. "Collector" Barbie Dolls and Beanie Babies are very common and entrepreneurs will be lucky to get face value. The entrepreneur needs to explain to the consignor that it is not what they paid for an item that determines the sales price, it is what is someone willing to pay for it.
   
   The entrepreneur may need to do some research on current and closed auctions to see what similar items have been sold for. What was the final selling price? Was it in a similar condition? Were all the parts there? The entrepreneur will have to provide the information, in written form, to the consignor so that they may see for themselves. This allows the consignors the opportunity to change their mind before listing the item. The last thing an entrepreneur needs is an unhappy consignor who "...was told by my friend I could get US$ 800 for that doll."
   
   Also, when someone says, "I want US$ 100 for this item," what does that mean? Do they want to net US$ 100 before or after fees and commissions? The entrepreneur will need to make that they supply the final sales information to the consignor.
7. No Less than US$ 50
   
   The entrepreneur may need to set a minimum threshold for consigned goods. An example guideline is accept no individual item with less than a US$ 50 value.
   
   The entrepreneur should think about the time and effort required to list items and run an auction. Think about the research they need to do, the photography, the item descriptions, the time required answering bidders' questions, and to package and ship. Then, think about the commission rate. Is it worth it for US$ 5 or US$ 10 items?
8. Return Policy
   
   Finally, the entrepreneur will have to set their own guidelines as to type of items they will accept. They are not obligated to accept any item a consignor brings. They can turn down or return merchandise to consignors after research shows that they will not sell at an acceptable price.

These are just a few suggested guidelines and they should be enough for now to help build the entrepreneur's business and reputation as an online seller. The primary goal should be for the consignor to be happy with the entrepreneur's professionalism and service. Business owners want these consignors to bring additional items and to spread the word to their friends and acquaintances. Generating positive feedback coming from both the consignor as well as the buyer is important.