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This life is a test.
It is only a test.
Had it been an actual life,
you would have received further instructions
on where to go and what to do.
~ Author Unknown
Introduction to Online Business Planning
The opportunities available to open and grow a successful business on eBay are boundless. Essential to the creation of a successful business, whether it is on eBay or any other e-commerce channel is the need and importance of dynamic business planning.
Dynamic business planning:
Allows for flexible, immediate reaction
Can be adjusted for events / changes
Provides for success in a reactionary environment
Dynamic business planning adds a whole new dimension from traditional business planning in that is allows for flexible and immediate reaction and subsequent adjustment for unplanned or unexpected events & changes. If you have sold on the internet for any period of time you may have experienced this firsthand.
The environment on eBay is ever-changing and continually evolving to keep pace with the fast world of e-commerce. Part of the difficulty in dynamic business planning is most e-commerce sellers are reactionary; there is not much history to gauge business planning and the industry is still evolving. Even if there was historical data, the environment is so competitive and difficult, to keep pace with literally millions of transactions occurring at any given moment, data becomes quickly irrelevant.
So how can you ensure that your business will grow and survive with so much unknown? Part of the answer to this question is 1) Identifying what to sell 2) Researching the market to determine sales potential of the item 3) Defining your target market and how you will reach them.
Identify What To Sell:
Where will you obtain the product?
Terms of purchase (consign? drop ship?)
Where will the product be stored?
Secure funds / capital
Identifying what to sell is critical to the success of your eBay business. Without the right product and ways of sourcing additional product you would have no business. Sourcing the product includes being able to answer “where” you will get your product.
Will you purchase the inventory?
Will you consign it for others?
Perhaps you will use one of the many drop shippers available today. And then finally, do you have a place to store the inventory where it will be easily accessible when it comes time to ship it to your buyer? Be certain you have also reviewed eBay’s list of prohibited items to make sure you don’t inadvertently acquire inventory you cannot sell. http://pages.ebay.com/help/policies/items-ov.html#prohibited
Securing the funds or capital is essential in the planning of acquiring inventory. Do you have cash readily available and if not, have you secured lines of credit with financial institutions? Are there investors that may be interested in offering funding? Can you purchase your inventory on consignment or even a 30 day net 10 policy? These questions should be explored in advance of launching your business.
Research Market:
Review active listings (competition)
Review completed listings (history)
Account for listing variables
Researching the Market to Determine Sales Potential
One of the very best ways to determine the sales potential of the items you are considering selling on eBay is to research right on eBay.
The easiest way to conduct research is to type in the keywords of the item into search and review the active items that are returned in search results. This will help you find what your current competition is doing. What’s the average price, are they offering free shipping, if I purchase this inventory will I be profitable?
By following up and researching completed listings will help bring you valuable information regarding the current market of the item. This search will return, on average, the previous 14 days of history of completed sales. Quickly assess the results, what’s the average or median price of a comparable successful sale. What types of items have sold? Use supply and demand and consider the sales track record as a way to make this determination.
There are also resources available on eBay’s Certified Provider list that can be incredibly revealing in your search of completed history and potential sales competition. Be sure to check out Terapeak.com and Hammertap.com, both offer ways to you’re your search easy and efficient. http://certifiedprovider.ebay.com/
Identify Target Market
Once you have identified what you will be selling on eBay it will be much easier to identify your target market. eBay has a very robust market with approximately 90 million registered users. The platform has been specially built and designed to optimize marketing opportunities for the seller. Determining your target market will be crucial to your success on eBay. Developing a strong “brand” and buyer association should also be one of the first considerations in building your online presence. Some questions to consider:
- Based upon your current research and other available data, what might be the projected volume and frequency of your target audience purchases?
- When and under what particular circumstance does your customer purchase? For example will this be a seasonal business?
- Is this a functional every day product and have the duration of weathering cyclical economic fluctuations or is it a luxury product?
- What are the demographics of your customer base, gender, age, economic status?
It will be very important for you to answer these very fundamental questions and more as your business emerges over time. Also equally important will be the need to review and assess your business’ performance over time. Market adjustments will be ongoing as the continual introduction of new products and competition will occur. Keeping pace with daily product pricing and will become a cornerstone of your survival.
eBay provides excellent free reports to help you review your progress with ease For example, Sales reports Plus is one way to monitor eBay revenues and expenses along with additional informational relevant to helping you gauge how your business is performing. You will be able to see a 3-month trending of your gross sales, unique buyers, percentage of sold items, average sales price for items sold, eBay and Paypal fees, unpaid item amounts and more. Sales Reports Plus also includes archived reports allowing for a 2-year look back period. .
To subscribe to Sales Reports Plus, you need to have an eBay seller account in good standing. There are no minimum requirements for Feedback or recent sales activity.
http://pages.ebay.com/help/sell/viewing-sales-reports.html
Another valuable reporting tool is Store Traffic Reports. You must be an eBay store owner, but once you subscribe the report is free. Traffic reports provide a more in-depth view of your buyer behaviors such as pages they are visiting, specific items they are looking at, where traffic is coming from and more. Traffic reports are a great way to help you determine how to increase your sales and effectiveness on eBay.
http://pages.ebay.com/help/sell/traffic-reports.html
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5 Tips for Effective Business Planning
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1. Clearly define your business idea and be able to succinctly articulate it. Know your mission.
2. Examine your motives. Make sure that you have a passion for owning a business and for this particular business.
3. Be willing to commit to the hours, discipline, continuous learning and the frustrations of owning your own business.
4. Conduct a competitive analysis in your market, including products, prices, promotions, advertising, distribution, quality, service, and be aware of the outside influences that affect your business.
5. Seek help from other small businesses, vendors, professionals, government agencies, employees, trade associations and trade shows. Be alert, ask questions, and visit your local SCORE office.
Brought to you by SCORE, America's small business mentors, at www.score.org.
Ask SCORE
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