Before Selling Anything Research Your Market

For a number of popular items (DVDs, electronics and computer games in particular), the profit margins tend to be very low when buying from wholesalers. Despite this, many sellers just see the popularity of the item and dive in head first. Overly-saturated markets just mean a lot of work for very little in return. Throw big, established sellers into the mix and it's almost impossible to compete.

I recommend: Visiting auction sites, reading classified ads and any material you can get your hands on until you have a good idea of exactly what you’re going to sell and the price you're going to sell it for. eBay and Amazon are great places for gauging prices.

Just Because Your Business is Online Doesn't Mean You Should Stay Online

The Internet provides easy access to a great many wholesalers these days, and it's a quick way of making initial contacts. However, it certainly doesn't provide access to all wholesalers. If you're serious about finding the best wholesale prices for your products, then it pays to check out other sources as well.

I recommend: Try looking through trade magazines such as Closeout News and Wholesale Merchandise. With fewer people vying for stock, there’s a good chance you’ll find some exceedingly good prices tucked away in the corners!

Build Relationships

Yes, Email is a wonderful thing and it saves a lot of time but building up personal relationships with sellers is absolutely essential for getting the best priced goods.

I recommend: Making a phone call, starting up an email exchange, or having regular chats on a messenger service and getting to know the supplier. The time you spend building a relationship will not only mean you’re in a stronger position to get better prices, but, because you know your supplier, you’ll be more confident that things will go smoothly when you finally do place your order. For some benefits of forming long term business relationships check out  Entrepreneur.

Deciding Where To Sell

As the world's biggest marketplace, eBay has made its fair share of millionaires. However, the fact is eBay is simply too competitive in some categories. Electronics, jewelry, designer clothing and computer games are all dangerous territory for the new seller. You won't stand a chance against established sellers who've already got a strong following and highly competitive prices.

I recommend: Shifting your focus to less competitive markets if your product falls into the product categories mentioned. Try selling through classified newspapers in your local area. Try using eBay international sites such as eBay UK or eBay Australia, as well as other sites with less competition such as craigslist and UBid. These sites give consistently higher margins compared to eBay US, and the number of buyers is still very high.

Locate a Niche Market

Finding a niche item that no-one else is supplying at a competitive rate is every seller's dream. Niche products are hard to find precisely because they aren't wanted by everybody. Thus, finding a supplier will take quite a bit of work on your behalf as these items usually can't be purchased from individual wholesalers. Instead, you'll have to contact large wholesalers, or even contact the manufacturer directly.

I recommend: Doing effective market research and  taking the time to find a good supplier. If you do this then your hard work will pay off. Software like Auction Inspector can help you find niche markets.