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Starting An eBay And Amazon Business In 2014: It’s All About The Cash Flow, Joe.

Hi gang,

I’m really happy to announce that my good friends at StartupNation have asked me to keep on truckin’ with some more e-commerce blog posts for your enjoyment and, hopefully, benefit. Basically, I am the Game of Thrones of e-commerce. My 13 year journey is full of ascension, betrayal, conquest, death, misdirection, battles, snark, wit, plans, manboobs, and of course dragons and the undead – I’ll probably need to explain those last two later. In short, if you don’t know me, I am THIS guy.

In the meantime, let’s talk about you. You are driving a red minivan right now, having just left the courthouse where you told the judge that yes, you did in fact hit the neighbors dog with a dart gun but it was because the dog wouldn’t shut up at 3 am and so he had it coming. The picture of the two dogs on the judges desk probably should have clued you in to the fact that you were not going to have a sympathetic ear, but unfortunately you missed that clue and you were genuinely surprised when the judge nailed you with a $1,500.00 fine and ordered you to pick up dog poop with one of those little poopsandwichbaggies for a year.

Your husband, who you quietly call “Failure Frank”, is certainly not going to be happy about the fine. You just blew his entire miniature army figure budget for the year and his ComicCon airfare as well. That will not be a pleasant conversation.

The bottom line is, you need to make some money. Your best option, of course, is being an adult escort, but you pretty much blew up that bridge when you gleefully yelled across your yard at your COOL neighbor that “Frank is DTF tonight!” thinking that DTF stood for Doing The Floors. You wince as you recall your neighbors startled, horrified expression.

It’s time to sell stuff on eBay and Amazon.

Good idea? Well, sure. Hundreds of thousands of people sell stuff on eBay and Amazon all the time. Some people actually make money doing it. Others form companies and turn eBay and Amazon selling into a business. Selling on eBay and Amazon is like anything else – you can make money or you can lose money, so be smart about it.

I thought that, since you’ve decided to get Failure Frank his war miniatures money back, that you should know a couple of the roadblocks you’re going to face on each platform at the very beginning. Knowledge of these hiccups ahead of time can save you a lot of frustration.

Let’s start with Amazon:

There are 2 things about Amazon which can be a problem right off the bat:

1. Not every category is open to sell goods. So if you have a bunch of shoes you want to sell, you are hosed at the beginning because the Clothing, Shoes, and Accessories category is closed and you need to meet certain requirements to sell. For a list of categories that are restricted, go here

2. Amazon only pays you every 14 days. Be very careful with this one because it can be a serious cash flow issue. Also remember that Amazon does not pay you for an order until it is shipped. So plan for that by having enough cash/credit available to withstand the onslaught of expenses until the money is transferred.

eBay is even more fun:

1. For new sellers, eBay restricts the number and amount of items they can sell at first. If you were a seller unfortunate enough to try to start an eBay business in Q4 of last year, the monthly number of items you were allowed to sell was….wait for it….10. ten. TEN. At other times of the year, they will start you off at 100 items monthly. That’s no problem for a small seller just getting started but insanely restrictive for a medium/large seller, so just know that ahead of time. As long as your feedback is good, eBay will gradually loosen the stranglehold on your listing restrictions. You are absolutely free to call eBay and explain your business model to a frontline 21 year old kid, but don’t expect much from it. These eBay employees are even trained to ask you The Forbidden Question. “So, who are your suppliers?” (note: NEVER answer that question)

2. Paypal, which eBay owns and requires you to use for payments on eBay, will hold your funds for up to 21 days before they give it to you. This creates another major cash flow issue and so plan accordingly. As with the eBay restrictions, they will eventually begin releasing your funds to you earlier, but I have spoken with several sellers who tell me that Paypal will sometimes hold for 21 days for 3-4 months. What’s more disturbing is that PayPal has also been known to require a seller to maintain a percentage of sales in their account at all times, even long after the seller has proven themselves worthy. For many sellers, that percentage is 25, which is a very large cash flow burden once again so make sure you plan for that also.

3. Your listings will not be seen by a lot of people at first, so expect sales to start slowly. This is a product of eBay’s highly complex listings and results algorithms. The short story is this: the visibility of your items gets better the more items you sell and the better you are evaluated by your buyers (called DSR’s in eBaySpeak). Don’t expect much at first, but if you are a good seller, it will get better.

It’s interesting to note the difference in approach between the two companies for new sellers right now. Amazon seems to approach it in a friendly manner: “Welcome! Come on in! Fill this out and you’re selling! Have some cookies! Use FBA! We only make money when you do!” Basically, Amazon is the OtherMother from Coraline . eBay, on the other hand, appears to approach the relationship like this: “I’m sorry – who are you? Why do you want to sell here? Who are your suppliers? Well…ok, I guess we’ll let you sell, but we’re not going to let you sell much at first and we’re holding your money for 3 weeks. Your listings will also be pretty much invisible but we’re going to make you pay for them upfront even if they don’t sell. You ok with that? Ok then. Oh, we’ll be watching you, mister!”

So the good news, Joe (short for Josephene which you got from your Momma’s side of the family) is that you can indeed start Amazon and eBay businesses, and you can indeed help Frank out. In general, though, prepare to be very patient and make sure you have enough cash on hand to weather the storm at first.

That dog probably DID have it comin’

Kidding.

Kevin Harmon

Hey! I’ve finally started a website! Come play with me: GodImSexy.com

Twitter: imadness
LinkedIn: Kevin Harmon

P.S. I want to write for a living. Somebody hire me!

About the Author: Kevin Harmon

Kevin Harmon is a freelance e-commerce business consultant and blogger. He is the former CEO of Inflatable Madness, LLC, one of the largest DVD and CD sellers on eBay and Amazon, and Red Shorts Media, LLC, which operated multiple e-commerce media buyback websites.