Bootstrapping on Craigslist: Finding Your Own Way Through Financial Uncertainty Part II
With Little or No Startup Funding
In article one, we looked at the basics of selling as a means of making money with Craigslist. If you're new to the unemployment world and are concerned for your finances, chances are fairly good that you have some sort of collection or stack of "stuff" lying around that has simply collected dust. Check out the first article if you're uncertain as to what you need to focus on if you're looking to make a bit of cash for your old stuff. Covered are the elements to consider in order to sell, what to expect, and what to watch out for in selling on Craigslist.
It's to be expected at some point or another-you find yourself low on inventory, and maybe even a little cash rich in your Craigslist exploits. In which case, congratulations! On the other hand, if you're strapped for cash, and concerned about where the next utility payment is going to come from, that is a different story. As with anything else stressful, the best solution is to sit and think of a way out of it. As the focus here is generating money with Craigslist, you may consider taking what little cash you have, and finding something to sell.
As mentioned in the previous article, the name of the game is buy low, sell high, which is how it's always been in the commercial world. The other major point to keep in mind is cash flow. If you're considering taking the Craigslist merchant lifestyle to the next level, or you think your un/underemployment state is here to stay, these are the two incredibly important elements to bear in mind throughout every transaction.
When it comes to developing inventory, remember the following:
1) Choose a niche: Or two, or three. Depending on how well rounded of person you are, you may feel comfortable selling a range of different products. The theory is that as long as you select a niche you're interested in, 1) you won't pay someone more than this or that item is worth, 2) you won't invest in something you don't believe in (ie, you'll be able to sell it effectively, if the need to sell arises), and 3) you won't burnout and find yourself with an inventory you can't bring yourself to effectively get rid of. If you're into music, educate yourself on the value of products in demand. eBay is an excellent resource for this, as you can investigate what people are willing to pay for a variety of items by specifying "completed listings". And remember to only purchase from someone an item you know can be sold. If that Michael Buble CD is something that can be bought for $2 at a used record store, don't pay $5 and hope to sell it for $10. Instead, focus on the highly commercial elements in your niche. A good investment would be if you come across a collectible vinyl record at a yard sale for $.75, and someone paid $20 for that same record on eBay last week, then go for it.
2) Find the goods: Everyone and their brother has access to a computer nowadays. Meaning, if you see an 64GB iPad in your town selling for $50, then a million other people have seen that same post. Don't get me wrong, monitor the marketplace, but don't rely completely on it for your merchandise. The unusually good deals are exactly where you'd expect to find them:
-mom and pop shops (where negotiation is encouraged)
If you can't find good deals, then you aren't looking in the right places.
3) Pricing: This is where it gets a bit hairy. You obviously have to mark your product up, otherwise you'll simply be treading water. If you see your prize widget in the store for $20, but find that it could sell for $50 online, what do you decide on? The answer is "it depends". One of the variables is when will you next come across that same widget? Is it collectible? Is it incredibly common? Clearly, if it is valuable or rare, and in demand (which means someone will pay money for it-remember, rare does not necessarily mean valuable), you have the opportunity to make a bit more, but the tradeoff is turnaround time. If you have a steady stream of goods coming in and can afford to wait to make that extra $50, $100, $500, then by all means, wait. On the other hand, if it's something you're likely to come across your next round through the pawn shops, then price it to move. Cash flow is king. It's better to make $5 three times today than wait to make $20 the day after tomorrow. The reason is that your $15 could have been put to work for another two days (an additional $30) by the time you 'held out' for that $20.
4) Buying and Negotiating: This makes a lot of peoples' blood run cold. Every culture is different, and every set of family values is different. Some cultures (and families) believe that a very deal-centric process is ideal and will go as far as screaming and throwing things to get that deal while others are very relationally-oriented, valuing the manner in which that deal is conducted in order to preserve the relationship. The truth is, there are no hard an fast rules, and it's not possible to empirically prove which philosophy is "better". Personally, if an item is priced well (meaning I can make at least 10% and still sell in a reasonable timeframe), then I will ask the seller once "if he/she'd be willing to sell for less", and then will either buy or not buy. If it's priced according to the fair market value or above, I'll ask no more than three times for any reason. As a personal rule, whatever price I have at request number three is what I walk away with.