Auction Flipping. Episode 1 of The Hustle Lab
I’m going to try out a business idea – Auction Flipping. That means buying stuff at auction and “flipping” it on eBay and Amazon. Apparently there’s money in this, and on the face of it that looks like it’s true.
I’m going to explain everything I’m doing in my attempt to launch this business. I’ll describe all the difficulties, hurdles, costs, earnings, workload and worries as they occur, and then publish them all on my blog. I’m performing this experiment in a glass box with full transparency so you get the best possible view of what happens and you can learn as much as possible from it.
Follow my attempt at making money from this blow-by-blow and judge for yourself whether you think this is a legitimate business.
But first: A word about why I’m doing this.
The Side Hustle Laboratory
This is the first ever episode of The Hustle Lab, where I take on the role of guinea pig and try out a side hustle strategy. I’ll take the risk so you’ll know what you’re getting into if you choose to follow.
I’ve started this series for a couple of reasons. The most obvious reason is that it’s a way of getting some real information, experience and knowledge about these business strategies that I can share with my audience.
There’s literally thousands of bloggers, pinterest pinners, vloggers and podcasters out there baiting your clicks with catchphrases like, “I made $127,423 in a single month by flipping stuff at auction.” Most of these make money from clicks you send to their affiliate partners. That’s Ok as far as it goes, but it’s also a conflict of interest. If they make money from your clicks, then they’ve a reason to tell you stuff that makes you click, rather than stuff that makes you leave their website to try it yourself.
These social marketers also sell courses claiming you can do the same thing they do, but if they’re making 127 grand a month, I have to wonder why they’re selling the course and not giving it away. I wanted to find out how hard it is to get into these business areas and whether there’s real money to be made or not.
The second reason I’m doing this is more personal, and more important to me. I want to overcome Entrepreneurship Inertia. That’s a fancy way of describing the difficulty we have of going from zero to one, which is yet another fancy way of describing fear of failure.
I want to get off my observer’s chair and actually start a side hustle. Since I’ve long been worried that the side hustle might lose me money or be a waste of time, I need a better reason to do it than “I want more money”. By doing it this way, I’m doing it for the social good: to learn and help others learn about specific side hustles. In this way, even if this fails to make me any money, I gain something from it anyway: The content for these articles, and the benefit it brings to others to learn from my jumping into the deep end with both feet.
So now that the explanation is out of the way, let’s get started:
Auction Flipping: What is it?
In my definition of this business model, auction flipping involves buying stuff at auction or from various other sources, and reselling it, either in another auction (eBay in my case) or on Amazon or through some other channel.
The basic concept is that you’re able to get product at a price low enough that even after all the channel and shipping costs, you end up with enough profit to make the effort worthwhile.
Sources of Product
There are different ways to get your hands on product. You can buy Amazon returned or discarded stock, for example, but I chose to buy stuff from an auction house in the UK. The auction house I’m going to use is John Pye, and you can find them at www.johnpyeauctions.co.uk. They’re frankly the low-rent end of the auction market, where businesses send their damaged, returned and liquidation goods in the hopes of making a little bit of cash off stock they’d otherwise have to pay to get rid of.
I don’t want to use Amazon boxed returned goods because having watched a few videos, I think it’s closer to gambling than to a business. I’ve seen people open boxes and find that the buyer swapped out a high-end product for a low-end product and returned the box for a refund. I personally think it’s shocking that Amazon would pass that loss on to someone else through an auction system and I want no part of it.
There are higher-end places I could go, but I want to dip my toe in this world, not become a permanent player in the industry, and I don’t want to invest too much of my money into the effort.
To sell my stuff, I’m going to be going primarily through eBay and Amazon. They’re the omnipresent marketplaces everyone’s heard of. I don’t know if I’ll be doing FBA or managing all the shipping myself. Tt would be useful to find out about FBA, so I think I’ll be testing that out once I’ve understood how complicated it really is, but I’ll have to take a closer look at the fees first.
I might try out a couple of personal ad websites like gumtree or craigslist, but I have no idea whether they’re decent places to sell stuff for a profit. Facebook marketplace may also be worth looking at, but I don’t want my Facebook profile (which has nothing to do with my professional life) to get polluted by my selling random objects I’ve picked up at auction.
I expect to learn a lot about eBay and Amazon channel costs and administration.
I’m not going to pay for any courses on this one. I’ve got more than a couple of degrees and a lots of experience in business, even if all of it involves working for someone else. I’m excellent with spreadsheets and my upbringing was steeped in common sense. I should be able to figure this out for myself.
There’s no secret sauce to auction flipping. On the complexity scale I expect it to be easier than running a blog, even if the stakes are higher.
I also think I’ll learn more this way, even if it costs me because I’ll make mistakes that might have been avoided. Lessons learned through experience are better understood than solutions given to you by others.
I’m giving myself about £800 to play with on this. I’ll see what happens once I’ve dipped my toe in the water and I may to double down on that if there’s enough to learn and I choose to extend the experiment. Since I know nothing about this business model other than what I can see from a distance, I don’t want to risk too much money at first.
I want to keep my expectations in check, and I want the test to be realistic. To that end, I’m setting out my expectations up-front. Here they are:
I don’t expect this will make me much money. Based on the research I’ve done so far, I should be able to turn a profit, but my official expectation is that I’m going to break even and make back what I invest.
I’m not lowballing the expectation here: I understand that as a complete beginner, I’m likely to make a large number of mistakes that will cost me a little bit each time, and I can expect to lose any profits I have through the learning process.
I think this will take a lot of time. I’m guessing that much of that time will be spent packing and shipping stuff.