Sourcing Products : Episode 2 of the Hustle Lab

As you’ll know if you read the previous instalment, I’m trying out a side hustle – for experimental purposes – which I referred to as auction flipping. I’m buying stuff at auction and selling it, primarily on eBay and Amazon.

The first step in this process is to get stuff to sell, and that’s where the auctions are involved. In this episode, I’ll talk about how I obtained my first two lots of stock and the various challenges and lessons learned in the process.

If you’re reading this and you have some experience to share, I’d be very happy for you to comment below. If this is something you have a lot of experience with, then please reach out if you want to be featured at the end.

I started by doing a little research and I found out that the easiest place for me to get a decent amount of stock was at John Pye Auctions.

John Pye is a kind of low-rent auction house where a lot of defunct stock seems to get offloaded on a regular basis (several times per week). Their website lists a ton of stock being ready for auction in the coming days, and they frequently have large lots of goods that seem to come from hardware, toy and electrical goods stores.

You get everything from fridges to circular saws, wireless keyboards to bicycles.

All of it comes with a nasty little disclaimer:

John Pye Auction Disclaimer
This is a Public Auction, not a consumer/retail sale – Lots inc. second-hand, returns, ex-display and damaged goods, sold as they lie – Public Viewings are recommended.

Of course the auctions are in far away places and a public viewing is impossible.

The Bidding Process

I put in what I thought were reasonable bids for a few of the items on sale. There’s a minimum efficient amount of stuff to bid on since I have to ship it all at my own cost from the auction site to my home. I want to spread that cost over at least a decent quantity of goods.

I bid on:

  • A TomTom Sports Golfer’s Watch with GPS
  • Two speaker systems for gamers
  • A bunch of “Ring” video doorbells*
  • 5 sets of Sony Headphones
  • Two baby monitors
  • A thrustmaster joystick control system forgamers
  • 4 bids on individual Tello quadcopters
  • One bid on a bundle of 2 Tello quadcopters (oneout of its box)
  • A Kobo e-reader

I got outbid on almost all of it. Some people clearly have a higher appetite for risk than I do.

Since the auctrion hadn’t concluded yet, I went back to the listings and increased my bids in certain places, found a few new items I could be interested in, and did a lot of cross-referencing with prices on eBay and Amazon with the help of a spreadsheet.

The bidding process is actually quite stressful. Everyone focused their attention at the alst minute and since a lot of this stuff is going to end up on eBay or Amazon, everyone has access to the same resale data that I do, only with more experience to interpret it and back it up.

The question I found myself asking was, if the margin on this or that item is only £2.50, how much hassle am I willing to put myself through to make that amount of money? Is it worth the time for me to list, rewrap, address, post and run the risk of damaged goods or returns for such a small amount of money?

If this experience goes well, finding another source of product will be the next step on the journey.

Do I become a Ninja Luxury Handbag Trader?

Watch this space… stranger things have happened.

A Little Live Blogging

So the auction’s underway as I type this and I’m getting outbid on stuff, so I  run off to eBay to check the value of the item on the secondary market before I return to up my bid again. I see profits being flushed down the toilet every time this happens and it’s frustrating.

I’ve been outbid on the speaker system for the third time. I just put in a higher bid but the other bidder was ahead of me. I’ll stop there on this one. There’s only 2 minutes to go on the set of 2 drones and I see no other bids coming in. Let’s hope there isn’t an article in the news trashing Tello drones since it looks like I just bought a couple.

 I’m keeping my hands away from the keyboard at this point. I don’t want to get drawn into a bidding war. I’d hate to lose money because Ididn’t follow my own rules. Looks like I’m going to be the proud owner of a few headphones and some drones. I’ll let the auction play itself out without further intervention now.

I’m going to spend some time organising the shipment of all this stuff from Staffordshire, where it’s being auctioned, to London, where I can assess the damage.

Why do I feel like I need to take a shower?

Initial Conclusions

Invoice from the Auction House

Well, the auction is over and I’m now the proud owner of 4 Tello Drones, one broken-looking Tello drone without packaging and five pairs of cheap Sony headphones.

The cost to me :

£108 in bidding amounts
plus £21.60 in bidders premium
plus £25.92 in value added tax
plus £12.45 in shipping costs
Total : £167.97

What can I expect to make from these products?

A pre-owned Tello drone goes for about £65 on eBay
A set of MDR-ZX110 Sony headphones goes for about £13 on eBay

I assume I can charge the actual shipping cost to the end customer so I can ignore it. I should make about £390 in revenue. I’ll trim that down by 15% because something’s bound to go horribly wrong, so let’s call it £330. Then I have to subtract various costs like referral fees that I’ve not looked into in any great detail, but let’s call it 10% for now. That brings us to £297, which would represent about a 77% profit on my initial costs.

This isn’t enough stock to get properly stuck into this business model, so I’m going to be buying more at auction over the coming days.

That sounds too good to be true, so it probably is. We’ll see how it pans out in the next few instalments.

Lessons Learned

  • You need to know what something is worth to you before you get into the auction process
  • Make sure you understand the additional costs of buying at auction. Is there a bidder’s premium? Is there a sales tax or VAT? Is the tax also paid on the bidder’s premium?
  • Try to figure out which iteams are in decent condition. If you have a doubt, it’s probably worth passing
  • Take into consideration shipping costs, you’ll have to pay these too

A Polite Request

This exercise is expensive in time and effort. I’m doing it because I think it creates useful information for the budding, but as yet uncommitted side-hustler-to-be. It’s also a learning experience for me.

What would make it more interesting and more useful is if you were to get involved. By asking questions. By providing insight. By sharing your stories. You can do that in the comments, or you can write to me and I can write it up, with or without credit (you choose), in one of these posts.