Getting it right. What percentage of your income do you spend on inventory

[taerese]

Hi.

How do you control stock and at the same time ensure that you have enough disposable income after bills

This is easy pea for the long time seller with enough money to fill their refrigerator for a year but it could be very daunting and challenging for a new user trying to climb the ebay tree.

So, what are your advise. How do you do it?

[Haidukken]

Don't risk more than you can afford to lose? I guess that's the view I take on investment in general.

When it comes to stock as such, I remember starting out and investing 90% of my money into stock because I wanted to get going real quick and based on my calculations my profit margin was at around 300%.
It's not an approach that I would tell other people to take, but for me personally, it seemed like an only way to get going.
Now looking back, I would suggest people to invest maybe 50% of your money into it and take is slow and steady- It's all a learning process and if you have a bit left in the bank, you might sleep better.

Now... Now I invest a lot less because I know roughly how much I sell and what the potential is. Obviously if I get a great deal on something I will still buy and flip it, but gone are the days where I force myself to buy buy buy and think that I can forever keep selling selling selling.
Obviously I have more in the bank so I can sit on my stock for longer period as well- That has been the real key for me I think.

I now save 50% of my money, invest 25% of my money and use 25% for daily stuff like bills and food and other expenses. Anything left over, I either buy my other half something nice or send my friends random presents.
Because my turnover has grown quite a bit, 25% investment is more than enough to generate quite a bit of income.

Once you get going, you'll see what numbers work for you. In my case, the amount I spend on stock is very closely related to how much I feel/think I can sell.

Also, if you are selling something for months and months in a row, then you will have to replenish your stock etc. It makes money management a lot easier- It's like running a bar. You sell out of booze, buy new stock in the morning and what else is left- That's for yourself.

[jeffweico]

I don't think there is any "right" answer here. It all depends on what you are selling. When it comes to books, what I spend on inventory is determined by the opportunities available to me that month. If there are a lot of opportunities, I can access a bank line of credit I use for this purpose (although I try to avoid that).

For my other inventory, I try to buy enough to make two weeks worth of sales. When I reach the halfway mark, I order more. Of course, there ARE exceptions to this rule, such as stocking up for Christmas, etc.

At the end of the day, you just have to do what works for you.

As far as doing this as a new seller, I would only invest what I could afford to lose. Don't spend your mortgage money thinking you will make it up out of sales. Because if anything goes wrong (AND BELIEVE ME, IT DOES!) then you are going to be behind on your bills.

[yankee]

I have a lot of rules for inventory and most likely my standards would not work for most people.
A huge factor is "Who's" money is spent of inventory and next is ROI and rate of turn. If I am holding inventory, I try to not have more than 30 days supply on hand unless the ROI is 3x+ and limited availability.

When using other peoples money, it comes down to supply and demand and what is an acceptable turn/ROI for the investor/creditor.

If I am liquidating retail stores inventory and pay cash, the ROI is going to be exorbitant and turn is five day $0.99 auctions with no reserve.

Every situation is different. You have to figure out what works best for you and your situation.

[jeffweico]

I agree with Yankee and would also add that if you are IMPORTING, you also must take into account the shipping times, and customs duties or fees and any holidays in the country you are importing from. In China, for example, each year they have the Chinese New Year followed by the Spring Festival, which lasts 7-10 days. During that time, NOTHING IS MOVING out of China, so you want to have extra stock on hand to account for that.

[GreenBean]

Your choices need to be based on how much selling you are doing as well.

Are you looking to be full time or as a hobby seller until the accounts become more viable.

Tough question to answer as every person and situation is different.

I wouldn't advise over stretching yourself if you are just starting out. You will build a better sense of what you can do over time.

[richie2065]

Just to add in my 2 cent, I try not to hold too much stock so when it comes in from my supplier I list to sell then order more, the reasons behind this is not cash flow but the uncertainty of ebay knowing that one day I may wake to find the account suspended (even though I only sell legit item) Don't want to be left with mountains or stock and a back debt.