::: spoiler The term used in retail is Keystone. That means 50% profit margin. It is the benchmark. In cycling retail, few products are proper keystone margins. The issue is that keystone bumps the overburden losses so that the shop comes out to ~30%-35% actual margins. Even in a year round market for cycling, this will barely pay the rent and salaries for a sub par, maybe what I could call B-class location. Most bike shops go out of business within a decade because the margins are too thin. Any shop that lasts longer is either a write off hobby business or has an excellent bike service and maintenance business for low end junk only. The margins are too thin in bikes to make up for the overburden. I learned to specialize in overburden management. This is why I did eBay. I also sold customer trade in bikes and occasional strait consignments. Keystone is the secret to sustainable retail.
The reason retail struggles right now is because online sellers do not have skilled sales staff labor or retail space rent to deal with. It may be possible to run a business on at little as 25%-30% margins in some cases. You certainly won’t get someone like me doing the job though.
I can’t say how viable it would be to do eBay as a business. It takes a lot of space and organization between staging listings, storing listed items, shipping sold items as soon as payment clears, and a photo studio setup. There is a ton of time involved with listings and it is not really possible to make that into a 9-5 job easily. I answered questions and stuff right away during my waking hours. I doubt you could even find someone that could know and understand products like that as an employee. You won’t get a ton of consignments from most people. It is hard for a person to want to get rid of their bike and deal with the numbers in practice.
Let’s say you bring me your 3 year old BMC carbon road bike you paid way too much for and spent $3k5 on new. I look up the sold history for your exact bike and find 3 have sold for $850, $925, and $1225. You don’t know anything about how I’m using sold history, and you looked up your bike on eBay already. You found 10 bikes, of which 3 were sawn into pieces and smashed with a sledgehammer while they were listed for $50 over what you paid 3 years ago for your new bike. Now I have to explain why those listings were created by mental patients in a padded room somewhere. I have to show you that I can only expect to get the average sold history price for your stuff because you race and your 3 years is like a club rider’s decade and is beat to hell. Now I have to tell you what I can offer you. The final offer is $360. Do you take that offer for the bike you paid $3k5 for just 3 years ago? Most people can’t stomach that kind of offer. However that is accounting for all of the fees combined that I must pay other businesses (40%), then that is 40% of the remaining for me to do a massive amount of work to photograph and carefully pack the bike for shipping. I’m taking all of the variable risk and in most cases not getting adequate pay for my time commitments.
In a shop environment, as the Buyer, I was like one of the owners. I could assign employees or schedule them to do whatever I wished. I utilized them to do a lot of the menial work while I managed and oversaw the details on the side. Overall eBay was just a tool for me to manage the inventory of all of my shops. I bought many little eeww and awww flashy products people like to look at but will never purchase specifically because I could easily offload them later on eBay for cost. Like that Felt IA I mentioned in the original post, one of the owners got to ride it for a season. That was a 30% margin purchase. There was no chance I was selling a $14,900 bike out of my stores in an area without many high profile triathlon events. It was just eye candy. I marketed it as a rental bike too just for kicks and giggles, but no one bit that bait. That was a stupid expensive bike at the time and I had to order it well in advance. I sold a ton of other lower end triathlon bikes though and I got a good deal on a size run from Felt and Orbea. That anchor brought people into the store. The bike cost me $10,430 which was hard on my budget for highest end but there wasn’t anything spectacular in Road bikes in the same season, and that is only like 3 high end bikes I sacrificed. I think I sold the wheels for somewhere north of $1500 shortly thereafter. So in the end I managed to pull over cost… technically, but after you factor all eBay fees I actually lost around $3,770 to my advertising and happy owner in a hobby business budget.
In my experience, eBay is too expensive in total for what they offer and the support they give. You’ll find yourself in a pawnshop like business model and you’ll likely need a pawn license if you want to do it long term and be protected. One has to ask why the person is willing to take so little for such high end merchandise in the first place instead of trying to sell it themselves or just giving it away to someone where the act has more useful value.
That is just my take. I would consider it much more viable at a 20% total margin for all overhead from taxes to shipping and listings. At 30% it probably isn’t long term sustainable. At the 40% I experienced, this is the reason eBay goes to massive lengths to obfuscate the total fees involved with selling on the platform. They do not want you to know this number even if you sell a ton of stuff on there. It is hard to track all of it in detail.