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What’s a Trading Post?
Okay, you are a PowerSeller. You have been successfully selling stuff on eBay for your friends and neighbors. The garage is getting way too full, and it’s time to think about commercial space. The knee-jerk reaction might be to rent warehouse footage out by the airport where the rents are low. But there’s another alternative that’s becoming quite popular. You could open a retail shop called an eBay Trading Post, also known as an eBay drop store (see Figure 3.8).
Figure 3.8 An eBay Trading Post in a retail setting.
Trading Posts are a relatively new phenomenon, and are now popping up like weeds all over the world. As you will see when we explore them in depth throughout this book they have a number of advantages but can be challenging to run profitably.
The big advantage is that a properly located retail store with a visible sign will attract a lot of attention, and therefore a lot of potential customers, leading, with any luck, to a lot of high-end items for you to sell for a fee on eBay. The potential downside is that retail trappings are expensive. Good locations are difficult to find, and often expensive to lease when you do find them. You will need considerable working capital to start a Trading Post, perhaps as much as $75,000 to $100,000 or more. Because you will only receive a portion of the final value of the auctions, you are going to need to sell a lot of other peoples’ stuff to turn the corner financially. We’ll look at some sample financial scenarios in Chapter 4, "Budgeting, Forecasting, and Cash Flow."
