(Day 4: Oh my goodness. This is tough. I was dying to watch television yesterday after a long workday. But I didn’t and today is much easier. I think not watching TV, more than any other bad habit, will help me to be more aware and responsible for my daily actions. The next challenge will be a weekend of no television.)
(I know I’m not watching TV right now, but you can enjoy this Warren Buffet cameo for me!)
More than any other CEO, Warren Buffet’s shareholder letters are his signature: uniquely personal, incredibly insightful peeks into his world. He reflects on the company’s successes and failures of the past year, provides explanations to how he and Charlie Munger value companies and understand that particular business, its industry and expectations of growth, and often provides anecdotes and personal detail not found anywhere else. That sounds like a personal blog of a very successful business owner and investor! Some people have even made books just by compiling these shareholder letters, but why pay for something when you can get it for free?
I don’t talk much about investing in equities, and for good reason. I don’t think I should be investing when I am in debt. I contribute to my retirement account and savings account with every dollar I make, but I am not spending much time these days thinking about investments. Personally, I prefer small business and real estate investments, and stock investing requires time and a sophisticated understanding of the industry you invest in. Put simply, you better know your sh*t! I’m OK with not investing, knowing that my debt balances are going down and my savings is growing (slowly of course). Which got me to thinking about tech stocks. Tech stocks are always in the news. Sure, right now it’s Facebook and its inevitable underperformance, but before that it was Groupon, and LinkedIn, and Microsoft and Baidu and Zynga and Yahoo! and eBay and Amazon…you get the point. Remember how I lost a lot of money in options? Well, that was a tech stock. I took advantage of that stock’s volatility for two years profitably, but in the end, I got hosed because it wasn’t my investing strategy I was using, but someone else’s. I learned a great lesson about investing (develop your own strategy), but I also became much more wary of the tech industry.
Many great investors specifically stay away from tech stocks. The industry changes rapidly and competition is fierce, including shameless copycats. Users are fickle, servers crash and you’re one animated GIF away from becoming a sad internet joke. That’s an exaggeration but it’s not a grand one either. On the other hand, companies like Youtube and Instagram are companies without many major physical assets but who were nonetheless acquired for $1.65 Billion and $1 Billion, respectively. Think about that. I think it’s important for people from all walks of life to grasp that concept: the amazing thing about the tech industry is the value which its major players put on a product or service that has a large number of users with a strong loyalty record. Instagram is not making money…yet. But it has 30 million users (and growing) who might be willing to sit through an ad the next time they log in to the app. Which brings me to my next point: the world’s largest technology company, Google, and most other web-based or mobile tech companies make their money from advertising. Does this blow your mind? It blows my mind! Here is a product as amazing as Google, one that has infiltrated millions if not billions of people’s lives, it has changed the way our mind processes information, the way we think and it has made me an information and media addict, and it derives the majority of its revenues from advertising! Unlike TV or movies, there are no subscription fees or box-office revenues.They don’t charge for 99% of their products and services. Just ads. Just other companies paying Google to allow them to place ads all over everything and all over our minds. What can we take from all of that? That providing businesses with a service that you can do better than they can (Google is better at getting their ads out to more viewers) can be 1000x more valuable than the products of the business itself! Crazy right? While it’s exciting for Google and other big players, an entire industry dependent on advertising revenue seems extremely volatile and we have seen tech stocks rise and fall sharply since they began dominating NASDAQ in the late 1990s. Companies can fold or fade easily in any industry, but it seems like the sheer volume of tech companies makes it all the more dramatic.
Of course, internet and web-based companies are not the only types of companies that are tech.
Tech Industry Includes All Kinds of Companies
There are software companies (Microsoft), e-commerce companies or e-tailers (Amazon), hardware companies (ASUS), WiFi/connectivity companies, SaaS (Software as a Service like Salesforce) and cloud computing services and so many more that don’t get as much airplay like financial technology (like payment processors), medical technology and building and engineering technology. Lots of these companies have tons of physical assets, are sitting on cold hard cash (last I checked Yahoo! had about $3 billion in cash) and have weathered several economic storms. So there are plenty of companies that could be values for an investor, but they are probably not going to be the hyped-up IPOs.
I love the technology industry and like to stay somewhat informed of the news and trends in this market, but I am not about to buy any more tech stocks. I am not a full-time or active investor at all, and investing in tech stocks without a deep understanding of the company, the management and the next big move the company needs to make is straight GAMBLING. You wouldn’t invest in a shady MLM company when your financial situation is rough, why should you take a similar risk with investing in a tech company you know little about?
One of the hardest things about changing your financial situation (from really crappy to pretty good) is getting the big picture of financial matters. Sometimes, when we are tight on money, we hear anecdotal evidence that could tempt us to take big risks. “Lady Godiva bought Apple stock when it was $92 and now it’s almost $600!” or “Jamie’s brother is buying a ton of foreclosed houses and flipping them for profit!” Anecdotal. Anecdotal. Anecdotal! It’s one instance. What worked for someone else in the past may not neccesarily work for you. I try not to compare myself to others anymore. Consider the same advice in your investing and financial life. So even though I like the technology industry and its services and products and breakneck speed, I don’t have any plans to invest in it. Unless someone has the next Instagram and wants to offer a very small angel investor a 10% stake. I wouldn’t turn that down.
What about you? Do you have preferred industries you invest in? Others you steer clear of? Where have you had your best returns? Secret tip-sharing encouraged.
Happy Halloween: If you can’t have good customer service, do this.
After you’ve started selling on eBay, you’ll discover a weird secret about sales: you now have customers. If you’ve never worked in a restaurant, retail or other direct-interaction-with-the-general-public type job, having customers is a strange new phenomenon. Here are a bunch of strangers who are suddenly asking you a lot of questions at once and a sale might depend on it. When a sale is completed, there are even more questions coming in and you have a few of your own: How do I handle this flood of requests? How do I deal with returns? How fast should I ship? Every successful eBay seller is different. But after having spoken with sellers whose volume ranges from $20,000/month to over $1 million/month, as well as handling my own much more modest sales volume, I’ve developed my own way of doing customer service on eBay. It’s unique to the platform and it’s focused on efficiency, because by its nature, an eBay business is less efficient than a normal retail sales operation. But with lower overhead and start-up costs, eBay is a great place to gain real world sales and customer service experience. My overall eBay customer service philosophy is: be as descriptive and honest as possible, always offer a refund or a way to correct any problems and work customer service tasks when they are convenient for you (you don’t have a 24-hour customer service number for a reason!).
Tips for Strong eBay Customer Service
1. Always describe items to the best of your knowledge with all flaws clearly described. It’s so much easier than dealing with returns. Jeans have a weird oil stain? Mention it and take a picture of it. Selling a Tiffany necklace with a loose clasp? You better describe it! I have found that it is better to disappoint people upfront and I am in the habit of describing items with plenty of detail, several pictures and an open, enthusiastic tone (some eBay sellers sound very unhappy in their product descriptions and make the buying process sound like a punishment. Make buying from you sound like a fun, positive experience). Sometimes I sell stuff I know nothing about and have no way of testing to see if it works, like computer components or SCUBA gear. I list those items for parts only/non-working or as is and with tons of pictures. Specialty items tend to find their buyers and get bid up to their value, even if the exact condition can’t be verified.
2. Offer a No Questions Asked refund policy. It’s easier and faster and most people won’t abuse it. Someone will probably take advantage of you at some point, but not enough to matter. Most customers are very impressed with an easy refund policy and will leave you glowing positive feedback despite not getting the product they were expecting.
3. Do Your eBay Work in Batches. Like any other online activity, eBay listing and management can become a time warp, and you can waste hours listing one item at a time, leaving one feedback at a time, or printing out shipping labels one by one. I do everything in batches: process orders twice a week (since my listings end twice a week), leave feedback for all paid transactions once a week, and account for all sales, refunds and fees once a week. Turbo Lister is a free eBay tool (but it’s only for PCs) and will save you time when you are listing multiple items.
4. Don’t Respond to Every Question. It feels counter-intuitive, but you don’t need to respond to every single question. I’m at the point where my feedback and my extremely detailed listings speak for themselves. In my case (but certainly not everyone’s) most people’s questions are irrelevant. They either ask me to ship to countries I don’t ship to, ask about a detail that is already in the listing or are requesting a product I don’t have. If I have something they request, I will list it and respond to them. But if I don’t and I have no plans to get it, I don’t respond. My eBay sales are not intended to become a big time commitment and I like it that way.
5. Ship items promptly and with tracking. As long as you ship out within one business day, your buyers will be impressed with your speedy shipping. An item could end on Thursday night, your buyer will pay on Friday, leaving you to ship on Monday and still meet the one business day window. Tracking is also vital in case buyers ever claim not to have received an item. USPS does lose mail and UPS is generally better but also more expensive. You will have to decide which carrier works best for your business.
6. Always be polite to a fault in messages and feedback. Since getting a lot more active in eBay in the past six months, I can tell you that some customers are going to be rude. It will be new and unexpected at first, but just know that no matter how detailed your listing and how easy your return policy is, you will never make everyone happy. Some people really enjoy complaining. Just offer them a refund and move along. Don’t get dragged into any fights and don’t defend your product (“What do you mean it’s broken? It was working fine when I shipped it!!”). Once you’ve offered a refund, you’ve done everything you need to do. You won’t change anyone’s mind trying to convince them that you’re right and they’re wrong. The customer’s always right, remember?
Are you interested in seeing more posts about eBay? I can talk about cutting down costs, the logistics of your operation, eBay stores and listing software. But I may look at some other small business ideas first as well as alternatives to eBay. Let me know what piques your interest…
If you’re under the age of 35 or so, chances are that someone has asked you to do something web or tech-related for them. I actually really like that. I miss the old days when my mom would ask me how to get to her Gmail while she was looking at the Yahoo! homepage (now she’s all savvy and checks her Facebook on her iPhone). I’m a pretty active eBay seller and people are always asking me to help them set up their eBay listings or figure out what to sell. eBay is awesome. Setting aside the double-dip they get on their fees (eBay charges fees per listing and per PayPal transaction, the online payment processor it also owns), the magic of eBay is that it provides efficiency to an inefficient market. Anyone can sell their used and new items and can choose whether they want to make their product available to international eBay buyers as well (thereby increasing their market with a single click). But after ten years of selling apparel, electronics and highly technical niche equipment on eBay, I have a pretty good idea of what is worth selling and where you shouldn’t even bother. There are tons of eBay seller guides available to help you research what sells well, as well as Terapeak, but I like to round these ideas out with real sellers’ experiences.
The following are just a few of my favorite products and brands to list on eBay and are based on my personal experience only. These brands sell well even when the item is used, as long as it is a current style and in good condition.
- Tory Burch (People go crazy over anything with that big double T logo)
- Michael Kors
- Tommy Bahama (Men’s Hawaiian shirts in general sell like gold on eBay)
- Juicy Couture Kids (it’s a little less common on eBay and tends to sell very well)
- Whatever the hottest denim brand of the moment is (Seven, Citizens, J Brand, True Religion)
- Under Armour
The important thing about electronics brands is that they seem to sell well even when it is really dated stuff (to you). So if you’re in doubt, just list it. You’ll start to get a feel for what’s popular based on the number of watchers and page views your item has.
- Apple (duh)
Other Stuff that Sells Well on eBay
- Scuba/diving gear and other specialized sporting equipment
- Power tools
- Construction small items like clamps, connectors, fittings, etc.
- Anything related to CB/Shortwave/Ham Radio
- Auto parts
- Vintage/collectible/antique items in popular, low to mid-priced categories (Bakelite, vintage costume jewelry, army/navy/war surplus)
…And Stuff that Doesn’t Sell Well on eBay
- James Perse/Vince/and other non-flashy aspirational designer brands (Rule of thumb: does it have a big logo? Sell it on eBay!)
- Generic clothing (Don’t expect to make a living selling plain black t’s unless you are already a well-established seller)
- Super-specialized items that don’t have a large enough audience on eBay to sell for what they’re worth (like high-end antiques)
There are many different ways you can go with an eBay business. You might start out just cleaning out your house and garage of old stuff you never use and realize you really enjoy selling and don’t want to stop (especially when you’re just two feedback away from the next color star!). Then comes the more difficult task of actually choosing a few items to buy over and over to sell on eBay. It might take a few tries, but you will eventually discover what works for your business.
Next time on The eBay Series: Successful eBay Customer Service