Many new eBay sellers make the mistake of finding out what the
hottest selling products are, then finding a supplier and buying
dozens of those items. They are then shocked when the products don't
sell as quickly, or for as much money, as they had planned. Developing
an understanding of product life cycles will keep you from being
stuck with a truckload of products in which nobody is interested.
The Product Life Cycle
Product life cycles are different for every product, but they
all go through the same three stages:
Stage 1 & The first stage of the product life cycle
is high-demand stage. During this stage, everybody wants one and
nobody has one. Think in terms of Cabbage Patch Dolls, Talkin' Bubba,
Xbox, and Tickle Me Elmo, just to name a few. People were able to
sell those items as quickly as they got them, and for prices several
times higher than they would be within a couple of months. Depending
on the product, this stage can last from a few weeks to a year or
more.
Stage 2 & During the middle stage of the product life
cycle, demand for the item decreases as more become available on
the market. During this stage, prices start to drop, and more businesses
and sellers are able to compete for buyers.
Stage 3 & During the final stage of the life cycle,
there are far more of the product available than there are customers
to buy them. Prices fall through the floor, and the items are readily
available through liquidators and closeout sources.
Capitalizing on the Stages
As a seller, it is possible to use the stages of the product life
cycle to your advantage. Use the following tips and tricks to make
the most of the product life cycle:
Pay attention. If a product is in stage 3, there is a very good
chance that a replacement product will soon be on the market. For
example, when the PlayStation dropped into the third stage, the
PS2 was released. That was followed by the PSP, then the PlayStation
3. This happens with every product, not just video game systems.
If your supplier can get you the new product before it is released
to the general public, you can take advantage of the high demand.
Take advantage of stage 3 early. During the third stage of the product
life cycle, the product can be found cheaply. The problem is in
selling it. If you pay attention to the product, though, you can
purchase from liquidators before everyone else catches on. While
this can be risky, the profits are well worth the risk if you do
it properly.
Don't wait to find suppliers. If you wait until you see a product
is in demand before getting a supplier, you will probably miss the
boat on the high-dollar sales from the first stage.
Understanding product life cycle is vital for any eBay seller.
To avoid taking a major loss or being stuck with worthless products,
you have to buy and sell during the right stages of the cycle. By
paying attention, tracking products, and being prepared, you maximize
your profits in every stage.
There is a wealth of "current trend" information available
on eBay Pulse (http://pulse.ebay.com)
Pulse reveals the top items of interest in each category on eBay,
which can be very valuable to identifying what people are searching
for Another excellent tool for extracting research information from
eBay on what people are bidding on is the Hot Item Finder.
