The first step to starting an eBay powersports parts dealership is deciding what type of business you want to run.
Do you want to start a dropshipping business or an actual inventory store? How much money do you have available for investment? How much time will this take up in your day-to-day life? How long are you willing to wait for returns on investments, if any at all?
Building any type of enterprise from scratch is a daunting task, and an eBay vehicle parts store will not be any different.
This blog post outlines everything you need to know in order to start an eBay powersports dealership.
The benefits of selling powersport vehicles and their parts on eBay are numerous. Based on their own data from 2019, every second, three parts or accessories are sold on eBay Motors. Every minute, eight ATV parts or accessories and fifteen motorcycle parts are sold.
This online platform offers almost instant access to millions of potential buyers and has massive site traffic.
More than that, eBay Motors is a community-driven marketplace where shoppers can find all sorts of information about specific types or brands of vehicles, from reviews to questions from other users.
There is already a user-friendly interface for placing ads and managing auctions, so you do not have to worry about developing your e-commerce platform from scratch.
You can also leverage the existing audience that uses eBay as their primary shopping destination by advertising in other areas like Facebook or Instagram.
Setting Up Your Business
Starting an online business may sound simple but can be challenging if you’ve never done this before. How you identify yourself and your product to customers, who your target audience is, where the business will operate from (including locations for warehousing/inventory) are a few of many considerations that need to be addressed at the very early stages.
A business plan is crucial for the success of any venture. Even more so if you want to seek finances from investors or a bank – they will want to read through your business plan to see how realistic your ambitions are.
What does the average business plan consist of?
Plenty! It’s a document that maps out the entire process of your new undertaking, from creating an overall vision and direction for it to outlining how its marketing strategy will work across all channels (online or offline), through to what kind of people are needed to make it happen.
A business plan should include these sections:
- Executive summary: a brief summary of the business plan that encapsulates what it is, who its customers are, how it will make money, and key risks.
- Company ownership: who the business is owned by and what their financial stakes are.
- Startup costs: a list of all the aspects you need to invest in for a successful startup business. This can include website development, computer hardware, storage space, software support, and similar.
- Products: how you will source your parts, the type of products you’re selling, and how you will set yourself apart from competitors.
- Market analysis: this section includes research on what competitors are doing, how the market is evolving, and any opportunities to take advantage of.
- Processes and strategy: how you will manage the ordering and shipping processes and reach out to potential partners and business allies. You also need a sales forecast for at least the next two years.
- Marketing overview: a section that explains your marketing strategy across all channels.
- Management summary: the key people involved and their roles in the business.
- Financial plan: expenses, projected revenue, and how you will keep up with your monthly bills.
Dropshipping or Actual Inventory
Online automotive dealers can choose between two main paths: dropshipping and keeping inventory.
Dropshipping is a method of e-commerce where the retailer doesn’t keep any inventory – they simply list items for sale and send a purchase order to an external supplier. When the customer buys, the item is shipped directly to the customer from the supplier. This is a good option for retailers who want to focus on marketing and customer service but still have product variety.
Dropshipping has many benefits:
- You don’t need to invest in expensive warehousing costs.
- It makes it easy for you to change your product range quickly.
- There’s no risk of stock being lost in transit or damaged.
The downsides include: not having a physical presence at the point where customers are shopping (unless you use storefronts), increased customer service costs as everyone will need to be answered personally, and difficulty negotiating with suppliers.
Keeping inventory is a more traditional approach, where you buy the products before they are sold and store them (typically in your own warehouse). This has many benefits: you can immediately respond to customers’ needs for their desired product, improving their buying experience; you can employ a wide range of tactics during sales periods like deals on vehicle essentials, loyalty points, or rewards.
However, there are disadvantages too: You’ll need to invest in expensive warehousing costs which will eat into your profits if left idle, it makes it harder for you to change your product range quickly as you need to get rid of the old stock first, and there’s a risk that your goods will be lost or damaged.
Once you have a reliable business plan and have figured out whether you will be dropshipping or keeping inventory, it is time to register your business.
This process is different depending on what state you’re in, so contact your local government for more information.
Common steps include:
- Printing and signing license agreements.
- Registering a company name.
- Opening an appropriate bank account.
Make sure that you have all your bases covered here. You’ll need to keep records of the business’s financial transactions, and you should register for any relevant tax schemes.
It is also vital that you know what type of company structure your business will use (e.g., sole trader, limited liability partnership, or corporation). The specific legal requirements differ depending on this choice – consult a lawyer if necessary.
One of the last steps is registering for an eBay Seller Account. This will allow you access to special seller tools, so you can list your products for sale and keep track of the orders.
When a customer agrees to buy one or more items from you on eBay, they will be redirected through PayPal’s Checkout process so that their credit card payment can be processed securely.
Make sure you read eBay’s selling guidelines before starting to list your products. Be aware that selling on eBay isn’t free – eBay charges insertion fees (listing fees) and final value fees on each sale. Look into how much you will be paying to list your items and take this into account when planning out your finances.
When dealing with powersports parts, having correct fitment data is vital for the success of the business. Sellers should make sure that all their vehicle listings contain accurate fitment data, including the year and model of the vehicle.
Here are some common listing mistakes to avoid: failing to list the manufacturer, listing a part for more than one make/model, not specifying right-hand drive (if applicable).
Inaccurate information will lead customers to leave negative feedback about the seller and to them canceling their order.
It is also important for the dealer to be aware of eBay’s return policy: if a customer returns an unwanted item, they are entitled to receive a refund up until 30 days after purchase; however, this may affect your eligibility for Seller Protection and Buyer Protection Program.
The final step is, of course, having a good quality product and providing excellent customer service, so that people will want to buy from you again!
Starting an eBay powersports dealership is no easy task, but with the right business plan and attention to detail, it can be a profitable venture.
Even if you have no prior experience running an online store or working in the automotive industry, there are resources for providing guidance and support (such as our blog!).
Out of all the technicalities, focus on developing a solid business plan and registering the necessary legal entities. Choose what type of store you will run (dropshipping or inventory), and create an account on eBay.
The most important thing is that your customers are happy. Offer customer service that is second to none and ensure accurate fitment data for all your listings so that people are confident about their purchase. And don’t forget about marketing!
If you’d like some help with your eBay listings and fitment data, don’t hesitate to contact MyFitment. We’re always happy to help new online businesses in the automotive industry.