Saturday, May 19, 2007

KossDVD.Com - College Sophomore On Track To Become A Millionaire Selling DVDs On eBay

Corey Kossack, 23
Tempe, Arizona
eBay User ID: kossdvd
2006 Sales: $1 million
Projected 2007 Sales: $3 million
eBay Business: New DVDs, iPod accessories and video games

In 2004, Corey Kossack was a college sophomore doing some online shopping from his dorm room for a digital camera memory card. One of his stops was eBay to see if he could find a deal. Although he says he "always thought of eBay as a place for people to get rid of junk," he found someone selling hundreds of memory cards that day. This was clearly a businessperson, not an individual selling castoffs from their personal collection, and it changed Kossack's thinking about eBay. He saw a business opportunity and wanted in.

Recognizing the need to carve out his own niche, Kossack decided on DVDs. He reasoned that there are always new titles coming out, creating an ongoing demand for the product, and most DVDs are the same size and weight, which makes the process of packing and shipping them much simpler.

However, "finding suppliers was difficult," he says. By calling major distributors from the study room in his dorm, Kossack eventually got his foot in the door. But he says the sales terms at the outset "weren't very good," mainly because his sales volume was low.

That soon changed as Koss DVD's sales volume increased. In its first year in operation, the company sold $500,000 worth of DVDs. But what has kept the business on course has been Kossack's focus on profitability, not sales. "Sales volume isn't all that's important," he says. "What's really important is profit."

While most businesses focus on the top line--sales--Kossack has paid equal attention to keeping costs down. One change to the company's shipping process, replacing the bubble envelopes it had been using with a lightweight alternative, shaved 0.3 ounces off each package's total weight and saved the company $10,000 in its first year.

From the start, Kossack has tracked each order's profit margin carefully, taking note of all the factors affecting profitability to make constant improvements. But in 2006, recognizing how important such calculations could be for any eBay business, he paid another student to create software and used the new formulas to replace his manual calculations.

In addition to automating his profit tracking, Kossack has renegotiated deals with his suppliers based on his company's track record of growth and success. He's also expanded his product line, from 1,000 DVD titles to 10,000, and added video games and iPod accessories to his store. He says, "We're becoming more of a superstore."

Be sure to research your intended industry thoroughly to understand what margins are typical. You will be better armed to negotiate with suppliers, and you can confirm upfront that your business can be profitable. And this magic free software that eBay millionaires use can help you get started.

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