Neil Waterhouse is the founder of Waterhouse Research and an eBay millionaire;. He’s also the author of, “Million Dollar Ebay Business From Home – A Step By Step Guide.” Waterhouse explains how people can start businesses with no money and how they can automate businesses, so they can live the “Internet lifestyle.” Waterhouse also shares his tips for simple photography and sales copy, and how we can apply all of this to make money on eBay.

Find out more about Neil Waterhouse at www.neilwaterhouse.com.

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Start of Interview with Neil Waterhouse

Jason Hartman: It’s my pleasure to welcome Neil Waterhouse to the show. He’s coming to us today from Sydney, Australia. And he’s the founder of Waterhouse Research and eBay millionaire and author of Million Dollar eBay Business From Home – A Step By Step Guide. Neil, welcome, how are you?

Neil Waterhouse: I’m really well, thank you. Thank you for having me on the show.

Jason Hartman: Well, good. How are things down under?

Neil Waterhouse: Well, it’s pretty cold here in the morning. It’s only 7° Celsius down here, so we’re in the winter, just heading into spring. So we’re looking forward to some warmer weather.

Jason Hartman: Yeah, well, you’re going the opposite direction we are.

Neil Waterhouse: We certainly are.

Jason Hartman: That’s for sure. Well, how long have you been in the business of selling things on eBay?

Neil Waterhouse: We started in 2002, but back in those days we were really just poking with a stick and doing the usual – selling the second hand things around the house. Then back in 2005 is when we started to look at it seriously and ramp it up. So, really, 2005 is when we really kicked it off.

Jason Hartman: And what are you selling? Just anything or some particular product?

Neil Waterhouse: These days we just do new items. With the further new items, we don’t like doing the second hand things anymore, simply because with a used item you’ve got to photograph it once, write the ad copy once and then, once you sell it, all that work you’ve done is all gone, whereas if you have a new item you can just photograph it once, write the ad copy once, and you can just keep reselling it over and over. And we’ve got some of our items back to 2005 that we just keep selling over and over now. So we sell them, we buy them all from the supplier. So we much prefer the new items because you can automate it – eBay for us is all about automation.

Jason Hartman: Sure, absolutely. Well, do you, by any chance, sell on Amazon as well?

Neil Waterhouse: We don’t. I have in the past, but in Australia we don’t have Amazon. They keep promising to come out here, but they’re still not here yet. In the past, I’ve had businesses for eBay in the US and in Canada and it’s great. Amazon is a fantastic marketplace.

Jason Hartman: So do you consider that that gives you an advantage if you’re selling and shipping just in Australia, for example, the fact that Amazon isn’t there is the reason you have a good business. And if Amazon was there, you’d have to either be selling on Amazon or would it wipe out the eBay business or is eBay still…I mean, what I’m looking for is the defining unique selling proposition of each one.

Neil Waterhouse: It wouldn’t make a difference at all because we only sell items that make over 100% profit and sell over 15 times a month. So we wouldn’t be selling an item that we wouldn’t make money on – doesn’t matter where it is.

Jason Hartman: So tell us about the types of items you sell.

Neil Waterhouse: Basically, anything that makes the criteria of making over 100% profit per month, over 15 times sales per month which means it’s got volume. We also want a price bracket between $20 and $150. We’ll somewhat stretch that if the profit is there, but the reason for that is we want over $20 because many, many times I’ll see a lot sellers selling really cheap things like iPad cases, iPhone cases, and you walk in and they’re running around like crazy, getting all this stuff out and they’re making hardly any money, whereas if they sold something instead of for $5 but for $20, they could be making a lot more money for the same amount of labor. So we don’t like to get into that thing because it’s almost like a sweatshop, you’re running so much, getting all this tiny stuff out and not making much money.

And then really the sweet spot for eBay we find is less than $150. That sort of price bracket’s where people go into their pockets and they’ll get their credit card out or PayPal or however they pay, and they’ll pay for something that cheap. Once we start spending more than $150, we have to start doing a bit more mental processing to whether we’re gonna buy it. And we found that, especially in the global economic crisis, people stop buying houses and cars and expensive holidays, but everybody still buys things because that’s what makes people happy. And that prospect, between the $20 and the $150 is where people will just keep on buying.

And the other thing we have is we don’t do any brand names. Because these days, we’d get a lot of stuff out of China because it’s the cheapest place to get it. And if you get these from China, there’s a very high chance it’s gonna be some kind of rip off. We all know about the Rolex watches and the Gucci handbags. But it doesn’t just extend there. It extends it pretty much in anything, it’s got a brand name out of China. Because, let’s be honest, Apple’s not gonna go and sell us 10 mobile phones or Panasonic’s not gonna sell them 20 cordless phones. They’re just not gonna do it. So it’s a lot easier just to stay with non-brand names.

Jason Hartman: Okay, so you’ve answered a lot of questions, but what are you actually selling then? I’ve got the category – you’ve got all around the edges here…

Neil Waterhouse: I’m not gonna try and bypass that question, although it’s just really anything and everything. It could be like a garden spider. It could be a garden gnome. We’ve got a lot of gardening stuff that’s happening at the moment, but also it could be some auto accessory parts, anything and everything that fits that price barrier, because we’re looking at the profitability. We’re not looking at what niche or what category. It’s just really anything and everything and cups, plates come through sometimes. Sometimes small clothing comes through. Fashion’s very big.

Jason Hartman: Okay, so now with that knowledge, now that we know what you’re selling, I mean a big part of your success I would assume is attributed to the fact that you’re just a very good buyer. You’re very good at knowing how to select products.

Neil Waterhouse: The way you make money on eBay like many other businesses is all about the buying. It’s all about the research before you buy an item. You make your money on eBay, like many other businesses, when you buy the product, not when you sell it. And I get called into a lot of consulting things where people will make you try and sell their products that they bought. And you can do it, but you’ve got to create a really top level ad, top level photos for stuff that is hard to sell, whereas you get other items that it’s got low competition and you got it at a really good price, and you can do the worst photo with the first ad copy and they’ll still sell out of hotcakes.

Jason Hartman: That’s great.

Neil Waterhouse: Because it’s all about what people want, so it’s all in the research, absolutely. It’s the research before you buy it – not buy it, then try to find a way to basically flog it, because that’s just a lot of hard work.

Jason Hartman: Mhm, sure. And when you’re buying stuff, you are taking a risk, right? Because are you buying a certain quantity in advance? I mean you’re not getting stuff drop shipped from China.

Neil Waterhouse: No, no. I don’t like drop shipping at all. So many times people get burnt with drop shipping. Drop shipping, it all goes great until the supplier runs out for some reason. That normally happens on a Monday morning when someone sells 6, 10, 20 over the weekend, they ring up the drop shipper, and for whatever reason the drop shipper no longer has the stock and now you’re gonna cop 10 or 20 negative feedbacks. And not only that, if eBay gets wind of what you’ve done, they can suspend you and PayPal could suspend your funds for 6 months.

Jason Hartman: Oh, because they don’t allow drop shipping?

Neil Waterhouse: Well, you’re not supposed to be selling things you don’t have, bottom line. And so it’s not making eBay buyers happy campers when they don’t get their stock. And you’re building a business on quicksand if you’re doing drop shipping in my opinion.

Jason Hartman: Yeah, well that makes sense. That’s good advice right there. How do you know how many to buy and a quantity when you’re picking a new product?

Neil Waterhouse: Well, like many other businesses, it’s all about the previous history. And when you get the previous history from eBay, if you search for an item, then on the bottom or halfway on the left there’s a completed listings button. And that tells you what is actually solved in the past. Because our biggest indicator on eBay, like many other businesses, is a past history. Now, if we can see over the last 3 months, it’s like 100 have been solved. There’s a reasonably good chance that another 100 is gonna be solved over the next 3 months. We don’t get involved with things that are niches or I should say trends or seasonal. So we don’t do Easter bunnies. We don’t do Christmas lights or any of that kind of stuff. So if something has already sold previously X amount over 3 months, it’s a pretty good chance it’s gonna do the same thing. So we’re always looking at the previous history. And then, by doing that, you’re limiting your risk for buying a new stock because it’s already selling, so it’s a pretty fair chance it’s gonna sell again. And if you’ve got 100% minimum margin up your sleeve, it is something that’s nasty and some other competition comes in there, you can still drop the price a bit and still make money, whereas if you only have 20% margin and something happens, you’re gonna do a lot of your money.

Jason Hartman: Sure, yeah. Good stuff. Well, what would you say to someone that is interested in this idea and wants to get started? I mean, where do they start? Do they take a course, do they read your book? What’s sort of the series of events that someone needs to go through to do this properly?

Neil Waterhouse: The smartest way is to get an instruction manual, where it’s mine or in my book or it’s someone else’s book, just get an instruction manual. Don’t try to wing it all. Everyone’s done it already for you. Save yourself a lot of time and heartache by just getting someone else’s book – I call them an instruction manual – and follow it. And when you get good at that, then go and change things slightly and modify. But if you follow an instruction manual, you really can’t go too far wrong.

Jason Hartman: Okay, so get an instruction manual and follow it. I mean, this is just pretty much an opportunity to start a business with n0 money, right?

Neil Waterhouse: Well, that is. And I think it’s a great opportunity. I love it because eBay’s now a $14 billion marketplace, e-commerce, $1.3 trillion marketplace. It’s where the world’s going, it’s where the world is right now. More people now buy goods online than they do through some other stores. Because you can also limit your risks because you can have so many small, cheap products rather than having just a few big expensive products. And you can start from scratch, start with 0 money. We did that – we proved that in 2009. We start a new eBay account from scratch and we build it up to being over a million dollar turnover and we didn’t spend a cent just by getting used products and adding that and then using that money to go eventually buy new product. So you can do it and you can do it with n0 funds. So I think it’s a great opportunity.

Jason Hartman: Well, I mean they can’t do it really with 0 funds, though, right? I mean, they need some money to buy inventory.

Neil Waterhouse: Well, we did it. We started by using used inventory. There’s many sources of getting used inventory, secondhand products. And that’s exactly what we did. We went to different avenues to get these secondhand products, and we’ve reinvested those secondhand with the sales from these items that we got for free, and that’s how we built up our cashflow.

Jason Hartman: Yeah, fantastic. That’s a good way to do it. Do you care to share any kind of statistics on the kind of volume you’re doing?

Neil Waterhouse: What we do, we have a central eBay business account and then once we have a particular niche we’ll take out products from a niche. So let’s say we do gardening. We’ll take those gardening products out and we’ll start a new eBay account. I had one business which was doing toys and hobbies, which I saw that back in January and that was [0:13:39.2]. That business was doing well in excess of a million dollars. So without going too much into the exact how much we do, that gives you a bit of an idea about that particular business was well in excess of a million dollars.

Jason Hartman: And so you sold that business. That’s interesting to hear about people selling their eBay business, huh?

Neil Waterhouse: eBay will give you a great cash flow, but for capital you can sell your niches. So you can separate your businesses and sell off different parts as a capital sale.

Jason Hartman: Well, fantastic. Yeah, good for you. And I would assume the other areas that you have to be really good at are photography and sales copy. What are some of your tips on those?

Neil Waterhouse: Even your worst digital camera these days will take a brilliant photo. The secret of it is just to get a nice white background. People always ask ,me what sort of background should I have, and I always say what’s the biggest website on the planet? What’s their background? And of course it’s Google. And they’re all white on the background. What’s the biggest ecommerce platform on the planet? And that’s Amazon and, again, their background is all white as well, and that’s what we want on their photos. I’m always looking at modeling and looking at what other people are doing as well. Writing ad copy, yeah, there’s certain things you need to know about writing ad copy like headlines, bullet points, features, benefits. And, again, any decent instruction manual off of eBay will tell you how to do that. You can compare the listings, but you can have a look at the same item and see how they’ve written their copy. So let’s say something in particular like a garden gnome as an example, you could go and look at the garden gnome in The US, go to eBay Canada, look at the top ad for in there, you could go look at it in the UK and Australia, look at the top ads, and look at their ad copy. See what they’ve done. What’s their bullet points? What’s their benefits? What’s their features? What sort of photos have they taken? And just by doing that you can get a really good picture of what you need to be doing to create yours. So I’m not saying it to rip of anybody else’s ad, most definitely not because that will come down like a ton of bricks on you. I’m just saying look at other people to get their ideas of exactly what they’re doing.

Jason Hartman: And on the guide book, tell us a little bit more about the guide book and then I want to ask you a little bit about your coaching.

Neil Waterhouse: The way the book came about was from the selling of the eBay businesses because I had to write step by step procedures of exactly what we were doing and how we were doing it to sell the businesses. And I basically rewrote that into the book. So it’s just an exact procedure of exactly what we do of how we’ve built up multi-million dollar eBay businesses.

Jason Hartman: What about inventory and shipping and all of that sort of back office stuff? I mean does one need to have a warehouse? Do they do this on their kitchen table? What does that look like?

Neil Waterhouse: Yeah, that’s a great question because shipping is one thing that scares so many people. But realistically if you bring things in from, say, China, it really is no different to asking one of your friends or relatives to post something from wherever they are. Let’s say grandmother’s in Sweden. Let’s go back to our garden gnome example. It’s no different to asking her to go and post you the garden gnome from Sweden. It arrives in your letterbox and it’s really that simple. Now, when you get bigger, of course, things get a little trickier, but it’s not difficult. It’s just a matter of just learning how to do it. You can have like a teacher’s container box which can arrive basically at your front door. When you start doing a few, yep, you’ll have to get a freight forwarder involved with the process. They will need to do your customs work for you. But, initially, you can just get the small amounts, just post it to you from China, and they’ll end up in your letterbox. And that’s it, they’ll slide under the radar. As you get bigger, then more freight forwarding. And you can get bigger and bigger and bigger until eventually you get a container coming over or a part container but one step at a time and you just build yourself up. Now, for storage, most people always start at home and in the home means you’ve got X amount of room. You might not have any room, you might have the corner of a cupboard, you might have a garage, you can build up from there. And then a lot of people will use like a self-storage unit, so they’ll keep some stuff at home and then they’ll pay to have the rest of it stored. And then people will say to me how do I pay for this? Well, by that time you’re making 100% on each product you sell. You can well and truly afford to pay $50 or $100 a week for a storage unit. Or you can go and find through the local newspaper or gum tree garages that are not being used.

Jason Hartman: What’s gum tree? I think that’s an Australian name. What is that?

Neil Waterhouse: Gum tree, it’s not just in Australia. It’s in other countries as well. It’s the next site where people advertise what they’ve got, but you’ve also got the local newspapers. People don’t always use their garage. The older people don’t often. And you can go and pay to use their garage and store some stuff in there. And then self-storage units are the best way to start off with.

Jason Hartman: Okay, yeah, fantastic. Now, in the book, you talk about 2004 being a game changer, and then you go up to 2007 and you talk about the bait and switch scam of affiliate advertising. Can you just touch on those for us?

Neil Waterhouse: Before eBay, basically back in 2000 I had a computer company and I sold it off and I was just looking for other opportunities to do something from home. So I did a lot of writing of e-books and selling e-books. With an eBook, of course, that’s just an electronic book which you can download, and I was doing a lot of advertising on Google. In fact, we’re spending over a million dollars a year on Google for advertising selling these e-books. And that’s not because we just had a spare million bucks. It’s basically if you spend a dollar on Google and you get back more than a dollar, then of course you just open the throttle. If you get back $1.50, you’ll spend unlimited money, and that’s basically what we did. We opened the throttle once we could get more than $1 back for every dollar we spend. But then Google do what they do a lot, they reshuffled the deck and they brought a whole lot of new rules, and that changed a lot with the affiliate marketing. And the bait and switch was people were right. Is this a scam? Rate this first. And then people will click on that – is it a scam? And then people will write this is a scam but I would highly recommend this. And, amazingly, it works that people will go, ah, well, this guy’s recommending this, but who is this person? And that’s what the bait and switch was. It was taking everybody who was making good money on there – they’ll just come along and write “Hey, don’t buy this – it’s a scam – look at this first.” And then they’ll just redirect the person to that. And that changed things a lot for a lot of people back in 2004?

Jason Hartman: What are some of the things you’ve learned about bidding and the way the process works? And in your book you talk about show bidding? And there’s a lot to know about how the system works? I mean, are you auctioning items or are you just selling them at a fixed price?

Neil Waterhouse: Yeah, we just sell them at a fixed price. Auctions have really been dropping. Last year they dropped 23%. So eBay’s really moving away slightly from auctions. So it’s not just eBay, but it’s just the public in general. We want to buy things right now. So we wanted to buy it now and auctions are definitely phasing out.

Jason Hartman: That’s funny because that’s where the start was but it’s not lasting it doesn’t seem like. It’s too complex probably, right?

Neil Waterhouse: It is. And Amazon’s been leading the way. Amazon’s been pulling better numbers in growth and eBay’s watching that. They’ve been doing 30% year and year on. So eBay’s been changing their model as well.

Jason Hartman: What are some of the arbitrage tools that you talk about in the book?

Neil Waterhouse: What we call an arbitrage is just an opportunity where we find a product which we can make that meets that criteria, I mentioned earlier about making the over 100% profit and selling over 15 times a month. And that’s the research you have to do with eBay to find these products. So we credit a non-arbitrage tool which we call Waterhouse Research which finds these products automatically that meet that particular criteria. Because that’s really the hardest part is to get the products. When I ask anybody what’s the hardest part about eBay, they come to me and say, well, it’s trying to find products that make money. So we created a tool to do it for them.

Jason Hartman: Yeah, fantastic. So that’s one of the backend services that you offer. It’s the book, the coaching, and then you have this tool as well, right?

Neil Waterhouse: Yeah, so the book teaches you how to do it manually and then Waterhouse research is an automator. If people want an automator, you don’t have to use the automator while you do it for free.

Jason Hartman: And so what is that like? A website that they join and they can use to help find products?

Neil Waterhouse: It is. It’s a website. It’s just www.WaterhouseResearch.com. On there, it shows at any particular moment what opportunities there are for USA, Canada, UK and Australia of these arbitrage that meet that particular criteria. Realistically, all you people need to do is get X amount of these products and they have a business. You can run product. An average product conservatively will make you $350 profit a month and that’s conservative. So it’s just a matter of extrapolating out. If you want to make $3000 profit a month, then you’ll need 9 of these products. It’s basically as easy as that.

Jason Hartman: Yeah, it sure is. Well, that’s good. This is exciting stuff. I mean, where do you think it’s going in the future?

Neil Waterhouse: Well, e-commerce is changing fast. It’s just getting easier and easier. That’s what they’re trying to do – like mobile phones, smartphones and iPads have completely changed the way we do business now. People stand there in the Starbucks cue and you look at everyone, they’re all staring at their device whether it’s an iPad or a smartphone, and they’re surfing, they could be talking to their mates of course, but if they’re surfing they could be looking at something right now on eBay or Amazon or wherever, and then they might buy it right then and there, standing in a Starbucks café. And that’s changed exactly how we buy things in the world. We used to drive over to the mall, to the shopping centers, to buy things, but we’re not doing that. We could be sitting on our sofa at 9:30 at night and we want something, so we just log onto our smart device and we buy it.

Jason Hartman: Yeah. And you can be such a better consumer nowadays, too. You can read reviews, there’s so much more to choose from. And it’s so frictionless. It’s really just becoming incredibly easy and powerful. So good stuff.

Neil Waterhouse: Last Christmas, it really showed us a lot. We had the opportunity at Christmas, we’d go to our mall with everybody else, stand there in all the cues, try to find a car park, or do we just sit at home, get a nice cup of tea and sit on our couch and do a lot of Christmas shopping? That’s what we do. We did all our Christmas shopping, all arrived at the door a few days later. And that’s where we are and that’s where we’re going. So it’s not like bricks and mortar sales are gonna come back and get bigger. We’re just gonna go more into e-commerce and all the inventors out there will find us more ways to buy things even easier.

Jason Hartman: That’s for sure, that’s for sure. Well, Neil, give out your website and tell people where they can get the book. I looked it up on Amazon and it’s got great reviews, by the way. And give out your website and tell people where they can just learn more and what they can access from you.

Neil Waterhouse: Sure, thank you. The website is NeilWaterhouse.com. The book is available on there or it’s available through Amazon, Million Dollar eBay Business from Home. And for just the arbitrage software, it’s WaterhouseResearch.com.

Jason Hartman: Fantastic. Well, Neil Waterhouse, thank you so much for joining us today.

Neil Waterhouse: And thank you for having me.

Narrator: This show is produced by the Hartman Media Company, all rights reserved. For distribution or publication rights and media interviews, please visit www.HartmanMedia.com or email [email protected] Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own, and the host is acting on behalf of Platinum Properties Investor Network, Inc. exclusively. (Image: Flickr | liewcf)

Transcribed by Ralph

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