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Navigating Unexpected Expenses: The Cost of Doing Business

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Navigating Unexpected Expenses: The Cost of Doing Business Online

When I first started off into the business world many decades ago, I had no idea or understanding of all the inner workings that were required to be successful at it. I thought to myself, how hard can this really be? All we are doing is selling things, and collecting money. Boy, was I wrong!

The first lesson I learned (back then) was that every step or decision a business makes can either make them money or lose them money. As an employee of a business, you are expected to help control costs, and to help make your employer money. Every action that an employee makes could inevitably cost the business money. And since a business is there to make money, an employee who does those sorts of mistakes routinely probably won’t be working for that company for very long.

For example, the simple act of stocking a shelf in a grocery store can have dire consequences if it is not done properly. Nearly every business that sells food in the United States is required to follow the FIFO (First In, First Out) doctrine. The oldest food or product always goes to the front of the shelf with the newest items going to the back. This forces customers to buy the oldest products first.

Not following FIFO can lead to the older products being lost at the back of a shelf and going out of date before someone has a chance to buy them. A company, in most cases, cannot legally sell out-of-date food items and would be forced to discard them in the trash, which will cost them money.

These sorts of costs are expected in a food-related business, and they will have an acceptable limit of loss already figured into their business expenses. This is no different than what an electronics store, a restaurant, a thrift store, a toy store, or even a reselling business will do.

An electronics store anticipates that there will be some form of loss due to a customer return, an accident, internal/external theft, shipping, or some other unforeseen issue. No company honestly wants to have a loss, but it is completely unavoidable in most businesses. They may feel a 3% or 4% loss of product annually is acceptable and merely a cost of doing business.

Nearly every company will incur some sort of cost while doing business outside of their normal expenses. The amount of loss deemed to be acceptable will vary from business to business depending on what they sell or what services they render.

In reselling, there are many things that would be considered a cost of doing business, and should be expected. One of the most common ones we see all the time are shipping costs not being calculated correctly by a reseller. A simple mistake in a shipping weight could easily cost someone an extra $20 to mail a package out to a buyer. Or you may not have had the dimensions correct and you now have to pay a fee for an oversized package. As a business, if I were to make those sorts of mistakes, the loss would be completely my fault and would be a cost of me running my business.

A buyer wanting to return an item would fall into this same area and cannot be helped with many items such as clothing. Ten years ago, we were heavily invested into selling clothing and did very well. We always had a certain percentage of returns regardless of how well we described, photographed, measured, and shipped the items.

This is no different from what brick and mortar retail clothing stores deal with everyday. I learned to expect a 2% to 5% return rate for most of my clothing. I still made good money even when the return rate was at the high end, but it is not fun watching some of my profits go down the drain.

After I stopped selling clothing, that rate dropped down to less than 3/10 of one percent, over all. So, those sorts of costs can be avoided to some extent. The worst to deal with, and hardest cost to avoid, are most often due to theft from a buyer. This usually happens through the return process and causes the most frustration for resellers. If you are in business long enough, it will happen to you at some point, without a doubt.

I have personally had a buyer open up a return and send me back a brick instead of the $300 Stereo Receiver they actually bought from me. In that case, eBay sided with the buyer, which cost me both the money and the loss of the receiver. I sure was not happy about the loss, but it was another example of a cost of me doing business.

It was out of my control, leaving me with little to no options. From a business standpoint, I can understand why eBay (or really any company) would side with the buyer, in this type of case. The buyer did send back an equally weighted item within the given time frame required, and had tracking to prove an item arrived at my Post Office box. eBay had no way of knowing when or who put the brick in there. For all eBay knew I was making up the whole thing.

A big mistake to avoid with these sorts of issues is to never take them personally. This is a business, and when things happen, I treat them that way. I never let my personal feelings affect how I handle business-related issues. In the case of my stereo receiver, I am sure the thief just assumed that it was eBay who would be losing out, which most people seem to assume.

Regardless of how well you run your business, you will inevitably run into some sort of issue that will be far beyond your control, and cost your business money. No one is expected to be happy about a loss, but unfortunately those expenses are simply a cost of doing business.

Don Heiden on InstagramDon Heiden on Youtube
Don Heiden
Don Heiden
Don Heiden is a 30-year veteran of online reselling going back to the days of Yahoo Auctions. He runs The Auction Professor YouTube channel posting videos and content about various reselling platforms and topics, and he is a member of the eBay, Amazon, Hip, and other affiliate programs where he may earn a commission when linking to products on those sites. He can also be found on most social networks under the same name, including Instagram. He is also a published professional artist which includes works produced for The Walt Disney Company. He holds an Associate Degree in Database Design, Construction, and Network Administration. He also holds a Bachelor Degree and Master Degree of Research & Communications from The University of Toledo.