5.5 Selling on eBay

eBay is big business, averaging more than one billion page views a day and selling some $1,700 worth of goods every second. You may simply wish to dispose of items you came across in clearing out granny's flat, or sell some unwanted Christmas presents, but to make a sustainable business out of eBay — and there are many thousands of traders who do just that — you will have to:

1. Find out what people wish to buy.
2. Locate suppliers consistently offering items where a profit can be made, and
3. Present the items on eBay in a compelling manner.

Normal retail, in short. What makes eBay different is the popular shopfront and low entry cost (no reps, no shops, no heavy overheads) — advantages more than offset by the intense competition: customers can size you up very quickly.

Research your Customers

What about high-ticket items? Yes, if you can. It's much less trouble to sell Swiss watches than make repeated trips to the post office with Toby jugs, but it's riskier, needing specialist knowledge and considerable capital (unless you use the approaches below). Until you've established a market niche, and can afford to explore further, the usual advice is to concentrate on items that:

1. Have well-known brand names.
2. You are enthusiastic/knowledgeable about.
3. Occupy specialist niches, i.e. do well but face little competition.
4. Are collectible (but research carefully).

The following don't generally do well on eBay:
1. Jewelry: often given as presents: cheap purchases somehow feel cheap.
2. Computer monitors and/or printers: not worth the carriage.
3. Handmade items (except perhaps paintings).
4. Antiques (difficult to price, and overseas shipping is a nightmare).
5. Records (in oversupply).
6. Books (unless really antiquarian/collector's items).

Research other Sellers

You're in competition with some very slick operations. Once you've decided on your market niche, you'll need to carefully check out all other sellers, systematically analyzing their:

1. Product selling history
2. Pricing policy
3. Returns policy and guarantees
4. Beyond eBay presence — online shop, bricks and mortar premises, trade representation?
5. Likely turnover and profit margins

Becoming a Small Wholesaler

Many drop-shippers have large minimum orders, perhaps of a thousand items. At $10 (say) per item, that means an outlay of $10,000, which is beyond the means of the smaller eBay merchant. But what's to stop you becoming a wholesaler, with a minimum order of 50 items, for which you charge $13/item? You'll have to research the market carefully, but 20 such batch orders of a fast-moving product will net you $3000, less shipping expenses: clearly worth thinking about.

Selling on eBay: Finding Suppliers

Once you've worked out what people will buy, you'll need to locate competitive and reliable suppliers. Your approaches:

1. Take delivery, buying wholesale and selling retail.
2. Don't take delivery but supply through a drop-shipper.
3. Promise purchase, collect orders through eBay, and then purchase as required.
4. Work through reps, offering a commission.
5. Form a partnerships with existing merchants.

Buying Wholesale

Suppose you deal in collectible postcards, say of 1930's vintage or earlier. Your sources will be auctions, jumble sales, newspaper ads or even other eBay merchants. You buy large lots, sort through them, and then sell items individually on eBay. Ditto for many types of collectibles: coins, stamps, memorabilia, fossils, etc.

Drop-Shippers

Drop-shippers are used extensively by emerchants who clearly don't want to incur insurance and warehousing costs by storing goods on their premises. Orders are taken online, customers details emailed to the drop-shipper, who then does all that's necessary: packing, shipping, invoicing and insurance. You can find drop-shippers through Internet searches, your Yellow Pages and local Trade Directory, but there are four problems, unfortunately:

1. Being fully automated they take the burden off your hands, but of course charge handsomely, which eats into the profit margin.
2. Drop-shippers have minimum orders, which puts them beyond the means of the small eBay merchant, or those just starting up.
3. Competition from other eBay sellers who all use the same drop-shipper: your operation will need to be slicker than theirs.
4. Any shortcomings with the drop-shipper reflect badly on you: you may have to sort out any problems and rescue your reputation.

You should note one advantage, however. Drop-shipper can be used as a loss-leader, to bring visitors to your online store, a marketing approach that may be cheaper than pay per click if you do your sums right. Note that eBay also has a second chance offer feature, which lets you send emails to losing bidders asking them if they're interested in buying the product at their losing bid price. Whatever happens — but particularly if there are problems — do keep your customers up to date by emailing them of progress.

Purchase After Sale

Though somewhat a juggling act — and you need to be very persuasive if the the vendor is to hold items for you — this approach reduces your risk and capital outlay.

Working through Reps

The personal contact is essential, plus some local standing, but many reps will be pleased to get a 10% or 20% commission, on which they cannot lose. Gradually, as sales take off, you'll want to phase out this extra expense, but many high-ticket items are sold this way: watches, electrical goods, car accessories, etc.

Partnerships

Perhaps someone locally is selling what you want to advertise on eBay, and will pay a commission. You must do your sums carefully, as even the 40% markup common in retail sales needs to cover eBay selling costs, carriage and insurance. What happens if the prices realized do not cover the merchant's wholesale costs? You can place a eBay reserve, but this doesn't encourage sales. Go carefully.

Selling on eBay: Setting Up Shop

It's pretty simple. Do the following:

1. Look up value of similar items: click search in upper RH corner of page. Check completed listings on LH side of page: click again. Note prices (those in red didn't sell).
2. Check individual listings for starting bids put a very low starting bid (e.g. $0.99) to encourage bidding. Do not put a reserve (which scares people off).
3. Make the listing succinct: bullets are fine.
4. Add one or more good-quality pictures.
5. Close the auction when folk have had a chance to get in from work and rest, e.g. Sunday and/late in the evening.
6. Check and double-check the spelling, particularly of title (or no one will find the item).

Getting a Positive Ranking

To sell successfully on eBay, you need positive feedback. For that you should:
1. Describe your items fully and honestly (flaws included).
2. Display your shipping and returns policy on your site, and deliver on promises.
3. Include an automated page soliciting customer response.
4. Buy courteously from other sellers and ask for feedback (which counts as feedback on you as a seller).

General Advice

eBay buyers find most of their items by typing selected keywords into the search box. Those keywords should feature in your title, and nothing else. Use the most common name for the item, and alternatives only if there's room (remembering that US and UK usage differs).

1. Include brand names if significant.
2. Describe fully, including size, color and material, and any flaws.
3. Get to know and use the eBay lingo. Some examples: MIB: Mint in Box: item is in the original box and as you'd buy it in a store. MIMB: Mint in Mint Box: the box has never been opened and looks factory fresh. MOC: Mint on Card: item is mounted on its original display card, attached with the original fastenings, in store-new condition. NRFB: Never Removed from Box. COA: Certificate of Authenticity Documentation that vouches for the genuineness of the item. OEM: Original Equipment Manufacture: came with equipment but you don't have the original box, owner's manual, or instructions. OOAK: One of a kind: you're selling the only one in existence. NR: No Reserve Price. NWT: New with Tags: in new condition with the tags from the manufacturer still affixed. HTF: Hard to Find.
4. Use multimedia cautiously, and sound files only if relevant: delays put off purchasers.
5. Write good ad copy.
6. Make your photos count.
7. Exploit eBay's tools fully. To speed up listings and improve the presentation, you may want to use presentation software. There are also auction utilities that purchasers use, which it may help to become familiar with.

Being a Legitimate Business

Once you've made a few sales you'll want to set up a bona fide business, which generally means a separate bank account, registering with the tax authorities, and keeping proper records.

Questions

1. Describe the eBay model. How do you set up shop on eBay?
2. What sorts of things sell on eBay, and how do you source supplies?
3. How do you get a positive ranking as an eBay seller?
4. What can be done to improve sales?

Sources and Further Reading

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