How to Make a Fortune Selling on eBay
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About 160,000 people earn much or all of their income these days selling items on eBay, the user-friendly
on-line auction site. These sellers have advantages over other retailers -- they don't have to rent retail space,
hire sales clerks or keep regular hours.
Still, eBay entrepreneurs work long and hard. The process of listing a single item can take 15 minutes or
more for less-experienced sellers -- but eBay's elite class of power sellers whittle this down to a minute or
two.
An established full-time eBay business generates an average annual gross income of $60,000, though
some incomes do run much higher. I know one seller who has an annual gross income of $250,000 and
has hired employees to assist him. To run this eBay business successfully...
TARGET A NICHE
When you focus on a field, you build expertise in that area. Then you'll know what's in demand, the prices that
items are likely to fetch and how to write product descriptions that lure potential buyers.
Example: One seller grosses between $10,000 and $20,000 each month by selling comic books. It's not a
field that just anyone could step into and be successful in. He devotes 20 to 50 hours a week to it.
Another advantage to narrowing your focus is that once buyers have purchased from you, it is more likely that
you can sell to them again.
Example: If your specialty is antique kitchen items, collectors of old toasters soon will learn that you can be
trusted and will seek out your auctions.
To decide what to focus on...
Make a list of the product categories you know well and those for which you have an avenue to obtain
merchandise inexpensively.
Do eBay market research on those categories. The preceding 30 days of eBay sales are archived on the site.
Determine prices and the percentage that goes unsold. Track a minimum of three months of data before
investing heavily in inventory -- longer, if the category is seasonal.
Proceed only if you can sell items for at least 40% above your purchase price. A narrower margin won't
provide a reasonable profit once eBay fees, the cost of lost and damaged shipments and other expenses are
taken into account.
Avoid fads. Prices on trendy items, such as Beanie Babies and Cabbage Patch dolls, invariably tumble. You
could be stuck with a pile of inventory that is worth significantly less than what you originally paid for it.
Don't assume that an underserved niche is an opportunity. If no one is selling a particular item on eBay, it
may be because no one's buying. Don't stock up on inventory until you're sure that there's enough interest to
support a business.
BUILD INVENTORY
To find merchandise...
Buy off-season, when there are great deals on clothes, sports equipment, decorations and other seasonal
items. Store merchandise until the following year.
Look for liquidations. Check under "Liquidators," "Importers" or "Wholesalers" in the Yellow Pages, or use
these terms in a search engine, such as www.google.com. If you can get good deals on products in large
quantities, you should be able to auction individual units profitably.
Example: Chris P. grosses close to $2,000 a month selling clothing overstocks. He sticks with brand names,
such as Levi's, and popular goods, such as blue jeans. He devotes about 15 hours a month to the business.
Important: Be selective. Items usually don't reach liquidators unless they already have failed to sell at retail
prices. Stay away from outdated technology, such as computers and cell phones. Avoid goods that aren't
brand names -- these may be of inferior quality.
Make things yourself -- saleable handmade products, including quilts, novelty T-shirts with catchy slogans or
distinctive designs, even paintings and sculpture.
CREATE CUSTOMER LOYALTY
Be honest. Descriptions and photos should depict the product accurately and disclose any problems. If a
buyer isn't satisfied, allow a return or provide a replacement without argument.
Send a follow-up E-mail after shipping the merchandise to make sure the buyer is satisfied. Ask if he/she
would like to receive periodic E-mails listing current inventory. If you have a Web site featuring similar
products, include the URL.
Example: A movie memorabilia dealer I know has built traffic at his Posterpalace.com site through eBay
customers.
Strive for positive feedback. When a buyer or a seller has a positive experience with a transaction on eBay,
he/she rewards the other person with a short, positive comment posted on the site. If the experience doesn't
go well, he may leave a negative comment. Tell buyers that you're giving them positive feedback. This
reminds them to do the same for you.
MORE SMART MOVES
Give buyers a credit card option. Sign up for a business account with the third-party on-line transaction firm
PayPal (instructions are on eBay). You'll attract more bidders and receive your money faster. You'll also lose
fewer sales. Buyers sometimes back out after they sleep on their purchases. PayPal bills immediately,
leaving customers little time for second thoughts. PayPal fees are 30 cents per transaction, plus 2.2% of the
sale price.
Trim packaging expenses. Order free shipping materials, such as express and priority mail cartons, tubes
and packing tape, on-line from the US Postal Service (http://shop.usps.com). They will be delivered right to
your door.
Track competitors. You might learn about a product subsector that's more popular than you imagined... or
notice something in an item's description that you hadn't thought to include.
Keep scrupulous records of your expenses and income. The IRS is becoming increasingly interested in eBay
sellers.
