Since eBay was launched in September 1995, the world’s premier internet auction site has grown to become a global sales phenomenon. The statistics speak for eBay’s unprecedented success: by June 2011 eBay had almost 100 million active users and a customer base numbering 233 million.
eBay is no longer simply the domain for folk who wish to auction off their unwanted clothes and household items; today it is a thriving marketplace for budding sales entrepreneurs, and the source of countless success stories for ordinary people who, through a combination of insight, luck and hard work are now making a living out of eBay.
The attraction of making a living out of eBay
The benefits of starting your own sales business and making a living from eBay are attractive; the basic requirements are a computer, storage space and something profitable to sell. Unlike a high street shop, an eBay business is immediately global and there are no additional utility costs or advertising costs to pay. You choose the items you sell and the hours you work. And many of the people already making a living out of eBay speak of the sheer buzz of excitement each time a sale is made.
Making a living out of eBay requires hard work and is not a ‘get rich quick’ option
Lots of eBay sellers use the site to ‘top up’ their income from an existing job. Making the transition from paid employee to successful eBay business person requires a significant amount of preparation and research; competition in such a vast marketplace is extremely fierce and, if you want to make a living from eBay, you must ensure that profit margins are realistic and maintained – dropping prices (and therefore reducing profits) in order to remain competitive on eBay will result in the rapid demise of your business.
Similarly, anyone who thinks they can buy a thousand items of stock at trade prices and sell those items for a huge profit on eBay overnight are largely misguided. Building up a business and the reputation of a trustworthy and reliable supplier that customers will want to do business with takes time. As with any new business, dedication and resilience are fundamental requirements for those who seek to make a living out of eBay.
Making a living out of eBay: a comprehensive step-by-step guide
Deciding to start an eBay business is easy; putting the decision into practice and making a living out of eBay is not as easy. Nevertheless it can be done, and is being done every day. The following step-by-step guide is designed to give the basic information to help you make a living out of eBay – exactly how you do it is entirely up to you.
Decide what you are going to sell on eBay
This is perhaps the single most difficult aspect of making a living out of eBay – knowing what to sell. This is where a little common sense and a lot of research are invaluable. The Holy Grail is to find a niche market that is being exploited by as few competitors as possible, which has a pool of customers willing to buy the items that fall into that niche from you at a profit, and which you can obtain and send out as easily and economically as possible. This is where the research comes in – you need to follow the sales trends of popular items on eBay to find out what the ‘hot’ products (i.e. those that sell the fastest) are. Then you need to find a similar product or a product that enhances the original product which few people, or ideally, no-one else is selling. Here’s an example. Historically, handbags have always been a good seller on eBay. Handbags that are in some way ultra-fashionable, unique or highly-exclusive are hot sellers. In today’s world, environmental-friendliness and financial prudence are both hot topics. So, in theory, if you can source an ethically-produced, chic and exclusive handbag unlike any sold by your competitors, that can be sold at an acceptable price whilst still generating a good profit, then you should be on to a winner. This is the level of consideration that needs to be applied to any product you want to sell. Want to make money by selling T-Shirts with funny logos on them? Forget it. The competition numbers in the thousands. A better bet is to find a small range of different niche items and achieve a small weekly profit from each. So, you have a portfolio of ten different desirable items and you make a modest weekly profit of £50 on each of them: there’s a lot of work involved but – hang on – that’s £500 per week profit…
Source your stock
More research is required, because nobody is going to willingly reveal where they buy their stock cheaply to sell at a profit. Luckily there are a number of resources on the internet to enable you to find a reputable and reliable wholesaler for the types of item you wish to sell. There are a number of online wholesaler directories such as thewholesaler.co.uk to help you find suppliers, as well as companies that provide liquidated or bankrupt stock at discount. If you’re looking for a product that is not currently available or is in limited supply to the UK market, check out eBay’s sites in other countries – particularly America – where you may be able to arrange a supply deal with an overseas eBay business to get hold of the item you wish to sell.
Get the financials right
Its easy to for the pound-signs in your eyes to blind you to the underlying costs of making a living out of eBay. Firstly there is the initial cost of setting up an eBay account. Secondly, if you require an eBay ‘shopfront’ this will add an additional monthly cost which increases in accordance with the functionality and versatility on offer. Next up, you’re going to be paying out upfront for postage and packing materials which can be very expensive for bulky and heavy items especially if you’re using shipping internationally (although you will recoup these in the sales price). eBay also takes a percentage cut (often 10%) of each sale made. If your business becomes highly successful you may need to consider the cost of additional storage space for your stock and of course, the cost of purchasing greater volumes of stock (ideally, of course, you’ll negotiate some degree of volume reduction with your supplier to cover this eventuality). You’ll either need to offset these costs against your retail price or, as most eBay store owners choose to do, charge them as a supplement at checkout. The use of eBay’s online payment system incurs transactional charges and then there are tax implications if your eBay business begins yielding income above a certain threshold.
All of these considerations will affect the degree of profit you need to obtain from each sale in order to make a living out of eBay. As an example of potential earnings, let’s assume that you wish to work weekdays only on your eBay business, and that you can sell ten products a day, Monday to Friday, earning £5.00 clear profit on each item after all other financial costs have been accounted for. Based upon this model (which does not take into account public holidays), the earnings of your eBay business would be:
261(days) x (10 (items per day) x 5 (pounds profit per item)) = £13,050 annual profit
Ensuring that you have accounted for every aspect of the financial side of your business will enable you to set product prices that achieve the dual goals of being competitive whilst generating sufficient profit to enable you to make the living from eBay that you seek.
Set up your online eBay shop
Before you can make a living out of eBay there are a few criteria to fulfil. Firstly, scrutinise eBay’s terms and conditions to ensure that none of the items you wish to sell contravene eBay’s regulations. Next, you need to register a business account in the name of your proposed eBay business. This is straightforward, but you will be required to provide your full postal address, a business telephone number and details of a bank account that provides Direct Debit facilities. If you are VAT registered enter your VAT registration too and you’ll avoid paying VAT on eBay’s vendor fees. You are now ready to begin selling goods via eBay; this entails uploading an accurate and attractive photo (or photos) of the item you are selling and entering a non-misleading and honest description of the item. Obviously you will want to extol the virtues of the items you are selling, but also make your item name and description as search-friendly as possible.
Before you can set up an online shop with eBay you must have an active PayPal account and have received a minimum of five positive feedback comments from customers. If you do not wish to use PayPal you may still set up an online shop but you must have an alternative automatic payment system in place and will require no fewer than ten positive customer reviews. Once you have satisfied these criteria you then have the option to open an eBay shop; this is an effective means to promote your products over those of competitors.
Keep on top of your business
The key to successfully making a living out of eBay is to be 100% customer focused: sustained positive customer feedback is invaluable to an eBay seller. At the same time it’s sensible to keep a close eye on what your competitors are doing, particularly if they are winning sales that you aren’t. The benefit of maintaining a portfolio of niche items rather than concentrating your sales in a single area is that when a particular item begins to under perform or is no longer consistently profitable you can replace it with the next ‘hot’ product you find without impacting the continuing profit from your other items.
Making a living out of eBay is not an exact science, but it is possible as increasing numbers of people are discovering. The good news is that starting your own eBay business requires minimal investment and offers plenty of opportunities to experiment with products and prices to find the perfect balance of sales and profitability. For those who are prepared to put in the time, effort and research, to carve out their own niche in a crowded marketplace and to continually delight their target customers, the opportunity to make a living out of eBay is well within reach.
And Finally…………Compliment Your Ebay Business with an Ecommerce Store
Even from day one the benefits of having your own ecommerce store running along your Ebay business are evident. Every sale you make on Ebay is a new customer and also a possible repeat customer. Eery time you sell through the platform Ebay are charging you a hefty fee of around 10%. Then you have the PayPal payment processing fees, listing fees etc on top of that. By having your own ecommerce store up and running you can market to all of your Ebay customers via email and tell them about all the stock you have available on your ecommerce site. You can offer them incentives to shop on your site rather than your Ebay store and bypass all the final value fees for selling items to repeat customers.
Setting up an ecommerce store has tons of other benefits like getting traffic from the web and the ability to market to many more people that don’t shop on Ebay by various means. You can have an ecommerce store up and running in no time and can even use all your Ebay store data to populate it easily. Call us on 01903 368559 or drop us an email to find out how we can help you expand your business online with an ecommerce store or marketing.