7 tips for selling goods or services on eBay

Zero startup costs. Instant access to millions of customers. Lightning-fast, secure transactions. What's not to like about being a small business on eBay?

Depending on which survey you read, anywhere between 750,000 and 1 million people earn a living from eBay, and another 1 million to 3 million people rely on eBay for some income (those numbers are from eBay and AC Nielsen, respectively).

"EBay is a great place for a business to start," says Michael Ford, author of the video series, "Don't Bid On It." "Small business can also use eBay as a place to unload merchandise they could not sell elsewhere or merchandise they do not want associated with their company name, such as customer returns, refurbished or damaged items, or items the company wants to get rid of like old computers or equipment." (If you don't have Store Manager, which enables you to sell goods or services on eBay, see this page.)

But not every eBay business succeeds. The road to auction site riches can be fraught with peril. Common mistakes include everything from offering the wrong products to violating unwritten rules.

Yes, there are nuances to learn

Full disclosure here: I don't run an eBay business, but my brother does. It's not as easy as it looks. Most people have some experience buying merchandise on eBay. Imagine what it takes from the seller's side—making sure you have the right prices, product descriptions, and are able to handle fulfillment. It quickly becomes apparent that setting up a successful eBay business takes more than flipping a switch and watching the bids come in.

"On the surface, it seems pretty simple," says Sydney Johnston, co-author of "Moonlighting On The Internet" (Entrepreneur Press, 2007). "But there are many nuances, and sellers cheat themselves out of money they could have made simply because they don't really know what they're doing."

Here are seven tips for successful selling on eBay.

1. Get some experience before jumping in.   "Practice makes perfect," says Maureen Ellenberger, chief executive of auctionPAL, an online auction site. "Try selling some items and get a feel for the demands and process for selling successfully as an individual before setting up your company account."

   One of the first things you'll discover is that a lot can go wrong during the listing, selling, and delivery process. It's better to make those mistakes early on—with a product that your business doesn't rely on for its survival—than later when you depend on eBay for your livelihood. Another tip: Ellenberger says it's difficult to change names of a business account on eBay. So once you start under your business name, you should expect to stay with it.

2. Sell the right product for the audience.   Before setting up shop on eBay, ask yourself if you should be on eBay. "Handmade crafts and things like that do not do well," says Michelle Wingate, an eBay expert with MMI Associates, a communications consultancy in Raleigh, N.C. Remember, eBay is not a store you browse; instead, you type in keywords to find the item you seek. Search for the type of merchandise you're selling, and if a lot of similar items pop up, then you're in good company.
3. EBay rules are different from other e-commerce sites.   The key to eBay success is offering quality customer service and communication to back the details of the listing on eBay, says Linda Conoval, chief executive of MemoryQueens, an eBay consultancy. For example, a quartz watch on eBay needs to have details on its condition, whether it's new or used, the materials it's made from, and a picture of the item.

   Other unwritten rules: Fancy graphics and sales hype are frowned upon, and can even reduce the price an item fetches. It is assumed that you'll answer any potential questions a bidder might have in the product description (few bidders bother to e-mail questions to a business). The best way to understand all of these rules is to get on eBay now, make a bid or two, and acquaint yourself with how the system works.

4. Be realistic and commit the time.   "One of the biggest mistakes people make when they start an eBay business is having unreasonable expectations," says Barbara Weltman, co-author of "The Complete Idiot’s Guide to Starting an eBay Business" (Alpha, 2005). Instead, you should treat your eBay venture like any other. "It takes time, a lot of work, and some good luck," she says.

   Specifically, Weltman recommends keeping good records for eBay activities, just as you would keep inventory for your regular business. Microsoft Office Accounting Express 2008, for instance, is free and allows you to download transaction information about the items sold, including sales tax, PayPal fees, and all other transaction information, she says.

5. Think locally, sell globally.   Some sellers move portions of their bricks-and-mortar retail business online, selling items online that they cannot sell locally, according to Richard Stim, author of "The eBay Business Start-Up Kit" (Nolo, 2008). "For example, a comic book retailer may offer the most collectible comics at auction," he says. "Other retailers use online auctions to sell overstock, taking advantage of the national marketplace to liquidate items that are difficult to unload locally."

   If you operate two businesses—a bricks-and-mortar business and an eBay business—you have to decide which products go where at the outset. There's also the question of whether you should sell through your own site or take it to eBay. If you take Stim's approach, you might handle premium merchandise through your site and discounted items on eBay.

6. Research everything you sell.   Christopher Spencer, author of "The eBay Entrepreneur: The Definitive Guide for Starting Your Own eBay Trading Assistant Business" (Kaplan Business, 2006), uses a site called Terapeak.com to look up 90 days worth of historical sales data on items he sells through eBay. That research helps him set competitive prices. "I generally do not list anything unless it can be researched," he says. "With the vast universe of sold items on eBay, just about everything has been tried out."
7. Remember that eBay is a fast-moving business.   The stereotype of eBay as a place where hobbyists go to hawk their wares is increasingly fading away. Instead, eBay is a platform with real businesses participating, and where new trends are adopted with Internet-speed.

   "Keeping abreast of the developments and keeping your eyes open is essential, says Dan Wilson, chief operating officer of vzaar, which offers a video uploading service for eBay merchants. "It’s surprising how many sellers don’t notice how something new is affecting their business until it’s too late." Wilson says the successful sellers are obsessed with numbers, regularly reviewing their operations to ensure they're being as efficient as possible.

In many ways, setting up a successful eBay venture is like starting the business you're already running. You have to get some experience as a buyer and seller, learn the rules, research what you sell, and keep up with any changes in the industry. Knowing the differences between eBay and the real world can make your auction business the success it deserves to be.

About the author   Christopher Elliott is an Orlando, Fla., writer and independent producer who specializes in technology, travel, and mobile computing. His work has appeared in numerous newspapers, magazines, and online. You can find out more about him on his Web site or sign up for his free weekly newsletter.