Ebay business the smart way

eBay the Smart WayeBay Motors the Smart Way eBay Global the Smart Way Building Your eBay Traffic the Smart Way... 1 Introduction This book focuses on selling on eBay as a profit-making e

eBay Business the Smart Way

Second Edition

eBay the Smart Way

eBay Motors the Smart Way

eBay Global the Smart Way

Building Your eBay Traffic the Smart Way

eBay Business the Smart Way

Maximize Your Profits on the Web’s #1 Auction Site

Second Edition

Joseph T Sinclair

American Management Association

New York • Atlanta • Brussels • Chicago • Mexico City • San Francisco

Shanghai • Tokyo • Toronto • Washington, D.C.

This publication is designed to provide accurate and authoritative

information in regard to the subject matter covered It is sold with

the understanding that the publisher is not engaged in rendering

legal, accounting, or other professional service If legal advice or

other expert assistance is required, the services of a competent

pro-fessional person should be sought.

Library of Congress Cataloging-in-Publication Data

All rights reserved.

Printed in the United States of America.

This publication may not be reproduced, stored in a retrieval system, or

transmitted in whole or in part, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written

permission of AMACOM, a division of American Management Association,

1601 Broadway, New York, NY 10019.

To my grandfather, Albert L Hoener, Jr., and grandmother, Margaret Zoe Lorene Fellabaum Hoener, together the light of my life in my early years in Michigan

Contents

Acknowledgments xvii

I Introducing eBay Business 1

1 Introduction 3

Who Should Read This Book? 6

eBay’s Place 9

You’re in Business Now 11

Customer Service 11

Find Your Niche 12

Work 12

State of Retail 14

Call to Action 15

II Getting Started 23

2 Setting Yourself Up Legally 25

Sole Proprietorship 26

Partnership 30

Corporations 34

Hybrid Business Forms 38

Virtual Businesses 38

And Then You Grow 39

Taxation 40

Resources 41

Conclusion 42

3 Business Details .43

Sales Tax License 43

Business License 49

Regulations 50

Employees 50

Independent Contractors 51

Insurance 55

Bank Accounts 56

Tax Number 57

Merchant Credit Card Account 57

Trademarks 58

Accounting 58

Branding 60

Inspiration 67

Resources 69

4 Equipment, Supplies, and Space .71

Hardware 72

C ONTENTS IX

Software 74

Internet Access 76

Home Router 77

Long Distance Service 78

Business Machines 79

Office Furniture 80

Office Supplies 81

Office Premises 82

Storage, Packing, and Shipping 82

Home Office Tax Deduction 83

Inexpensive Home Office 84

On the Road 86

5 Finding Inventory 89

Basics 90

The List 92

Go for It! 126

6 Borrowing Money 127

Business Plan 128

Savings 130

Credit Cards 131

Relatives 132

Angels 133

Banks 133

Other Lending Sources 139

Lenders for eBay Businesses 142

Resources 143

III Business As Usual 145

7 Selling on eBay 147

Types of Auctions 147

Listing an Auction 151

Taboo Items 159

Illicit Practices 164

Your Marketplace 164

Passive Endeavor 165

Text-Box and Banner Advertising on eBay 166

Power Sellers 167

The Heart of the Matter 167

8 Auction Details .169

Advertising 169

Placement 182

Timing 182

Valuation 185

Linking 185

About Me 185

Final Details 186

Where the Work Is 188

9 Photography .189

Taking Photographs 190

Digital Cameras 198

Image Services 200

10 Using Image Software 207

The Digital Darkroom 208

Image Editing 209

File Formats 216

Summary 217

C ONTENTS XI

11 Pricing 219

Prices 220

eBay Research 221

Online Research 221

Analytic Research 224

Offline Research 225

Appraisers 226

Trial and Error 227

Selling Strategy 228

12 Special Auctions 231

Special Section Auctions 232

Separate Auctions 233

The Reality 241

Non-eBay Marketplaces 242

13 Fulfillment 245

Drop Shipping 245

Normal Operations 247

The Digital Goal 273

14 Receiving Payment 277

Merchant Credit Card Account 278

If You Can't Get a Merchant Account 281

Money Orders and Cashier's Checks 282

Checks 285

Online Payment Services 287

Cash on Delivery (COD) 291

Bidding Qualification 291

Don’t Sell on Credit 291

What Should I Do? 293

IV Unpleasantries 295

15 Dealing with Buyer Fraud 297

Fraud 298

Remedies? 307

Some Afterthoughts 310

V Making It Work 311

16 Software Features .313

Auction Management Software 314

eCommerce Software 318

17 Software Assistance 319

eBay's Programming Aids 321

PayPal Extended 325

Andale 326

Auction Management Services and Software 333

Custom Programming 336

Accounting Software 337

18 Expanding Your Market with Data Feeds .339

Data Feed Markets 340

Craig’s List 348

Summary 348

19 Selling Internationally 349

Selling 350

Buying to Sell 357

Buying 360

Merged Markets 360

New Yankee Traders in Force 362

20 Customer Service .363

C ONTENTS XIII

Feedback 364

Credit Card Chargebacks 365

Guarantees 365

Warranties 368

Payment 368

Escrow.com 369

Bonding 371

Square Trade 371

Authentication Services 372

Returns 372

Communication 372

Full Information 373

Software 373

Offline Customer Service 374

Experiment 374

Know Your Customers 375

Not Just This or That 376

VI Operate Smart 377

21 Storefronts 379

What Is a Storefront? 379

Informal eBay Storefront 381

eBay Stores 383

An eBay Business 388

Marketing 391

Website 394

eCommerce Software 396

Bonding to eBay 400

About Me Webpage 402

eBay’s Hidden Market 403

Summary 410

22 Determining Your Profit 411

How Are You Doing? 412

Expenses 417

Profit 420

23 Developing a Strategy 421

Building a Product Profit Model 422

Finding Inventory 427

Commodity Products 431

Value-Added Products 436

Time 441

Not the Same 441

24 Education 443

eBay University 444

eBay Live! 445

Books About eBay 445

College Extension Courses 446

eBay Videos 446

eBay WBT Tutorials 446

Business Seminars 447

Business Books 448

Web Development Tutorials 448

Web Development Books 449

Community 449

VII Other eBay Business 451

25 Selling Services on eBay 453

C ONTENTS XV

Advertising 454

What to Sell? 455

Strategy 462

Elance 464

Buying Services on Elance 468

Summary 468

26 Integrating eBay with Offline Retail 469

Trial 470

Accounting 470

A Special Business 473

Customer Service 473

27 Using eBay for Marketing 475

Compared to What? 476

The Plan 476

Other Businesses 480

Summary 482

28 Consignment Selling and Other Businesses 483

Consignment 484

Motors 490

Fulfillment 490

Photography 490

Picking 490

Buying 491

Systems Set-Up and Maintenance 491

Managing Auctions 491

Managing Communications 491

Running Customer Service 492

Bookkeeping 492

Use Elance 492

29 Buying on eBay 493

Normal Buying 494

Buying for Your Business 494

Organizing Your Buying 498

Services 502

Software 503

We Have Stories 503

Appendix I The Top 10 Tips for Beginning an eBay Business .505

Appendix II The Top 12 Tips for Seasoned eBay Businesses 507

Appendix III The Top 8 Tips for Business Buyers 509

Appendix IV HTML Tutorial 511

Defining a Web Page 513

Markups Alphabetically 515

Anchors and Hyperlinks 538

Example Web Page 539

Viewing the Web Page Source 540

eBay HTML 541

Summary 542

Appendix V Cross-Promotion Example .543

Index 545

Acknowledgments

My thanks to Charlie Craft, real estate and business entrepreneur and ex-tax attorney, who brainstormed with me exactly what eBay business- people need to know about legal and business basics to get off to a good start Thanks to my agent, Carole McClendon at Waterside Productions, who does a great job, and to Jacqueline Flynn and the folks at AMA- COM, including Mike Sivilli, Kama Timbrell, Bob Chen, and Andy Ambraziejus who contributed to the success of this book Special thanks

to Stephen Ingle of WordCo who helped with the copy editing, reading, and indexing of the book And I don’t want to overlook the peo- ple at eBay who continue to do an admirable job of creating a great new marketplace and expanding it globally Good work folks!

proof-Thanks also to the people working at the many vendors that serve the eBay industry and provide products, services, and software that help

eBay retailers sell on eBay The breadth of their innovation is always a surprise and an inspriation And thanks to my wife Lani, daughter Brook, and son Tommy, who are supportive—and sometimes even for- giving—during the huge effort it takes to write a book Finally, hats off to the many eBay entrepreneurs, who each day are setting the commercial trends for the new century, many of whom have contributed indirectly if not directly to this book Thanks.

Introducing eBay Business

1

Introduction

This book focuses on selling on eBay as a profit-making enterprise for

an individual, family, or small business eBay is a dynamic new ketplace that’s here to stay With over 95 million registered members

mar-already, it continues to grow From the first edition of eBay the Smart

Way in 1999, I compared eBay to the stock and commoditiesexchanges when everyone else was comparing eBay to local flea mar-kets The fact is that today it is clear eBay is as much a cornerstone ofAmerican business as the New York Stock Exchange According to

eBay CEO Meg Whitman, the Wall Street Journal finally recognized

eBay as an important marketplace by calling eBay an institution justbefore the eBay Live! conference in June 2004.

But more importantly, eBay is a democratic level playing field for vidual entrepreneurs eBay is no longer just for collectibles, garagesales, and flea markets eBay accommodates the sale of both new mer-chandise and fixed-price items, and collectibles have shrunk to lessthan 6 percent of eBay’s volume In 2003, eBay’s sales volume was $24billion

indi-The following are some statistics gathered from the annual eBay Live!conferences, eBay’s annual reports, and other sources

eBay growth in registered users (first quarter of each year):

of items for sale (including the latest figure):

Jul 1999 2,400,000 items for sale in 1,600 categoriesJan 2001 5,000,000 items for sale in 4,000 categoriesFeb 2003 12,000,000 items for sale in 18,000 categoriesJune 2004 21,000,000 items for sale in 45,000 categoriesThe leading sales categories for eBay are (figures in billions of dollarsannualized from second quarter 2004):

Motors 9.8

C HAPTER 1 I NTRODUCTION 5

Consumer electronics 2.5Computers 2.4

Clothing 2.2Books/movies/music 2.1Sports 2.0

Home and garden 1.6Collectibles 1.4Toys 1.3Jewelry 1.2Cameras 1.1Business and industrial 1.1

eBay Statistics

At one time, eBay published statistics on its home page It cut back the volume of statistics and then finally quit publishing statistics on its home page altogether Now it publishes some statistics at its annual conference in June, but you can find most published statis- tics in the eBay annual report.

eBay Magazine published great statistics quite useful for eBay

busi-nesses Unfortunately, eBay Magazine is no longer published

Statis-tics published by third parties about eBay are only estimates and are prone to error.

This book covers the business basics of selling on eBay, such as ing the form of your business, getting assistance from people withouthiring them as employees, avoiding undue risk and liability, borrowingmoney, and getting a sales tax license (very useful) Moreover, thebook also shows you how to do inexpensively with Web services what

decid-formerly occupied several employees, such as inventor y control,accounting, auction tracking, shipping, and customer service Alsoincluded is practical information on finding inventory, being fee con-scious, selling effectively on eBay, building your eBay reputation, cre-ating your own eBay Store, establishing merchant credit card status,and developing a strategy for profitability.

This book covers everything you need to know to get off to a quick butlow-risk start selling merchandise on eBay It’s a timesaver thatenables you to focus more on your particular retail business and less

on researching the process of starting and operating a business.The book also offers business buyers a few tips, such as how to buyequipment and even bulk supplies on eBay Purchasing on eBay is agreat way to cut your capital investment as well as reduce your operat-ing expenses The book even gives an overview of eBay-related busi-nesses But when all is said and done, this book is primarily for sellers(retailers) who want to dedicate themselves to a business on eBay

How Many Full-Timers?

How many people are selling full time on eBay? The exact number

is impossible to ascertain It’s likely in the hundreds of thousands eBay reported the figure as 430,000 sellers (summer 2004) who sell either full time or as a substantial sideline business.

The important thing to keep in mind is that eBay is still in its first decade You can still get in on the ground floor Look again at the

statistics!

Who Should Read This Book?

If you’re a casual eBay seller, this book probably won’t amuse you, andyou’re better off with a basic eBay book Indeed, this book assumesthat you’ve already read a basic eBay book or otherwise learned most

of the basics You won’t find many detailed step-by-step instructions

C HAPTER 1 I NTRODUCTION 7

here for doing your digital tasks My other book, eBay the Smart Way, to

be published in its fourth edition in the winter of 2005, has sold quitewell, which I take to mean that it has been useful to many people.Those readers who have read prior editions of the Smart Way series ofeBay books will notice that we are moving information between books

as we expand the series

eBay the Smart Way This is now the basic book Originally it

contained eBay business information as well as basic informationbut in the Fourth Edition will cover only the basics Basic infor-mation is the cornerstone of eBay success Don’t consider operat-ing a business on eBay without mastering the basics

eBay Business the Smart Way This book provides extensive

prac-tical information for those who want to start an eBay retail ness In the First Edition, it contained marketing information Forthis edition some of the marketing information has been moved

busi-into Building Your eBay Traffic the Smart Way, a new marketing

book

eBay Global the Smart Way This book covers selling to

consum-ers in other countries and importing inventory from abroad to sell

on eBay US For many products, you can increase sales by 30 cent or more just by taking part in global ecommerce This bookhelps you do that Co-author Ron Ubels is a customs broker withalmost 30 years experience in international trade

per-Building Your eBay Traffic the Smart Way This book, available

in fall 2004, covers revving up your eBay business not only on eBaybut also on Froogle and other online marketplaces You can reachmore potential customers for little additional effort or expense.Why not?

eBay Product Photography the Smart Way Good photographs

increase sales With a little coaching you can take great graphs of items Perhaps more importantly, you can take photo-

photo-graphs quickly and efficiently using inexpensive equipment Thisbook will be available in the spring of 2005 Co-author Stan Liv-ingston has been a product photographer for about 40 years.

eBay Motors the Smart Way This is a specialty book for those

who want to buy or sell vehicles It even includes four chapters forautomobile dealers Co-author Don Spillane is the finance man-ager at an Acura dealership

Naturally, the book you’re now reading builds on the basics covered in

eBay the Smart Way I have tried not to repeat much, although someideas and information are so crucial to success that they bear repeat-ing

Changes

eBay changes gradually rather than claiming a new version ally or at other intravals The policies get more complex The rules get stricter And eBay devises many new features, some of which replace the old In my opinion, this is a good trend eBay is matur- ing as an institution But the changes make it necessary for you to review eBay policies and rules occasionally in order to keep up to date and stay alert for the introduction of new features A book cannot do that for you.

annu-C HAPTER 1 I NTRODUCTION 9

eBay’s Place

I originally wrote a very extensive section attempting to prove a point.When I read it, it seemed to be a well-reasoned but much too lengthysleeping pill So, I will save you the somnolence and simply state mypoint

When you have a product or service to sell, that’s only half the story The other half is marketing and selling.

Another way of stating this is that about 50 percent of the money oreffort spent on any product or service represents the seller’s cost ofmarketing and selling that product or service This applies to manu-facturers, wholesalers, retailers, publishers, attorneys, auto transmis-sion repair services, pest control services, and you name it Marketingand selling is a huge cost component in the cost of doing business, anybusiness As Chapter 21 explains, it’s no different for ecommerce web-sites But it is different for eBay

How Does eBay Fit In?

eBay provides inexpensive, efficient, and convenient marketing andselling Don’t want to pay that traditional 50 percent for marketing?eBay may be your economical answer Let’s look at several models

1 eBay Only Seller You sell only on eBay Your marketing cost is

the fees you pay to eBay and the effort and money you spend oncreating your auction ads You have pinpointed your market.Only those who are interested in your product or service willlook at your auctions Those who look at your auctions (poten-tial bidders) are exactly the people you want to reach They areself-selected And there is the greatest number possible of thembecause eBay is such a huge market, and in fact the largest mar-ket

2 Sell on eBay and Also on Your eCommerce Website You have

an ecommerce website where you sell your product or service

and you also sell on eBay Well, it generally costs just as much tomarket on the Web as it does off the Web So, your ecommercewebsite probably won’t save you marketing and selling expenses.But your sales on eBay will save you marketing expense for thatportion of your sales that’s on eBay Thus, eBay can’t reduceyour marketing expense for all sales, but it can add to your saleswith a minimal increase in overhead.

3 Sell on eBay and Also Offline You have a physical location

where you sell your product, and you also sell on eBay This issimilar to operating an ecommerce website You will save onyour marketing expense only for that portion of your sales thatare eBay sales Consequently, eBay can’t reduce your marketingand selling expense for all your sales, but it can add sales withlittle additional overhead

The Great Equalizer

eBay is the great equalizer in that it puts you on an even playing fieldwith other manufacturers, wholesalers, retailers, or even individuals.The cost of marketing is so low in the eBay electronic marketplace thatyou can potentially compete with anyone In other words, you don’thave to spend thousands of dollars on marketing, advertising, promo-tions, and salespeople to make sales on eBay Anyone can potentiallymake sales on eBay It’s the new democratic marketplace The big guysdon’t have an advantage Abundant capital is not necessary for suc-cess This situation presents a classic opportunity for those who want

to work hard to build a business with sweat equity and a minimalinvestment

The eBay Advantage

eBay provides you with a means of reducing your marketing costs tothe point where you can potentially compete effectively with any com-petitors You can beat the 50 percent marketing and selling cost rulefor traditional manufacturing, wholesaling, retailing, and services

C HAPTER 1 I NTRODUCTION 11

business models With the addition of just-in-time inventory controland short selling cycles (covered in Chapter 13), you can take advan-tage of a powerful business model

You’re in Business Now

Many people are so successful in person-to-person buying and selling

on eBay that they decide to make a career out of it That’s great!They’re off to a good start Nonetheless, things change when onedecides to stake one’s future and one’s income on an eBay business.You’re in business now It’s no longer a game, a pastime, a hobby, or asideline It’s your new career And it’s a business not much differentthan any other business, offline or online

You need to start thinking like a businessperson, particularly like asavvy retailer Your focus needs to change from being self-centric tocustomer-centric If your focus is customer-centric already, great! Ifnot, you need to learn about customer service You need to understandthat some of eBay members’ most cherished practices amount to poorcustomer service You need to do better

Customer Service

One bias of this book is that customer service is all-important Why?Because it’s the biggest trend in business today, both offline andonline It increases sales and retains customers It’s expected onlinewhere buyers can’t talk face-to-face with sales clerks or fondle themerchandise It’s expected on eBay And too many immature or arro-gant sellers on eBay think it’s an impediment to profits; they set a poorexample for you

Customer service is many things It’s providing alternative means ofpayment It’s quick shipping It’s presenting an auction ad with com-plete information It’s answering questions in a timely manner It’salso many things online yet to be invented It’s whatever provides con-

venience to buyers and instills confidence in their purchase decisions.Customer service is your job.

But we’re getting a little ahead of ourselves here Before we can vide customer service, we need to find some customers For manyreaders, the best way to get some customers is to find a selling niche oneBay

pro-Find Your Niche

Another bias of this book is that you need to find your niche (a cialty) Selling anything and everything on eBay is an approach thatworks only for a few wheeling and dealing entrepreneurs Most read-ers will find their retailing success in a niche that they can systemati-cally exploit for sales For some it will be an opportunistic niche wherethey can make money for a few months or a few years and then move

spe-on to another niche For others it will be a niche where they can addvalue to the products they sell and stay in business indefinitely

You need to decide what you want to do This book will help youdecide and then help you achieve business success I wrote this book tohelp you avoid jumping into activities that will contribute little to yourbusiness profit and will help you focus on those activities that willprove profitable

If you’re starting to get the idea that with new business models, tomer service, and establishing a niche there might be a little more tostarting an eBay business than meets the eye, you could be right It’sstarting to look like work

cus-Work

Operating a business on eBay is work In most cases, it’s very hardwork I’m always amazed by those who think eBay is a pot of gold theyjust need to tap into and relax and enjoy the torrent of carats thatcomes gushing out They’ve obviously never sold merchandise on

• Some operating capital

just to name a few of the ingredients for success Don’t underestimatethe amount of work you will have to put in

Books Can Help

A book can help It condenses a lot of information into a ably small space and gives you leads to other information not included in these pages Don’t try to do it by yourself Use this

reason-book or another like it Also buy a basic eBay reason-book such as eBay

the Smart Way for reference If you don’t like my basic book, buy

one like it There’s more to an eBay business than you think.

Will your labor be justified and lead to something worthwhile? Theretail can be financially rewarding as well as professionally fulfilling.Then too, your timing couldn’t be better getting into retailing on thisday, in this medium (the Web), and in this highly tuned online market

we know as eBay

State of Retail

The general state of retail today offline seems to be in decline In manycases, retail clerks are paid minimum wages and are not well trained.There are too few available in most stores for customers to turn to con-veniently for help Often clerks can offer little help when a customerhas a question about merchandise Merchandise goes on the shelveswithout being marked with a price as if no one cares whether a fryingpan costs $9 or $29 Notice, all these complaints relate to customer ser-vice Retail establishments that do provide good customer service areconsidered unique

What an opportunity for online retailers! As a matter of fact, my wifedeclared after Christmas 2002 that for Christmas 2003 she would doall her shopping online Well, she didn’t do it all, but she certainlyincreased her online Christmas purchases for Christmas 2003 I’mahead of her I haven’t been Christmas shopping offline for five yearsand, in fact, bought her Christmas presents in 2002 and 2003 on eBay

In addition, most of what I buy for my business and even personal use(except groceries) I buy online Over half of that I buy on eBay

The Dark Side of Shopping

Did you see the Amazon.com television commercial during the

2002 Christmas season? Being originally from the Midwest, I could appreciate it.

It shows a man walking searchingly in a parking lot on a dark day with a few inches of snow on the ground The man obviously can- not remember where he parked his car He carries a huge load of Christmas presents One present drops into the snow He continues looking for his car without noticing the missing present Then the

message of the television commercial pops up on the screen:

Ama-zon.com and you’re done.

Amazon.com in this television commercial represents not only

Call to Action

The prior section makes a good ending to this introductory chapter.Nonetheless, I would rather end the chapter with a call to action Youcan’t really know much until you step to the firing line and take a shot

at eBay retailing Sell something at retail This is an essential step for

an experienced seller as well as for a novice You may decide based onyour experience in this initial trial selling period that serious eBayretailing is not for you Therefore, I don’t advocate that you get set up

to handle a lot of retail sales initially That comes later Do a trial first.Nonetheless, you have to be organized, and you have to handle yoursales immediately and efficiently Otherwise your reputation will suf-fer—from negative feedback—and your retailing experience willbecome a regrettable one

This book leaves it to you to get organized for this initial experiment.There’s no reason to learn and use anyone else’s system for this trialperiod Simply use a pen and paper system Keep all your pen andpaper records together in one place that you find handy to access Yoursystem should cover the following:

• Fulfillment (shipping and handling) management

• Customer service management (e.g., customer communicationmanagement)

Later after your initial trial—should you decide to continue your eBayretailing—you will need to begin using an auction management ser-vice (see Chapter 17), whether eBay’s or a third-party service such asAndale But for the trial, put together your own system using theabove list to guide you Actually, creating your own system will helpyou more intelligently choose a digital system later

Volume

For a trustworthy retail experience (experiment), you have to do somevolume selling However, hold it to a low roar Don’t try to sell fivepallets of baseball caps, one dozen per day, coming out of the gate.Keep your selling effort to something manageable given the auctionmanagement system you have invented This is just an experiment todetermine whether it’s worth your while to go further and invest thetime, energy, and money to put your eBay retailing on an efficient dig-ital system

The more volume you experience, the more likely it is that your sional pen and paper auction management system will be overloaded.Don’t let this happen If you lose track of what you’re doing—-veryeasy to do—your customer service will suffer, and you will surely getsome negative feedback Take things slowly during your trial period What can you learn from your voluminous effort? The essential thingyou need to learn is whether there’s enough potential sales volume tosustain your proposed retail business on eBay

provi-Experiment

You should not get the idea from this book that you need to try sellingone item once or twice and if it doesn’t work, give up your effort

C HAPTER 1 I NTRODUCTION 17

Rather, you need to experiment If you don’t get any sales, you have tochange something:

Price eBay buyers typically look for bargains If you can’t sell at a

price low enough to motivate buyers, you will have a lot of troublebeing successful on eBay That doesn’t mean, however, that youneed start with your lowest possible reserve price Start high andwork your way down See what works

Ad Copy The Web is an informational medium, which makes it

more similar to mail order promotion than to magazine ing That is, you have to provide plenty of information to potentialbuyers Try different approaches to writing the information More

advertis-is usually better Photographs are a must, even when the onlything that it makes sense to photograph is the product’s box

Model When selling products, some product models (e.g., Sony

TG50) are more popular than others even when they are almostidentical If you choose the wrong model, success may be out ofreach Experiment

Shipping and Handling Arrangements It appears that some eBay

sellers give away items at wholesale prices and make a profit onshipping and handling This irritates buyers Make your shippingand handling reasonable Compare alternatives and offer a cost-effective (to buyers) method Try including shipping and handling

in the price (i.e., free shipping and handling)

Payment Methods A common mistake for retailers is to use a

pay-ment method that’s convenient to themselves Think of your tomers instead Use payment methods that make buyingconvenient for potential buyers There are several popular ways toaccept payment I recommend that if you don’t use all of them, atleast experiment with each of them until you find cause to rejectany one of them

cus-If you get easy sales, you need to evaluate what you’re doing:

Price If your sales go very well, you might want to try raising your

price (reserve price) to find the point where sales drop off

Sustainability If your sales go well, you have to ask yourself, Is

this sales program sustainable? Can I get the products in the bers I need from wholesalers and delivered on time? Can I con-tinue to get the products at the wholesale price I need to beprofitable? How easy will it be for someone to duplicate my saleseffort?

num-It’s a rare eBay business that is sustained by only one item In mostcases, but not all, there will be at least a small number of related itemsthat you will sell in your eBay retailing business You need to experi-ment with selling each one of them

Unique Markets

Oddly enough each item, no matter how similar to another item, has its own market For instance, originally there were two kinds of memory for digital cameras, CompactFlash cards and SmartMedia cards When I purchased a memory module on eBay, I naturally bought the wrong kind for my new Fuji Fine Pix in February 2001 I tried to return the CompactFlash card to the seller for an exchange The seller refused and indicated that he sold only CompactFlash cards and could not make an exchange for a SmartMedia card When I investigated further, I discovered that the seller monopo- lized the eBay sales of CompactFlash cards while another seller monopolized the eBay sales of SmartMedia cards The dynamics of these memory micromarkets were different enough to have differ- ent monopolies Consequently, I bought a SmartMedia card from the other seller and sold my mispurchased CompactFlash card on eBay easily for a $10 loss.

What are the lessons for retailers here? The first lesson is that each item has its own market Don’t assume that similar items will pro- duce the same sales results You may have the market to yourself

C HAPTER 1 I NTRODUCTION 19

for one item and face an aggressive competitor for a similar item or even total disinterest from buyers for a similar item The second lesson is that you will want to sell similar items to take advantage of eBay’s potential The person who sold me the CompactFlash card could have provided better customer service, not to mention mak- ing additional sales, if he could have provided me with an exchange.

Note that if you check the digital camera memory market on eBay today, you will the find market dynamics much different than described above.

But don’t get carried away If you have 225 items you want to sell, youdon’t have to experiment with each before deciding that eBay will be agood or bad venue for your retail business Do some spot checks; that

is, do some representative selling with a reasonable number of items.You will not get definitive results, but it’s the best you can do under thecircumstances without undergoing an unwieldy trial selling effort

Price

eBay is like any other business Price alone does not determine salesvolume Price and customer service are the primary determinants, butthere are others Experiment with a variety of things, not just price.For instance, changing the advertising copy in your auction ads may

do wonders to improve your sales (see Chapter 8)

Let Your Brain Do the Walking

How often have you heard that someone started out selling one type ofitem with limited success but in the process discovered that selling acompletely unrelated type of item was very profitable? That mighthappen to you on eBay Keep an open mind You may discover that thetype of item you want to sell on eBay will not constitute a profitablebusiness for a variety of reasons Nonetheless, by putting yourself onthe firing line, you may discover one or more niches that no one else

has found or to which no one else is selling as well as you can Thus, itmay pay off not to keep your brain in a straightjacket Keep alert, andwatch for opportunities Find out what your competitors are doing.And research your markets well, both offline and online Figure 1.1shows Don Spillane, finance manager of Acura by Executive (co-

author of eBay Motors the Smart Way), selling an expensive used car on

eBay for $53,990 in 2003 Before that, Don was one of eBay’s leadingcollectible dealers for many years

Figure 1.1 eBay Motors auction listing ©1995-2003 eBay Inc.

There is another important consideration here eBay provides a levelplaying field for everyone That means that you can potentially com-pete effectively against major manufacturers and retailers, such as SunMicrosystems, now actively selling high-end computer hardware oneBay That’s what makes eBay a fabulous opportunity without normalbounds Without a huge capital investment, you can potentially com-pete successfully as a retailer against the big retailers in any nichewhere you see an opportunity

What is being said here? Don’t conduct just a few experiments in yourtrial retailing effort and call it quits if they fail Experiment a lot until

C HAPTER 1 I NTRODUCTION 21

you find something that works Then go after the profitable niche youhave found

What Do You Want to Do?

A trial selling period will often reveal to you what you want to do andwhat you don’t want to do For instance, some people don’t minddoing the fulfillment chores such as packaging and shipping It givesthem a tangible sense of accomplishment Others would rather doalmost anything else than package products every day and deal withthe US Postal Service Pay attention during your trial period Whenyou get into your full-fledged retailing operation, you’re unlikely tohave the time to do everything Delegate the tasks you don’t want to

do to your spouse, your children, employees, or independent tors

contrac-Marketing Study

If you were to open a bricks and mortar retail store, you would want to

do a marketing study first That’s the smart way to start a retail ness And marketing studies, usually done by an industry expert, tend

busi-to be expensive For eBay, your trial selling period is your marketingstudy In fact, it’s the best of all marketing studies It’s an actual trialselling operation And you can do it yourself You don’t need an indus-try expert What makes this possible and cost-effective is that eBay is avirtual market It exists only online It doesn’t take a huge investment

to operate in a virtual environment

Take a hint from the market study concept Conduct your trial sales asobjectively (scientifically) as possible Keep notes and records andaccumulate statistics so that when you’re ready to evaluate whatyou’ve done, you won’t have to rely on your memory completely.Don’t try to make your study complicated, but also don’t make it soeasy that you miss valuable market information

To supplement what you’ve determined from your trial, tr y theresearch programs covered in Chapter 11 One or another of them will

be very helpful to you

When the Time Comes

You’ve completed your trial, and your selling has been successful Nowyou’re ready to commit yourself to a retail course of action on eBaythat’s profitable This is not the time to keep the auction managementsystem you have created, particularly if it’s a pen and paper system asrecommended above Bite the bullet and subscribe to an auction man-agement service (to be used via the Web) It’s something of a learningcurve and it’s money out of your pocket, but it’s the only sensible way

to conduct eBay business eBay offers its own auction managementservices, and vendors such as Andale also offer great auction manage-ment services (see Chapters 16 and 17)

Further Information

Keep in touch after you’ve accomplished something substantial or unique in an eBay business, I’d like to hear from you Email me at

jt@sinclair.com (Put EBAY READER in the subject line so I can find

your email in the sea of daily SPAM.) Perhaps I’ll be able to use your story (without revealing your trade secrets) in a future edition

of this book.

Also, visit bookcenter.com for further information relevant to this

book This a website devoted to my eBay books.

This book was written to be easy to read and understand, but it isn’tmeant for dummies It’s for those who want to learn to conduct a retailbusiness on eBay the smart way

Good luck with your eBay business!