Yes, You Can Still Make Money on eBay

eBay provides the arena for savvy entrepreneurs to prosper.

by Dennis L. Prince
- Jun 18, 2008

Many long-time eBay enthusiasts pine over the "good old days" when an inconspicuous online destination, AuctionWeb, flickered into monochrome life under the unassuming hand of Tuft's University graduate, Pierre Omidyar. That was 1995 and, in the subsequent few years, the site that would be renamed eBay grew to be a fertile selling ground for individuals who discovered there was gold in that thar' Internet. More than a decade later, though, some wonder if an eBay livelihood is still a tenable endeavor, or if the ship has since sailed leaving only a corporate-bent portal that only serves its caretakers at the expense of its community of sellers. Many ask, then, "Can you still make money on eBay?"

The buoyancy of eBay

While original eBayers denounced the oncoming of Meg Whitman and the corporate structure she imposed upon the free-flowing eBay community, her actions positioned the venue to withstand the eventual bursting of the dot-com bubble, circa March 2000. As the economy at large spiraled downward and scores of virtual fortunes were lost, eBay sellers discovered a boost in sales activity spurred by folks turning to the bid-and-buy site as an alternative to usual retail pricing. Similarly, the collectibles trade that originally begat the eBay allure remained in high demand, likely from buyers eager for some mental escape from the realities of the ensuing economic upheaval.

Be it for practical goods or emotional indulgences, eBay's foundation within the adjusting economy was firmly set. Today, eBay is a de facto destination for people seeking an alternative to traditional consumption and, for sellers, the millions of registered users ensures a perpetual customer base to court.

First things first—maintaining a presence

On eBay, the storefront is virtual and the operating costs are comparatively trivial

The oft-forgotten benefit of selling on eBay is the assurance the site will be active and accessible day in and day out, year in and year out. The infamous June 11, 1999, site outage aside, eBay has maintained its accessibility to sellers and buyers on a nonstop basis. This reliability, coupled with the ease and low-cost of marketing goods in a worldwide marketplace without traditional business start-up headaches and costs, has made eBay a preferred platform for sellers of all intent, be they "sole proprietors" or established big businesses. Add that any eBay seller can market as much or as little merchandise as desired—even lapsing for weeks or months without actively offering any goods at all—without diminishing the constant activity of the aforementioned millions of registered users, and eBay proves itself to be a "marketplace on demand," available as the seller wants or needs it. Few, if any, strip-mall establishments can offer this sort of flexibility.

Profit potential

Right away, recognize the immediate profit potential of an eBay-based business. Had you embarked upon a usual strip-mall presence, you would be faced with paying a property owner a monthly rent for your storefront (typically a couple hundred-thousand dollars or more) plus a frequently stipulated gross-sales percentage. Add to this the cost of utilities, store dressings, insurance and so forth, and you'd have a sizable outlay even before you sold your first vintage Kewpie doll. On eBay, the storefront is virtual and the operating costs are comparatively trivial.

There are costs of doing business within eBay, though. There's no denying that eBay fees—and the inevitable increases—come at the dismay of its sellers. But as eBay makes adjustments to sustain and improve its profit potential, so too should sellers make adjustments to absorb and offset such profit-challenging developments. That said, business-minded folks need to constantly monitor their profit potential in the face of rising operational costs. When final value fees are edging upward, you'll need to look to control other expenses, including item investment costs, storage costs, and (easiest of all) listing costs. If your items enjoy active bidding to an acceptable and sustainable final selling cost, consider halving your insertion fees by listing at a lower opening bid price while dropping any add-on fees such as reserve prices and listing upgrades. When shipping costs are on the rise, ensure you pass that full price on to the buyers while offering lower-cost options (ground or parcel service) to help them control their outlay.

Riding the economic wave

It pays to understand the eBay model, its profit potential, and how you might market your goods within it

Key to your profit potential is maintaining a keen eye upon protecting the value of your goods, selling only when the marketplace will deliver profitable prices. If you'll specialize in high-value items, for example, yet detect a downward trend in the prices being paid for such goods, it might be time to change up your offerings, if only temporarily. Since it's certain you can't make your best profits by selling at clearance prices, you'll need to either develop a rotational inventory approach or ensure you can limit or suspend your offerings when demand—and prices—are down. A balanced approach would include offering lower-priced items alongside high-end merchandise. Maintain original high-end prices to ensure best profit when the high spender pays you a visit. In the meantime, structure your offerings in a way that the more affordable goods can sustain your bottom line in between high-end sales.

Casual cash

Now, if you're one of the good folks who just wants to unload a stash of varied goods or enjoys dealing in casual merchandising on an activity level similar to garage sales or rented craft and collectible booths, eBay is the answer for better profits than you'd likely garner selling from the sidewalk. Be sure to offer your items to international buyers since their interest in regional goods is on the upswing (and just be sure to accurately quote and recover shipping costs to ensure you don't unwittingly undermine your money-making efforts).

Despite any proclamations you might have heard that would suggest the eBay opportunity has come and gone, it pays to understand the eBay model, its profit potential, and how you might market your goods within it. If you keep a close eye on your expenses while maximizing the access to the millions of users there every day, you'll discover that, yes, you still can make a profit on eBay.

About the Author

Dennis L. Prince has been analyzing and advocating the e-commerce sector since 1996. He has published more than 12 books on the subject, including How to Sell Anything on eBay…and Make a Fortune, second edition (McGraw-Hill, 2006) and How to Make Money with MySpace (McGraw-Hill, 2008). His insight is actively sought within online, magazine, television and radio venues.

Opinions expressed here may not be shared by Auctiva Corp. and/or its principals.

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