From the November 2006 issue of Entrepreneur

Online exclusive:For more advice on starting an eBay business, visit Entrepreneur.com's eBay Business Center.

With more than 2 billion items listed on eBay in the past year, and close to $50 billion sold, the sheer size of this online marketplace can be overwhelming. Fortunately, as eBay has grown, the company has worked hard to make it easier for new sellers to get started and be successful. Here are 10 quick and easy steps for building a business on eBay.

 

1. Just Do It
Some people aren't sure where to begin, says Terry Gibbs, founder of IWantCollectibles.com and author of The Auction Revolution. Gibbs has been buying and selling antiques and collectibles online since 1997. At his business's peak in 2002, Gibbs was auctioning more than 500 items per week. Although the pace of his eBay selling has slowed since, he says, "eBay is the best way to sell [an item] quickly for the most money."

Gibbs, 43, recommends the laundry basket approach to get started selling on eBay: "Take a laundry basket around the house and gather 15 items you no longer want." Then set aside time to list all those items for sale on eBay, become familiar with the process and gain some selling momentum.

The value of starting with items you already own is threefold: 1) You are already familiar with them, so it should be fairly easy to describe them for buyers; 2) they're easily accessible, allowing you to start your business immediately; and 3) they cost you nothing to obtain, so if you make mistakes, it won't be costly.

Jody Rogers, president of Beachcombers in Altamonte Springs, Florida, advises new sellers to "start slowly." Spend a few months getting your feet wet to get used to the process, she says, and increase your number of listings each week.

Rogers and co-founder Asad Bangash, both 32, initially started selling personal household items, but now Beachcombers sells original ethnic accessories from India and Pakistan, such as Khussa shoes, glass bangles and Henna kits. After earning $1,500 to $2,000 a month in their spare time, the duo decided in 2004 to devote themselves full time to creating a business on eBay. Last year, their sales broke $100,000, a figure they hope to double in 2006.

 

2. Create a Routine
Next, pick a block of time you'll devote to your business on eBay. Set aside a certain part of the day, or particular evenings each week, to pack up auctions that have ended, list new items for sale and respond to e-mails from potential buyers, says Gibbs. Not only does such discipline stake out time for your new business, but keeping sold items moving out the door also helps make space for new merchandise.

As part of this routine, you'll want to develop a system for keeping track of listings in progress and those that have closed. Gibbs suggests printing out a page for each item you have up for auction and noting who purchased the item, how they paid, when it was purchased and whether insurance was requested. That printout can serve as a guide to ensure items are shipped properly.

 

3. Take a Good Picture
Though item descriptions are important, the photo may be even more essential. Buyers assume the photo is the best-case scenario--that the product probably looks worse in real life, says Justin Hartenstein, 25, founder of Advanced Automotive Concepts in Metairie, Louisiana, which sells custom car headlights. A good photo can make or break a sale.

In addition to taking a crisp image, Hartenstein advocates clearing the immediate area of clutter or photographing the item against a clean backdrop for best results. And he discourages sellers from downloading a stock photo from a manufacturer's website. "Buyers want to see the actual item you are selling," he says, to prove you have it in-hand.

 

4. Build Trust
Once you've got the eBay process down, your next objective is to boost your feedback rating--the number of positive responses you've received after transactions--which helps build trust with members of the eBay community. "If you're new to eBay, trust is everything," says Rogers.

Hartenstein suggests shopping on eBay for small, inexpensive items you might normally pick up at a local store. Just as you build a positive credit record by purchasing items with a credit card and paying the bill promptly, making small purchases helps you quickly rack up positive feedback points, building your reputation and trust among buyers.

Hartenstein also recommends waiting until you have a feedback rating of at least 10 and have earned a star next to your user name to officially launch your business. That star is a competitive advantage, he says--a way to differentiate your business from the competition. Joining SquareTrade, an online buyer protection group, is another way to build trust with buyers, who look for clues that a seller is legitimate. "People have to trust you for you to be a successful seller," he says. With sales of at least $10,000 a month, Advanced Automotive Concepts clearly qualifies as a success.

Rogers echoes that sentiment and says a higher feedback rating has meant higher sales for her business. "When we hit 500 in feedback, our sales definitely went up," she says. "When we hit 1,000, our sales skyrocketed."

 

5. Stick With a Niche
Once you've developed a process for regularly listing and selling items on eBay, it's time to start specializing. Sellers who specialize in a particular product category have a leg up on people who sell a wide variety of goods. "Specializing gives me the ability to spot a deal," says Gibbs.

But people tend to specialize in products when they really should be specializing in groups of buyers, says Gibbs. Within a major category--such as trains, which Gibbs concentrates on--there are several types of buyers, including collectors and operators. "Understanding who they are, what they're buying and why, or how they'll use it" helps you anticipate what other types of products they may need, Gibbs says. Train operators, for example, may need track or train light bulbs, but collectors may value price guides and reference books.

The key is finding something you're interested in, whether it's trains or ties or technology accessories. Becoming an expert in that category will give you a significant advantage. "The people who start on eBay as collectors have a higher chance of success than those who buy a drop-ship list" and sell commodities, says Gibbs. Passion makes a big difference.

A case in point is Proshopwarehouse of Franklin, Ohio, which specializes in liquidating golf equipment. Co-founders Todd McGohan and Tim Stallard, who are both avid golfers, began in 2000 with an initial inventory of $4,400 worth of golf clubs, which they sold on eBay at a 30 percent premium.

Encouraged by the quick sale of the clubs, McGohan and Stallard began approaching local golf pros and manufacturers to buy excess inventory, building their network of contacts and sources along the way. First-year sales were $300,000; second-year sales hit $3 million. By 2005, sales were close to $10 million, earning the company the coveted Titanium PowerSeller designation. "The most important thing," says McGohan, 41, "is to stick with what you know."

 

6. Invest in Equipment
Once you're sure you enjoy selling on eBay, it's time to equip your business with the basics. Although eBay selling doesn't require much in the way of equipment, three tools are essential: a computer, a digital camera and a postal scale. Gibbs advises investing in a camera with a macro setting to allow close-ups of smaller items. Early on, you can get by borrowing a digital camera and weighing shipments at the post office. When you start getting busier, lack of regular access to either of these items will really slow your business down.

Setting aside a work area or room for your business is another smart move. If that separate space is used solely for eBay work, you may be able to itemize it on your taxes and take a home office deduction.

 

7. Be Flexible
Although Proshopwarehouse grew out of McGohan and Stallard's knowledge of the golf market, the business's roots were in vintage jewelry. McGohan and his wife had started a business back in 2000, buying and reselling vintage and estate jewelry on eBay. But when Stallard, 36, approached McGohan with the idea of liquidating some used golf equipment, McGohan jumped at the chance to apply his eBay knowledge to a different product line.

What McGohan learned from that experience is "you need to be willing to move in and out of markets to match trends." Opportunities will arise, such as the sudden availability of bargain golf equipment. So if it's something you have expertise in, go with it. If you're open to exploring new markets, "a year from now, your business will look totally different," he predicts.

One useful source of information about popular products is eBay's own Hot List, which McGohan says is helpful in spotting pricing and product trends. Responding to unanticipated upticks in demand can dramatically improve your bottom line.

 

8. Build Your Brand
With competition on eBay stronger than ever, finding a way to distinguish your business is important, says Rogers. "If you look like every other seller, why would someone buy from you?" she points out. Identify what makes your business different and special, and make sure to communicate clearly to buyers what sets you apart.

For Beachcombers, "what makes us special is our instructions," Rogers says. The company also has an 800 number to make it easy for customers to ask questions. Other ways a business on eBay might set itself apart could be through free shipping upgrades, exclusive items, special packaging or surprise bonuses.

Also, make sure your business's image is reflected in each listing. If you aim to emphasize your small size and homebased status, the tone and style of your item descriptions will likely be more personal than if you have your sights on running a multimillion-dollar online empire--in that case, your listings should have a corporate look and feel. To that end, Rogers discourages reusing boxes for shipping. "Don't go dumpster diving, and don't reuse bubble wrap or the free community newspaper [as packing material], because it brings your image down."

 

9. Negotiate Shipping Charges
The larger your business, the more important shipping is to your bottom line. Unless you ship exclusively through the U.S. Postal Service, which provides free packaging for Priority and Express mail packages, you'll have to buy boxes and packing materials. McGohan and Rogers strongly suggest that you request quotes from local packaging companies, which will likely have prices as much as 50 percent below national suppliers, especially if you'll be a repeat customer.

McGohan also recommends negotiating a shipping contract with a national or international carrier, such as DHL, FedEx or UPS, which can significantly reduce your costs.

 

10. Join the eBay Community
For more help with starting, running or growing your business, look to fellow eBay sellers, Rogers says. The discussion boards in Seller Central are excellent for getting quick answers to frequently asked questions, learning how to write better listings and creating sales templates.

Another great resource is the PowerUp seller newsletter, which provides eBay news and ideas. And if you're considering opening an eBay Store, where you can sell fixed-price items, a great resource is Owen and Emma's eBay Stores Library, which has tips for running a successful store.

With eBay's help, you can become a thriving entrepreneur in no time.

Advice From the Wise
It's easy to spot new eBay sellers among the millions of professionals just by the quality of their listings. To be sure your listings stand out in a good way, follow this advice from veteran sellers.

  • Proofread your listings to be sure they're free of misspellings and typos.
  • Steer clear of titles lacking search terms--words such as cute, wow and nice are not terms buyers will search for.
  • Avoid colored backgrounds that make it more difficult to read the text on the page.
  • Limit the number of type fonts you use to one or two.
  • Don't ignore your "About Me" page, which only 5 percent to 10 percent of sellers actually use, says Terry Gibbs, author of The Auction Revolution.
  • Don't overcharge for shipping; it irritates buyers and reduces the chances of selling your item.
  • Don't ignore PayPal. Buyers want the opportunity to pay electronically; asking for a money order or check makes buyers suspicious.

Tool Box
Having the right tools to manage your business can be the difference between profit and loss. Here are some excellent resources for improving your productivity and revenue.

Sellathon: Sign up for a free 30-day trial of ViewTracker, which tells you all about potential buyers, including what terms brought them to your listing. After the 30-day period, the subscription fee ranges from $4.95 to $12.95 per month, depending on the number of auctions you have running simultaneously.

Seller's Assistant Pro: Find all the help you need to list, manage and track auctions with this software, which costs $24.99 per month but has an initial 30-day free trial.

Turbo Lister: This free program from eBay enables you to create professional-looking listings en masse, rather than having to type them individually.

 

 

Marcia Layton turner writes regularly about small-business issues and is author of the award-winning book The Unofficial Guide to Starting a Small Business.