From the March 2008 issue of Entrepreneur

Selling products on eBay is one of the few ways almost anyone can become a business owner in minutes, with no upfront investment and the advantage of working from home. eBay businesses can be tailored to fit everyone from stay-at-home moms and retirees to college students, disabled workers and anyone looking to make a little extra cash part time or even build a million-dollar business. Perhaps that's why there are currently more than 247 million registered users buying and selling on eBay, generating nearly $60 billion in sales each year. If you want a piece of that $60 billion pie, there are nine key first steps you'll want to take to be successful.

Start With Used Items
Rather than shelling out hard-earned cash to buy brand new products to resell on eBay, begin your eBay business selling used merchandise. In fact, start with what you already own--what you have in your attic, basement and closets, suggests Steve Weber, owner of Weber Books (eBay User ID: weber-books) in Falls Church, Virginia, and author of eBay 101: Selling on eBay for Part-Time or Full-Time Income. Selling used merchandise has many advantages: It's easy to come by, you don't need to do much research to learn about it and, says Weber, "the profit margin can be fantastic--you can get 10 or 20 times the markup," since you either already own it or were able to purchase it for pennies on the dollar from others cleaning out their closets.

The downside to selling used merchandise that you've bought from places like garage sales, thrift shops or household auctions is that it's labor-intensive. That is, it takes more time to find and prepare such merchandise for sale than it does for new items. But the fact that it's lower-risk and lower-cost makes it an extremely attractive place to start.

Develop a Specialty
Once you've sold some castoffs and become more familiar with the selling process, begin thinking about a niche or a type of product to specialize in. "You don't have to do this immediately," says Weber, but start thinking about your hobbies, interests and work experience as possible bases for your eBay venture.

It's virtually impossible to become an expert in everything, but learning as much as you can about one or two product categories can significantly improve your profit potential on eBay, because you'll be able to more accurately predict what price each product will sell for.

"Many people who are now on eBay started by selling products related to their hobbies," says Jody Rogers, 34, president of Beachcombers, located in Altamonte Springs, Florida. Rogers and her partner, Asad Bangash, 34, began dabbling in eBay in 2001 and went full time three years later selling primarily Indian shoes, glass bangles and henna. Their online business has grown at an astounding rate--in July 2007, the two generated nearly $25,000 in sales, their best month thus far.

Rogers and Bangash found "a niche we knew about that wasn't hugely flooded with competition: ethnic items." The duo had an interest in ethnic products from the start, which is something they believe is important when it comes to owning an eBay business. Being passionate about or fascinated by a particular subject or product category will inspire you to learn as much as you can about it, making you a more savvy seller.

Also, "if you don't take time to learn about your product, you may lose sales," says Cheryl L. Russell, author of eBay Income. The more you demonstrate your expertise to buyers, the more likely they are to want to do business with you.

Comparison Shop
Similarly, before you start selling, do some research to find out how much products generally sell for--"and not just on eBay," advises Russell. Check the prices of products at major retailers, both online and off, because shoppers today do the same kind of research before they decide to buy from anyone.

On eBay, you can subscribe to Marketplace Research to learn how much products have sold for and how many times they had to be relisted before the auction closed, or found a buyer.

Take the Easy Route
As you ramp up your selling, you'll undoubtedly have questions. Fortunately, you can get nearly any answer you need for free on eBay. "The best source for information on eBay is eBay itself," says Russell. "There is very little you can't find--you don't need to spend lots of money" to find out how to do something.

On eBay's Sell page you'll find a "How to Sell" video tutorial that will walk you through the selling process. You'll also find several sections devoted to various aspects of selling: determining an item's value, what's selling well now, shipping rules and regulations, and other resources.

One of those resources is advice from fellow eBay sellers, most of whom are more than willing to answer questions posed by newer users. eBay's discussion boards are one place to get answers or feedback from experienced sellers; Rogers has found the eBay Stores Discussion Board to be a great resource. She's turned to it mostly for feedback on eBay regulations to make sure her business is following the rules.

Invest in Your Business
Even though you don't need cash to start selling on eBay--especially if you're clearing out household clutter--there are some pieces of equipment you'll want to buy once you decide to start your own eBay business. Designating a computer specifically for eBay will help you better communicate with customers--plus, if you use it solely for eBay it'll be fully deductable come tax time. A regulation postage scale for determining shipping costs is a must, as is decent photography equipment. But, "you don't need a $1,000 camera," says Laura Poorman, 33, who co-founded Portland, Oregon-based Curvy Girl Clothing along with her sisters, Lisa Toton, 33, and Mi'Lane Cremeans, 35. "You do need to have photos that catch [people's] attention. If someone can't see [an item], they're not going to click on it," and they certainly won't buy it. Poorman says clear pictures are the most important element of running a successful eBay business. And the sisters know what it means to be successful on eBay: Curvy Girl Clothing earned sales of more than $500,000 in 2007.

Develop a System
As your business volume grows, you'll need to set up routines and processes so that you can get everything done--and done efficiently. Poorman invested in a template to make it easier and quicker to list new merchandise. You can find useful templates in the Seller Tools section of eBay (http://pages.ebay.com/sell/tools.html) . Poorman also created an inventory management system, which she says is as simple as using an Excel spreadsheet and can save a lot of time. Establishing clear procedures also makes it possible for others to help out because they have instructions for completing tasks such as packing up orders and taking product photos.

Getting into a business routine also ensures that small problems will be caught before they become big ones, says Weber, who checks his e-mail and eBay account at the same time every day.

Find a Reliable Product Source
With growth comes the need for a steady supply of products. If you prefer to stick with used products, you might want to schedule regular visits to local estate, garage and rummage sales to keep your inventory well-stocked. "Many people sell on eBay full time [using] these sources," says Russell. However, each item is likely to be one of a kind rather than something that's available in larger quantities.

To buy larger lots at wholesale, Google "wholesalers" to find potential suppliers of new merchandise in your niche. Weber strongly advises against investing large amounts of money in wholesale lots early on. Instead, he says, "start small, learn and grow--grow slowly." To do that, you'll need to find products you can sell over and over again rather than trying to make the deal of the century in one fell swoop. Such deals, say, for a container load of iPod accessories, will rarely pan out the way you expect them to. Stick to what you know, and keep a pace that's consistent with your business's growth.

Also, steer clear of drop-shippers, at least initially, says Weber. To be able to buy new products at a decent profit margin, you need to develop relationships directly with manufacturers or with master distributors.

Manage Customer Expectations
Building a solid customer base is much easier when you underpromise and over-deliver, says Weber, so customers will be delighted with the quality of the items they receive from you. That means being as accurate as possible in your description of the product--if the CD is in excellent shape but there's a slight crease in the liner notes, say so in your description. Don't assume the buyer won't notice.

More important, scale back your assessment of each item's condition to avoid causing buyer disappointment; something that's nearly new could be described as being "in really nice condition," for example, to ensure that the buyer doesn't expect to receive a brand new product.

Likewise, overestimate shipping times slightly so you aren't inundated with impatient e-mails from buyers. If you expect an item to arrive in seven to 10 days, tell customers it might take two weeks, says Weber--when it arrives in seven days, they'll be thrilled.

Setting customer expectations just a notch lower than what you know you can provide will help you avoid disagreements, dissatisfaction and negative feedback.

Know Your Numbers
Although eBay continues to grow each year, the days of every auctioned item selling during the first listing period are long gone, says Russell. At least 50 percent of auctions won't get a bid at all, she says, mainly because there are so many auctions going on at one time. But that doesn't mean you can't do well on eBay--you can!

The trick is to build higher fees into your cost estimates to ensure that you can sell an item and still make money. You may need to list an item several times before it sells, and each listing costs money. You can determine the average number of times it takes an item like yours to sell by using resources like Marketplace Research, then build those additional listing fees into your minimum price.

But don't get too caught up by the listing and final value fees that eBay charges for access to its millions of buyers. In comparison to the cost of placing a single classified ad in the newspaper, eBay is still a steal. Says Russell, "You can't get the kind of worldwide exposure you get on eBay for less anywhere else."


The Ebay Way
The biggest difference between top eBay sellers and those who are struggling is that successful sellers view each buyer as a potential long-term client, not a one-time customer. With that view, your goal becomes serving customers, not protecting yourself from a few unscrupulous buyers. That focus on customer service needs to be reflected in your policies and procedures if you want to build profitable, long-term relationships.

Assume the person you're dealing with is willing and interested in paying you for the item they've just purchased or won through an auction, says eBay entrepreneur and author Cheryl L. Russell.

Don't lash out at potential buyers with harsh, accusatory language, such as, "If you don't intend to pay, don't bid." Instead of scaring off deadbeats, you may actually scare off customers who'd prefer to be treated kindly. State your policies in a friendly manner.

Do Provide as much detail as possible about each product to help buyers determine if it's what they are after. Clothing measurements--instead of just sizes--are helpful, as are additional photos.

Don't suggest that products are in better condition than they actually are. Be honest to avoid refunds later.

Do Offer an unconditional guarantee, says Steve Weber, an eBay entrepreneur and author. "It puts the buyer at ease, and since so many regulations almost require it, offering it upfront gives you a competitive advantage," he explains.

Don't let the prospect of negative feedback cause you to make poor business decisions. Don't allow yourself to get mistreated by a dishonest customer because you're worried about negative feedback. "It's not the end of the world [if you get negative feedback]," says eBay seller Laura Poorman. If 99.9 percent of your feedback is positive, one negative won't kill you.

Do Offer PayPal as an accepted form of payment. In Weber's case, an estimated 93 percent to 95 percent of buyers prefer to pay online. Also, accepting personal checks and money orders is a good way to endear yourself to any customers who may be uncomfortable with online shopping.

Marcia Layton Turner has bought and sold on eBay since 1999. Her book, The Unofficial Guide to Starting a Small Business, was named one of the "Best Business Books of the Year" by Library Journal when it debuted.