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Developing a Successful Business

Want to be a PowerSeller, open an eBay Store, or find new markets for old inventory? Take a closer look at the many ways eBay can propel your business to new heights.

Opinions expressed by Entrepreneur contributors are their own.

When Angie Cash of Kennesaw, Georgia, first became an eBay entrepreneur five years ago (eBay User ID: cashco1000), she was looking for a way to make money at home after the birth of her second child. But she didn't expect that her home décor items business would take on a life of its own-and need its own place to live.

"I worked at home when I started, but the business snowballed and took over our living room, dining room, guest room and basement," says Cash, 37. "Plus, we used our two-car garage and foyer as the shipping and receiving area. The business became so invasive in our personal life that my husband finally said, 'Move the business out of the house or quit.'"

Cash didn't quit. Instead, she moved the business to a 2,000-square-foot house not far from her own home. Among the perks have been a kitchen for taking breaks and a yard where both her own and her employees' kids can play. But all that could soon change. "The business has outgrown our second house, so I'm now shopping for a 5,000-square-foot commercial/industrial space," explains Cash, who projects her company's 2004 sales to reach $500,000.

Such is the power of eBay, the monolithic e-marketplace that has suddenly morphed into a retailing leviathan in a phenomenally short period of time. It's common knowledge that eBay is now the place for consumers on the prowl for the goods or services they crave. But it's not always as apparent that a lot of average people are quietly becoming eBay moguls-and that many of them are doing it from the comfort of their own living rooms or the back rooms of traditional storefronts.

You can do it, too. And the good news is, whether you want to expand your brick-and-mortar business into the lucrative world of e-tailing to boost profits or shift your eBay business's sales into higher gear, eBay has a wide variety of tools available to help you make your dreams a reality.

Why eBay?

If you've been doing business the traditional way from a physical location, then taking the plunge into e-tailing on eBay might seem a little scary. But the fact is, eBay is a snap to use, and it's simply one of the best values around for moving merchandise. After all, where else can you advertise an item for as little as 30 cents and still compete on a level playing field with some of the biggest retailers in the United States-or even the entire world?

"The costs are so low that eBay really is an attractive alternative for people who are looking for a new sales channel," says Jim "Griff" Griffith, author of The Official eBay Bible (Gotham Books) and dean of eBay Education. "The outlay of cash for inventory, a facility and employees, plus the expense of running a brick-and-mortar business, are traditional barriers for folks who dream of owning their own businesses. But eBay allows you to start small with minimal expenses while giving you the same access to buyers as every other e-tailer in the eBay marketplace."

If you already own a business, there's an equally compelling reason to take the plunge into eBay today: It provides you with a viable outlet for moving that merchandise that's been sitting around in your storeroom or warehouse too long. Take a cue from Tom Howle (eBay User ID: thowle), owner of Sound Services, a professional audio store in Birmingham, Alabama, and an eBay user for more than five years. He has listed and sold items that were broken or missing parts (and disclosed the defects, of course) rather than tossing them, since he knew the parts might be of use to an eager buyer. "Even if you only get $20 for something you otherwise would throw away, you're ahead," says Howle, 44, whose business had 2003 eBay sales of $160,000-which makes up 36 percent of his company's total sales.

eBay provides you with yet another significant business advantage that has nothing to do with selling merchandise. It's also a great B2B channel for buying the merchandise and supplies you'll need to run your eBay and/or brick-and-mortar business.

For example, let's say you're a new eBay seller working out of your own home. Although you may initially run that business from your dining room table, eventually you'll need office furniture such as a desk and filing cabinets, as well as equipment like a copier and a fax machine. In addition, you'll need a powerful computer system with a high-speed modem or cable connection that will give you a lightning-fast hookup to eBay. But rather than heading down to the local office supply superstore to outfit your office, you should check out the eBay Business Marketplace, where you can find everything you need, from cell phones to clocks.

Need a reliable vehicle to tote parcels to the post office or drop the kids off at soccer practice so you can hurry home and post new items? At eBay Motors, you can search for great deals on new and used vehicles alike. eBay is also a great source for the packing materials, gift boxes and other supplies you'll need to serve your customers, and, like everything on eBay, they can be shipped right to the front door of your brick bungalow. In addition, since items sold at eBay are often offered at a fraction of their retail price, you'll spend less money on the tools you need to run your business, which gives you more money to purchase inventory you can sell to other interested parties.

By the way, selling to other eBay sellers is also a viable option for entrepreneurs who wish to grow their businesses, as wholesaler Gary Neubert (eBay User ID: gatorpack) has discovered. This 52-year-old Tampa, Florida, entrepreneur has been selling a wide range of packaging materials on eBay, including packing peanuts and bubble mailers, since 1999. Although Neubert won't divulge his sales, it's no secret that he's an eBay Gold PowerSeller, which means his company racks up sales averaging $10,000 over a period of three months. (You'll read more about PowerSeller status later.) His eBay business has been so successful, in fact, that he closed his commercial distribution location about six months after entering the eBay marketplace and now sells exclusively online.

"eBay has given us phenomenal exposure to the marketplace," Neubert says. "So while we're business-dependent on other eBay sellers, the market is several inches deep and miles wide. We also have a high percentage of repeat customers because we have a shipping guarantee that forces us to ship the day orders are received, or we pay the shipping costs."

Most Valuable Players

While your day-to-day online auction sales are likely to be the mainstay of your eBay business, you'll find that, as your business grows, you'll want to use some of the other available tools to help increase your revenue stream. One such tool is eBay Stores. Starting at $9.95 monthly and with a listing cost of just 2 cents per item for 30 days, eBay Stores is an excellent value, especially when you consider it costs $50 per month or more to host your own Web site.

In addition, eBay Stores allows you to "park" merchandise for as long as it takes to sell it when you use a Good 'Til Cancelled listing. That can be a big timesaver if your inventory is extensive, since it eliminates the need to keep relisting. The only other charge is a Final Value Fee, which is the same fee paid on every item sold through eBay. Finally, eBay Stores is an especially good place to list accessories and other related goods that go with the items sold in your regular auction-style listings, since they prompt your buyers to add on to their initial purchase.

"Cross-promotion with an eBay Store is the way to go if you're committed to selling online," says Marsha Collier, author of Starting an eBay Business for Dummies and an enthusiastic eBay buyer and seller herself (eBay User ID: marsha_c). "Besides, where else can you rent a store for $9.95 a month? You also can list items that you wouldn't ordinarily spend regular listing fees for, and if you make a sale, your cost is next to nothing."

You could also use your store to list less expensive items, such as the $25 keyboard-mixer-stand bag that Howle of Sound Services offers in his eBay store. But he says that many of the items in his store are also listed on the eBay site at the same time because this technique tends to create a steadier revenue stream for his business. Incidentally, a great way to attract buyers to your eBay store is by having active listings going all the time. That's because the red eBay Stores tag that appears in the Seller Information box can be a magnet for buyers who like your merchandise and want to know what else you offer. Try offering combined shipping at a reduced rate for multiple purchases as a way to spark add-on sales.

Despite its low cost, eBay Stores isn't for everyone. Griff says that if you only list five to 10 items per month, it isn't worth having a Store. But if you have lots of inventory, it's a great way to cross-market it and beef up your bottom line.

"When used properly, an eBay Store is fantastic because it gives you great leverage to ramp up your sales," says Griff. "Even so, you shouldn't rush out and open a Store. Sell a few things first to see how you do before you make a commitment."

If you do decide to have an eBay Store, be sure to rotate the merchandise and offer new products regularly. Customers like to see what's new and will keep visiting if you give them something different on a regular basis.

The requirements to open an eBay Store are minimal. In addition to being a registered eBay seller and having a credit card on file, you must have a feedback rating of 20 or more or be ID-verified. You also have to accept credit card payments through PayPal (an eBay service that enables businesses to receive and send online payments through a credit card or bank account) or a bank merchant account.

To set up your Store, click on the "eBay Stores" link in the box on the left side of the eBay home page. Among the things you'll be prompted to do will be to select a name for your Store (which can be your eBay User ID if you wish), provide contact information indicating where payments for merchandise should be sent, write a description of your Store, list your specialties, and designate the categories in which you'll be posting merchandise.

Finally, be sure to create an "About Me" page. According to Griff, this is one of the most underused features on eBay, yet it has great potential to increase your business, since you can tell buyers about yourself and your interests (and therefore put a human face to your name). Even more important, you can use the page to provide a link to your own Web site, if you have one, giving you another easy route to increased sales.

Feel the Power

If you're already an experienced eBay seller, you're certainly aware of how important good customer feedback is for capturing new sales. Positive feedback from satisfied customers is a sign to buyers that you're trustworthy, that you live up to the promises you make about the products and services in your listings, and that you provide good customer service. But there's still another way positive feedback can help you grow your business: It can earn you the designation of eBay PowerSeller-a designation that has been shown to increase sales.

PowerSeller status is awarded based on several criteria. First, you must be an active seller with a minimum feedback of 100 with a 98 percent overall rating. Next, you must average three months with gross sales of at least $1,000. That level of activity automatically earns you a Bronze PowerSeller designation. Average $3,000 in three months, and you'll be a Silver PowerSeller; $10,000 makes you a Gold PowerSeller; $25,000 earns you the Platinum PowerSeller designation; and $150,000 gives you Titanium PowerSeller status. Exceed that level, and you'll probably earn something akin to Space Shuttle status in recognition of sales that are out of this world.

While it's entirely possible that you could achieve the highest PowerSeller level simply by selling a few big-ticket items (like the Hope Diamond or a Rolls-Royce or two), it's more likely you'll reach these sales milestones by selling lots of items. And that's when the fun really begins. According to eBay experts, earning a really high level of feedback from satisfied customers-say, 1,200 or more positives-will make your sales skyrocket. So it's important to encourage every customer to leave you feedback, even if all you've sold is a $1 product.

Savvy eBay sellers place little reminder slips in each package they ship encouraging buyers to leave positive feedback-and promising to leave good feedback for the buyer in return. Some sellers prefer to wait until the buyer leaves feedback before responding in kind. Just be sure to follow through if you promise good feedback. It's one more way you can please the customer-and maybe make a customer for life.

Do Unto Others

Want to be an eBay entrepreneur without expanding your current inventory-or, for that matter, even investing in inventory of your own? Then consider becoming an eBay Trading Assistant.

Trading Assistants do all the work for people who don't have the time or interest to handle all the details that go along with trading on eBay. There are plenty of prospective clients, including those who are Internet-challenged and people who are intimidated by computers. Other likely clients include people who are liquidating estates, those who don't have the time (or the patience) to hold a garage sale, and those who want to make a quick buck off the dusty collectibles in Grandma's attic with minimal effort.

All this creates a win-win situation for a prospective Trading Assistant. In addition to creating new moneymaking opportunities that can lead to excellent profits, you can specify exactly which merchandise categories you wish to trade in. You also establish your own rules and terms, which, of course, should be made crystal clear to your clients upfront-preferably in writing-so there are no misunderstandings later.

As a Trading Assistant, you'll write item descriptions for your clients' merchandise. You'll take photos and post everything to eBay under your own User ID. You'll also pay the eBay fees out of your own account. Then, once you've successfully made a sale, you'll handle the process of sending out the sold item(s) to the buyer. Finally, you'll leave feedback for the buyer, and you'll be on the receiving end of any feedback left by satisfied customers.

Naturally, all this expertise comes at a cost to the client. Typically, Trading Assistants charge a percentage of the sale (often 10 to 30 percent) once the sale has been made. Others charge a fixed fee just to take on a job, then charge an additional commission (say, 3 to 5 percent) once the item has sold. The various selling fees-including the Insertion, Final Value and PayPal Fees, as well as postage costs&3151;are all charged to the client and are often collected upfront.

There are only four requirements for becoming a Trading Assistant. First, you personally must have an eBay feedback score greater than or equal to 50 with a positive feedback rating of greater than 97 percent. You must have sold at least four items in the past 30 days. And, of course, you must be an upstanding member of the eBay community who will uphold the company's sterling image and values.

Signing up to be a Trading Assistant is simple. Just go to the eBay home page, and click on "Services." Then under "Advanced Seller Services," select "Trading Assistants." If you've met the criteria listed above, you simply follow the prompts to create your listing in the Trading Assistants Directory. (Be sure to include details like the categories you'll handle, the geographical area you'll cover, your rates and terms, and how you'll dispose of unsold merchandise.) Because there is no charge to be listed in the directory at this time, you're essentially getting a free classified ad from eBay. Make it count by including as much specific information as possible, both to entice prospective clients and to protect yourself from misrepresentation claims.

The Trading Assistant Program has been around since 2002, and there are about 50,000 Trading Assistants worldwide. That's good news for you because it increases the odds that you'll be chosen when a person accesses the listing for your ZIP code. To find out who's currently operating as a Trading Assistant in your area, click on "Services" on the Trading Assistants home page, then "Trading Assistants," then type your ZIP code (or area code) into the "Find a Trading Assistant in Your Area" box. You can also search by the type of merchandise they handle (or all categories if you prefer). You'll immediately get a list of sellers in that ZIP code, along with pertinent information about their operations.

One type of Trading Assistant is the Trading Post location, which is a brick-and-mortar retail location where customers can drop off items that can be sold for them on eBay. Businesses that already have a storefront or create a storefront to sell for others on eBay can meet the Trading Post requirements, join the program, and begin using the Trading Post logo on storefronts and in marketing materials.

Staying Ahead of the Competition

In addition to using all the eBay tools discussed here, there are a few more things you can do to keep your business viable and your sales strong. First, be sure to research your market continually so you can find new and exciting products to offer your customers. Otherwise, you could end up desperately trying to sell those Tickle Me Elmo dolls you bought at closeout prices way after their popularity has waned.

Second, keep an eye on what your competition is up to. Is a rival eBay user starting his or her listings at a lower price in an effort to undercut the number of bidders you get? Or is he or she offering new variations (sizes, colors, quantities and so on) on your tried-and-true product line to lure your customers away? If so, you'll have to make some bold moves, too, to compete. Be sure to monitor your competition regularly by reviewing other sellers' competing listings to find out how much their products are selling for.

Finally, pay attention to what's going on in the entertainment world, which tends to be the barometer for what's in demand. "The media [drives] what's hot on eBay, because pop culture items are such a huge market," says Collier. "Anytime a celebrity makes big news, you'll want to drag out the celebrity merchandise and sell it on eBay. The Today show is also a huge resource. If a celebrity gives an interview or plugs a book, you can be sure there will be a demand for merchandise related to that visit."

Collier knows exactly what she's talking about when it comes to pop culture. Her daughter, Susan Dickman, sold quite a few movie posters from the film Pirates of the Caribbean at a tidy profit at the height of the movie's success. Interestingly, however, the money started rolling in only after Dickman made a minor yet important adjustment in her original eBay listing.

"We discovered when we searched for 'pirates poster' that some were selling for up to $30 when ours were selling for around $10," Collier explains. "Once we sorted by highest prices first, we noticed that 'Caribbean' was misspelled in the titles. So we changed our eBay listing to the wrong spelling, and the posters flew out the door. Then we bought more posters from someone who was still using the correct spelling, and we sold those successfully, too."

This kind of "outside the box" thinking can make you a big success on eBay, too. Good luck, and happy selling!

If the Shoe Fits

When David Hardin, a shoe wholesaler in Mayfield, Kentucky, discovered in 2000 that he needed a way to compensate for a noticeable loss of business from the independent stores that had been slowly disappearing from his client list, he took a bold step: He went retail and started listing shoes on eBay (eBay User ID: shoetime).

Now, four years later, Hardin, 56, not only has a thriving wholesale business and a 200,000-square-foot warehouse, but he also has five eBay apparel businesses and, at press time, was pitching his company's services as an eBay Trading Assistant to a large company in China. Last year, the gross sales for all his businesses combined were about $750,000-and they're still growing.

"Four years ago, none of us knew how to turn on a computer," says Hardin's daughter, Shelly Hudson, 33, who is the company's sales and marketing director. "Now we're a top eBay seller, and we're always looking to bring new sites to the market."

To the Rescue

Selling on eBay isn't just a great way to build new business-it can save a failing business, as Lisa Vanasco, 41, discovered when she stepped in to help Ready Medical in Paramount, California, make a last-ditch survival effort.

The 23-year-old medical equipment sales company was close to shutting its doors because it was so out of step with the times. The owner didn't advertise and wasn't online, so his company was being seriously undercut by the competition.

Enter Vanasco, a temp at Ready Medical at the time, who offered to list some items on eBay. "Everyone laughed, but they let me do it," she says. "The first week I sold more than $5,000 of equipment, and we became a Gold PowerSeller soon after."

The physical location survived, and the company is healthy again, with 2003 eBay sales of $200,000. "We have a basic Web site with a link to our eBay listings," says Vanasco, who has since become director of eBay Sales at Ready Medical (eBay User ID: mentalgoddess). "There's no point having anything more [sophisticated] than that now." In fact, the eBay experience has been so positive that Ready Medical has scrapped plans to build its own Web site and doesn't advertise anywhere but on eBay.

Eileen Figure Sandlin is an award-winning freelance writer who writes on a wide range of business topics.