Finding Your Niche on eBay Not sure what to sell on eBay? Learn how to research your ideas and find product sources in this excerpt from <i>How to Start a Business on eBay</i>.

A lot of eBay sellers start out selling odds and ends they have around the house-and for good reason. For items that are in good condition, you'll probably get more money for them on eBay than at a garage sale. You probably have plenty of stuff that you'll never miss and you really don't need to store or dust anymore. And it's a relatively risk-free way to test the waters of eBay selling.

If you can't bear to part with anything you already have, start with products you know and have experience with. Choose things that have demonstrable market demand (that is, you know people are buying them). Don't make the mistake of selling only things you like, or the trendiest, coolest things you can find. If your goal is to make a profit-and it should be!-then you need to be selling things people will buy.

If you are considering selling an item, do a search on eBay and see if that product or similar ones are being offered for sale. If the market is saturated, you may want to reconsider trying to sell that product. At the same time, if absolutely no one else is offering the product for sale, you need to figure out if that's because no one else has thought of it, or if it's because no one will buy the item.

Depending on the category, seeing a lot of similar items up for sale may work in your favor or against you. For example, you may see a lot of the same item pop up in response to a search because people are buying. Or, observes antiques seller Sue Rudolph, "It might also mean the market is flooded and nobody wants it." You have to do more than just count the listings, she says. Look at the individual auctions and see if people are bidding on the items-that will give you an indication of the strength of the market. Then check the completed auctions for the item you searched for. That will tell you what the item is selling for (if, in fact, it's selling at all).

Issues to Consider

Whether you have a specific product line in mind or are still trying to come up with some ideas for what you can sell on eBay, consider these issues:

• Cost. how much will the item cost you? There's more to cost that simply the price on the item-do you have the cash required to make the purchase or are you going to have to borrow money (and therefore pay interest) to acquire the inventory? Will there be any additional expenses, such as shipping to you or repairs if the item is not in saleable condition?
• Storage. Do you have room to adequately and safely store the item while you are waiting for it to sell?
• Shipping. What are the labor and cost issues associated with shipping the item to your customer once it sells? Is it very fragile, an unusual shape or extremely heavy? These are issues that can make shipping a challenge.
• Product life cycle. How long can you expect the demand for the item to continue? You may have something that is wildly successful today, but next year you won't be able to pay people to take it away from you. Beanie Babies and other fad collectibles are a great example of this. Some high-tech items are also at risk of having a short life cycle due to technology advances. If you pay attention to product life cycles, you can maximize your profits while the item is hot and avoid getting stuck with excess inventory when the demand declines.
• Season. When you put an item up for sale on eBay, consider the time of year. Heavy coats and sweaters don't sell well in the spring and summer. Lawn and garden equipment is not going to move as well in the winter as it will in the summer. If you have room to store items, you can make a nice profit buying off-season items and holding them until they sell.

Where Will You Find What You'll Sell?

One of the most exciting things about selling on eBay is that merchandise that will sell for a profit is virtually everywhere!

• Your home. Start by looking around your own home at the stuff that's collecting dust on shelves or stashed in the back of closets, or in the attic or garage.
• Flea markets. Flea markets can be a tremendous source of bargain-priced merchandise that will sell on eBay.
• Garage and yard sales. Savvy eBay sellers can make a comfortable living spending one or two days a week shopping garage sales for items that will fetch many times what they cost when auctioned on eBay.
• Estate sales. If a professional is already handling the estate sale, you're not as likely to get really great bargains. But if you have access to a truck and storage, you can advertise that you can buy entire estates. When you make such a purchase, select what will sell best on eBay, put those items up for auction, and then sell the rest through other channels.
• Established retailers. Stores need a way to move items that aren't selling. Once Gotham City Online, a eBay company that focuses on clothing and accessories with sales exceeding $1 million annually, was established, co-founder Jonathan Garriss was able to approach retailers and offer to help them solve their overstock problems by selling those items on a consignment basis on eBay. Eventually, he began purchasing that inventory outright.
• Discount stores. Look for clearance items at discount department and drug stores. Cindy Mayer of Cindy's Collectibles routinely buys infant's and children's items at the end of the season and stores them until the following year. "I buy out of season, and I have found great sales in drugstores," she says.
• Friends and family. Tell people you know not to throw anything away. Laurie Ayers says that members of her church will give thing they are going to throw away or donate to charity, and if she can sell them on eBay, she does.

Buying From Wholesalers

As your business grows, you may choose to start buying from wholesale sources and selling on eBay at retail. This can be very profitable, but only if you choose the wholesaler wisely.

The Internet is full of opportunities to buy lists of wholesalers, often for just a few dollars. Save your money. You can get the same quality of information (or maybe even slightly better) for free by using any of the popular search engines and plugging in keywords such as "wholesale," "manufacturer" or "drop ship." But even that is not the best route to take.

Instead, be more specific in your approach. Think about the type of products you want to sell, and then look for manufacturers, wholesalers and distributors you can work with. Find companies whose products meet your quality expectations, that have prices and terms you can work with, and that deliver the service level you want to provide your customers. Get sample products so you can see the quality yourself. Some companies send free samples, while others charge a nominal fee-either way, don't try to sell something you've never seen. Be sure it is truly worth what you expect to sell it for.

Be sure you're dealing with a true manufacturer, wholesaler or distributor, and not another middleman who is marking up their prices and increasing your costs. Ask for and check references. You want to talk with others who are buying from these sources. In addition, check with the Better Business Bureau, any industry associations, the consumer protection agency of the state in which the supplier is located, and any other source that may be able to verify their claims.

Legitimate manufacturers, wholesalers and distributors will also want information about you, including proof that you are a legitimate business and that you have any necessary licenses and tax identification numbers. A supplier who doesn't ask for this information is probably a middleman whose ethics couldn't stand up to moderate, much less close, scrutiny.

Excerpted fromHow to Start a Business on eBay