Selling on eBay - a Small Business Guide to Selling Successfully and Profitably on eBay

eBay is the world's largest online marketplace, with around 181 million customers. 43% of all internet users in the UK visit the site every month, with an average user spending almost two hours on eBay every single month.

It's no wonder that a lot of small businesses look at eBay as a way of getting into online sales. It's not all plain sailing though, and many businesses have found that it can be time consuming and unprofitable.

There are some pointers that can make trading on eBay profitable, interesting and fun. Have you noticed how some sellers can get significantly more bids and higher prices, whilst other sellers offer the same items at lower prices and get little or no interest?

It isn't down to luck. But put in a effort and planning, and you too can become a successful and profitable eBay trader.

I've written this article with an English audience in mind. The legal implications of selling on eBay are from an English perspective. However, most of the concepts will be the same around the world.

Know the Law

If you sell products to consumers, you need to be aware of the Distance Selling Regulations and the E-Commerce Regulations which give protection to consumers who shop via the Internet.

These regulations provide protection to consumers in the following ways:

1.     Consumers have the right to receive information about goods and services, in writing, before deciding to buy;

2.     A cooling off period of seven working days in which the consumer can withdraw from the contract;

3.     Protection from credit card fraud.

Get using eBay

If you haven't registered on eBay, get yourself a user name and start trading. Give yourself a sensible sounding user name that will add credibility to whatever it is you are going to be selling. Register yourself as a business user as this will give you easier access to more business functions within eBay later on, and register yourself as a Seller as well as a Buyer.

Browse some of the listings, notice how different people list their items. If you see a listing that you like - because of the description, the detail, the photographs, the layout - print a copy off. You may well want to do something similar yourself when it is time for listing your own items
.

Get yourself a PayPal account and register yourself as a seller, so that you can receive payments.

Buy a few small items on eBay. Get comfortable with the process. Bid on items in auctions, and buy items using the 'Buy It Now' facility.

When you have received your goods, promptly leave good feedback for the seller. They should reciprocate and give you good feedback in return. The more positive feedback you get the better, as this will help your credibility when you start to sell yourself.

Sell a few bits and bobs on eBay as well. It's a great time to clear the decks of jumble that you've picked up over the years.

Research Your Product, Research Your Market Place

Do you know what you want to sell? Who else is selling a similar product? What price are people paying for similar goods? Is your product easy to deliver?

If you have no idea of what products you want to sell, get a copy of The Trader and Exchange and Mart. It will provide you with a whole list of suppliers and could spawn off some other ideas of what you want to sell.

Consider your product. It isn't always necessary to pick a product you know about, but there are a few things that you should consider.

Firstly, how are you going to get it to your customer? If it is a big, bulky package, or if it weighs more than 25kg, it is going to cost a lot to get it delivered. It is also going to be difficult to collect it from a customer if there is a fault with the product. Is the package fragile? If so, expect problems with deliveries - no matter how well you think you can package it up.

If your item is too big or bulky to post, phone up a couple of parcel carriers to get some quotes. Use a reputable parcel carrier like ByBox, Initial City Link or Amtrak. If your item isn't so fragile, consider carriers such as DHL and ParcelForce.

Consider how you will resolve warranty problems. Do you have a supplier who has the facilities and resources to help you, or are you on your own?

The next step is to research your market and find out who is selling something similar on eBay. This is fairly easy as eBay itself provides some useful tools to help you get going, with the Advanced Search function.

Once you click on the Advanced Search function, you can start specifying what you are looking for in much more detail. You can exclude words from your search, you can specify a minimum and a maximum price, you can specify business or private sellers, whether the items should be new or used, and you can specify a range of how many bids the item should have in order to be included in the search.

More interestingly, from a viewpoint of someone wanting to research a specific product on eBay, you can specify Completed Listings only. This means you can see how many similar products to yours have been offered on eBay over the past month, what they sold for, if they sold and the number of people who bid on them.

I recently wanted to sell a car on eBay, and wanted to see what similar cars had sold for over the past few weeks. Using the eBay Advanced Search option, I requested a search for cars similar to mine, within a similar price range.

Very quickly, I was able to ascertain what other cars had been offered, how many bids each auction got and whether the cars sold or not.

It's a great tool - you can identify if your particular marketplace is saturated or if you are one of only a few sellers.

Now look at these auctions in more detail to find out clues as to why some sold for more than others. You'll soon notice a pattern:

1.     Lots of photographs and well written information with prominent contact details do well, with lots of interest, lots of bids and a good sale price.

2.     Listings lacking one or more of the above attract less interest.

3.     Animated cartoons, musical effects, difficult to read fonts, or a poor description in two or three lines and typed ENTIRELY IN CAPITAL LETTERS do worst of all.

This is a big eBay secret: spend time on your listing, make yourself look professional. You'll reap the rewards.

If you now know your product, your market and your competition, you're a big step along the way. But can you make money? It's time to...

Forecast!

Forecast your sales to ensure you can make a profit. Take into account:

- Delivery Costs - to the customer, and to you in the first place

- Warranty Failure Costs

- The time it takes to manage the sale and after sale

Then you can identify your break even price. Compare this with the average price of bids on eBay for the products you are planning to sell and see what the difference is.

Test, Test, Test

Before you buy a huge bulk of product, try and test the market with a small sample. This may mean you having to buy your product at a higher price, but it's an awful lot cheaper than importing containers of product in from China - only to find you can't sell it!

Get some really good quality photographs and then put your small sample of products on eBay.

How to make the most of your eBay listing

We've already discovered a few things about what makes a good listing and what makes a bad one. Now it's your turn to create your own sales pitch.

Start with an attention grabbing headline and subtitle. In eBay, headlines and subtitles are important. When you search for items on eBay, eBay searches the headlines and subtitles for matching words and phrases, so you need to make sure that all the relevant search words are included.

Here are some examples of good and bad headlines:

Good: Compact, lightweight folding bike/bicycle

Bad: Folding Bike

'Folding Bike' is bad because it doesn't pick up on anyone looking for 'folding bicycle'. If people are looking for a folding bike, they also want something that is compact and lightweight, so if your folding bike is compact and lightweight, put this in the headline as well, so that you get picked up on people looking for 'compact bike', 'lightweight folding bicycle' and so on.

Good: Smoothie/Smoothy Maker and Juicer with Recipes 
Bad: Smoothie Maker

'Smoothie Maker' doesn't say very much - there is nothing to differentiate your product from hundreds of others. But smoothies can make juice, so add that in. The handbook from a smoothie maker includes recipes, so add that too. And as for the the alternative spelling of smoothie? 'Smoothie' is an easy word to mis-spell, so if you include the most likely alternative, you'll get picked up if someone searches for 'Smoothy Maker'. None of your competitors will, dramatically increasing your chances of a sale.

Once you've worked out a headline, write your description. Don't start writing it on the eBay web site - use Word to start with - then cut and paste your description onto eBay.

There are some 'magic words' which work well on eBay. If you can use Free, New, You, Yes, Discover, Benefit, Money, Guarantee, Now, Secret, Proven. in your listing, you'll reap the rewards later.

Focus on the benefits of what you are trying to sell. If you do mention a feature of your product - highlight what benefit that will be to your customer.

Make sure you promote your Unique Selling Features in your auction listing. Ask yourself "why should people buy from me?" - and put your answer into the listing.

Incidentally, remember that the distance selling directive states that consumers have the right to return their purchases within seven days of purchase. So make this a benefit from buying from you:

Money Back Guarantee

We're absolutely confident in this product.

But if you are not satisfied, return it to us

in new condition within seven days

and we'll give you your money back. 

When I write a listing for eBay, I tend to write the first paragraph as a summary of what is on offer. I make it snappy, exciting and interesting.

Always include your name and telephone number at the top and bottom of your listing. Prospective customers will feel a lot more comfortable about buying from you.

When you've finished writing your listing, save it, print it out, then go away and do something else for half an hour. Then come back and go over it again. It can help to read your listing out loud and make sure it sounds right to you.

Setting the Price

You will obviously have a minimum price that you are prepared to accept for your item. There are two ways of setting this price:

- Either use this minimum price as the starting price, or

- Set a hidden reserve price

I personally tend to choose the latter and start the bidding from 1p. The reason for this approach is two-fold:

1.     If people see the start price as being fairly high, you'll get less people bidding and your product may fail to sell

2.     For some very curious reason, items with lots of bids on them attract more bids later on in the auction.

There is also a 'Buy It Now' feature in eBay, which allows people to buy the product straight away and short-cut the rest of the auction. Buy It Now is ideal for people who want to buy something and get it in a day or so. People who use Buy It Now aren't so interested in getting the best price, they just want it quickly.

Payment Options

Make it easy to get paid. Most eBay auctions are paid using PayPal: your customer has a choice of setting up a PayPal account (and millions have already done so), or just entering their credit card details online. PayPal commission rates are also very competitive when compared to more traditional credit card facilities.

However, it is always worth having other options available. If your business offers credit card payment already, make sure your listing tells your customer that they can phone you up to pay by credit card. This will encourage people who distrust online payment systems, and help you build up rapport with your customer once they've bought.

Getting your auction listing live

Once you are happy with what you have written, it's time to enter the information into eBay and get your auction going.

To do this, click on the SELL button at the top of the screen in eBay and follow the instructions. Type in what you are selling and eBay will suggest some relevant categories. Select the best fit category and then continue.

Enter your title - and subtitle if you so wish, and then upload your photographs.

The more photographs you upload, the more it costs, but it is never worth skimping on photographs - your prospects are going to want to see exactly what they are getting.

Select the option to have a Gallery Picture. This means that prospects get to see a thumbnail-sized photograph on the eBay listings page - which dramatically increases the number of people who will click through to see your listing.

Cut and paste your listing description from Word into the description. Then use the formatting tools to tidy up your listing: I personally tend to make the first paragraph bold, and tend to change the font size to make it slightly larger than standard, which has the benefit of making the listing easier to read.

eBay has a number of 'listing designer' options, which I tend to avoid as most of them look tacky and cheap. Feel free to look at them though, if you feel it would benefit your listing. One advantage that the listing designer has is that you can then put a picture at the top of your listing, which does help.

Next, set your start price, reserve price and - if you wish - your Buy It Now price.

Next comes the option to make your listing private. This means that all buyers remain anonymous to other eBay users. Select this option. This will stop your competitors seeing who has been bidding for your items and how much they bid for them.

Select your payment methods and set up your postage options. Offer the option to allow the customer to collect the item from you as well - this adds extra confidence in your auction, as it shows you are approachable, both before and after the sale.

Finally, set up the Returns Policy, and if you want to give your buyer some further information which they'll see once they've completed the auction, add this to the 'Additional Checkout Instructions' field.

Once you've completed posting your listing, make a note of the auction number, which will come in handy later on. View your auction so you can see what everyone else can see and make sure you are happy with it. If you are not, edit it immediately.

Now the fun really starts!

Running the Auction

For the first day or so, I usually let the auction run its course. Because eBay lists all auctions in date order, your listing will usually be near the back, so a lot of bidders won't see it in the early couple of days. You'll probably get one or two bids - opportunists who see the potential for a bargain - but that is probably about it.

For obvious reasons, eBay won't allow you to bid on your own items - but there is no reason for you not to ask a couple of your friends to put in some low bids. This increases the number of bidders, and the more bids an item receives makes your auction more interesting to other eBayers. If you can get 10-11 low bids in at an early stage, it can make a big difference later on. You still want your listing to appear cheap, however, so make sure your friends are well briefed.

If I were selling a £400 product, and I had started bidding off at 1p, for instance, I'd want to cap these bids off at around £80.

Then you leave the auction to run its course. Answer any questions you get on e-mail or by phone quickly, promptly and as friendly as possible.

Most auctions really come alive in the last few hours. I usually check the auction about twelve hours before it is due to close, and if the bidding is still low, I'll get a friend to put in a bid to bring it very close to the reserve price (i.e. £2 under), so that the next successful bidder will win the item. Then I leave it to see what happens.

It can be quite exciting to watch the end of the auction. If there are a few genuine bidders on there, your sale price can go up dramatically in the last two minutes of the auction.

As soon as the auction completes, use the eBay facility to get in touch with the buyer and send an invoice. Thank them for their purchase, and let them know your telephone number, in case they want to get in touch with you again.

At this point, you'll be able to see their full details - name, address and telephone number. Make a note of this (I tend to print off a copy of the invoice, which I then attach to the item when I ship it off), as it can be hard to get access to later on.

The Next Steps

The rest is just good customer service. Telephone or e-mail your new customer and thank them for their business. Assure them that they have bought a great product and remind them of the warranty and money-back guarantee, if you offer that.

If they haven't paid already, ask them how they would like to pay. If you offer credit card payment facilities, now is a good time to get that sorted out. If you are getting the product delivered to them, ask them what day would be convenient. If they are not around during the day, tell them about the ByBox parcel vending machine service and ask if they would be interested in using that.

There is one final tool that eBay gives you, which is suitable where you've got multiple items to sell: the 'Second Chance Offer'. If you had several bidders bidding acceptable amounts of money for your item, you can give them a second chance to buy your item at the price they bid at in the auction. It's a great tool, allowing you to potentially sell a few items at the same time.

After the Trial

Now is the time to go back to your forecasts and see how well you performed. Have you made money during the trial? If not, are you going to make money when you start selling in bulk? If not, it's time to try something else.

If, on the other hand, you've done well with your trial auctions, it is time to move onto the next stage. Refine your listing, start more auctions and take it from there.

If you're doing really well with your current product, your competitors will start selling it as well. To stay one step ahead, you need to start finding the next killer-product to sell.

When you've find it, get in touch with your existing eBay customers and let them know about it. Especially if it a related item to your first product, this could be a quick way to make some early sales.

When you're starting to sell reasonable volumes of products on eBay, you'll start needing to look for ways to automate your eBay listings and sales. There are a number of products on the market. Do a search on Google for 'eBay automation' for more details.

Finally, don't forget to keep checking your performance against your forecast. Make sure you really are making money and most of all: have fun! eBay is a great community and an enjoyable way to create an additional revenue stream and get your business known by a wider community.

I wish you the very best of luck on your eBay venture!