Why Ebay will not Work For Most People as a business Part 1

This article is written from my experiences of selling on ebay. I have a personal account and a business account with an Ebay store. I started selling on Ebay about 4 Years ago and was a power seller for about 3 Years. So this article is based on my experiences of selling on Ebay, not based on some ebook that I have purchased. (I have never purchased one on how to sell on Ebay - Maybe I should! - lol).

In many ways Ebay is the perfect marketplace in theory, because the laws of supply and demand largely determine the price. The greater the demand for an item and the lower the supply the more expensive the price will be. This is pure economics theory at work here.

There are exceptions to this, such as you only need two people to bid on an item to push the price way up and this is not reflective of the marketplace. I quite often sell the same items time and time again and the price can vary wildly. Some people get a bargain and some people less so.

How do you know what to sell?

There are two ways to find good products to sell: -

1.List a variety of products and see what sells. However this can be costly as you want to start your auctions at a low price, to encourage interest and if there is not enough demand, then you will not sell your product and end up with loads of fees and no income, or even worse you will sell your product for less than you paid for it and still end up with the Ebay fees and Paypal fees to pay.

2.Look at what other people are selling and how much for and then pick items that you can earn a good margin from. But beware other people can use this method to see what you are selling also.

How can you tell what somebody else has sold?

Feedback is how you tell whether or not to trust a seller on Ebay, but you can also use it to see what somebody has sold. If you type in any keyword you will get a list of items for sale. Click on any of the items and it will show you the details of the listing. On the listings page the seller's information will be included. Next to the sellers name is their feedback number. If you click on this number it will take you through to the feedback profile page for the seller. As you scroll down on this page it will show you what they have sold and on each item there is a link to view the item. This link will take you to the original listing and will allow you to see exactly what sold, how much for and how much bidding took place on the item. The more bidding the better, as it is an indication of a higher demand for an item, which is what you are looking for.

Ebay is too transparent!

One of the biggest problems with Ebay is that you can spend considerable time, effort and money finding good products to sell. At which point you think that Ebay is great because it works really well. However two things can happen: -

1.You list more of the same product thus increasing the supply when the demand has remained static and the price has to therefore fall.

2.Other people look at your feedback, see what you have sold and what they can also sell and earn a good margin on, so they also start to sell the same product. Thus increasing the supply with the demand remaining static.

No comparison to the High Street!

What I mean here is two things

Firstly when you go shopping in the high street there may be hundreds or thousands of shoppers and only a handful of shops that sell what you are looking for. (In my case Jewellery - Most towns only have a few Jewellers.) In this instance there is a large demand (shoppers) and small supply (shops). Comparativley on Ebay you are only on one computer so are an isolated shopper but there are hundreds of shops selling jewellery - low demand and high supply

Secondly if you want to sell a second hand piece of jewellery you cannot just rent a shop or stand in the High Street and sell your item. However you can just open an Ebay account and list you item. The competition from second hand pieces is much greater than it is on the high street.

Ebay encourages second hand items!

Most people will buy on Ebay for one of two reasons.

1.Because they think the item will be cheaper

2.Because they cannot find what they are looking for elsewhere.

Because so many people use Ebay to try and grab a bargain and it is so easy for people to list second hand items, it pushes the price of second hand items up and lowers the price for new items.

In the high street if a second hand item were slightly cheaper than a new item, then the new item would sell every time. But on Ebay it's quite often the second hand item that sells.

This is fine if you sell second hand items but most businesses sell new items. In the jewellery trade this is particularly true. A lot of the gold jewellery is sold by pawnbrokers and is unredeemed pledges that they have. When you consider that they only give scrap value for the gold it is pretty impossible to compete if you are selling new items. Have a look at the second part of this article to find some tips for selling on ebay based upon my personal experience.