While e-Bay is most well known for its auctions, anyone who is serious about making a regular income will eventually need to open a store.

E-Bay has two differnt fees they assess.  The first is an insertion fee, which applies to every item you put up for sale.  The second is a final value fee that is based on the price the item sells for.  There are four different ways to put your item up for sale: Auction, Buy it Now, Auction with a Buy it Now, and Inventory.

The first option, Auction, is certainly the most famous.  You must pick a starting price for the bidding, but you have little control over what it will sell for.  The listing fees are based on this initial price.  The ratio between the listing fee and the initial price is rather high and I suggest that you look at the proper chart.  You can find it by clicking the link to it next to the starting price block when you create a listing.  A common strategy is have the starting bid much, much lower than the anticipated selling price in order to minimize this expense.  This strategy will work well for high demand items, but many nitch items will not get a lot of bidders.  If your item is of that type, then your starting bidding price will usually be your selling price.  If it sells at all.  If your item is worth between $1.00 and $9.99, then the insertion fee of 40 cents (as of October 2007) represents 40% to 4% of your initial asking price.  If you make the mistake of starting the bid off at $10.00 even, then the 60 cent fee is now 6%, and you won't reach 4% again until the price is at $15.00.  The percentages get better as the price goes up, but in my experience most sales are in the $7.00 to $15.00 range.  This seems to be in line with some books and articles I've read that stated that most consumers think in terms of $20.00 bills.  Now, add to this the 5.25% final value fee for any sale of $25.00 or less (and this is based on what you sell it for, not what your original asking price was), and you are talking of a 9.25% fee OR GREATER for sales between $9.99 and $15.00.  Remember this for my paragraphs on inventory.

The second option is similar to auction, but with a twist.  Instead of starting out with a beginning bid, you are setting the final price you want.  The theory here is that an interested party, rather than have to wait for the auction to end, will be willing to pay a little extra for the quicker service.  This is born out in practice, I know I hate to have to wait three days on an auction just to find out I was outbid and I know there are others as well.  Unfortunately for the seller, the fees are the same.  Unless you are selling items worth (even with service) at least $15.00, I do not believe this is economically feasible.  Unlike an auction, you have no hope of getting a better price than you are asking for.

The third option is to use an auction with a buy it now feature.  This is my least favorite of any method, but I'll get to that in a second.  The theory is actually good-a buyer has the option of waiting a few days to get a better price by waiting out the auction, or he/she can pay a little extra to get it right away.  The reality, however, is quite different.  There are basically two types of customers that will look at your item: the patient ones and the impatient.  The patient ones will spend a lot of time searching for the best deal.  They are willing to wait a few days to save a few buck and therefore won't have much use for the Buy It Now.  The impatient ones may very well be willing to pay for Buy It Now to save on time, but since they are in a hurry they are less likely to do much shopping around.  If they see you at all, it is likely because they did an "ending soonest" search for their item and there may only be a few hours left on the auction anyway.  They will just place a bid and hope it wins.  As a result, the service you are offering at a higher price is not a service after all, but is a great way for you to pay too much for your item.  I speak from experience.  Willing to try anything, I did experiement with many auctions with buy it nows.  I've only had one take advantage of the buy it now and I wound up losing more money that I ever gained.  Regardless of the economics, however, this does remain a popular choise among sellers.  Don't fall for it just because everyone else is.  I've even seen items whose starting bid was only 1 cent less than the buy it now price.  I have no clue as to why, but I love that kind of competion.

This comes to the final option a seller has on e-Bay: the inventory.  The fees are easy to remember, as there is only two listing fee bands.  Anything less than $25.00 costs 5 cents a MONTH (more on that later).  Anything $25.00 or more is only 10 cents.  Now, the final value fee is much larger at 10%.  How does this compare to auction?  Well, let's take the $9.99 example.  If it only gets one bid on an auction, then e-Bay is taking 92 cents from you.  If it is bought the first month in an inventory, then e-Bay is taking $1.05 from you.  Strickly speaking, this example shows auctions as being better by 13 cents, but remember that $9.99 was the optimum selling price under $15.00 and that we are assuming that the item sold on its first listing.  If your item is in demand and will nearly always sell in an auction, then you may indeed get bigger profits.  But if you are a nitch seller, then this 13 cent margin does not offer you much safety.

Consider if the item does not sell the first time it is listed, but does when you relist it.  For auctions and buy it nows, you will get a refund for the relisting whereas the inventory will not.  So now you are 18 cents behind.  But if the item fails to sell on the second try, then the Inventory option comes back with a vengeance.  The insertion fee refund only applies to one relisting, so if the item sells on the 3rd try you would have paid $1.32 for an auction and only $1.15 for the inventory.  The lesson here is that high demand, fast moving items are best for auctions, but nitch items are best for inventories.

Why do people use Auctions and Buy It Nows if Inventories are so good?  The biggest reason is advertisement.  Buyers have to ask to see an Inventory item unless their search comes up with less than 20 Auctions/Buy it Nows.  Not all customers know this, so by not having an auction you may be missing out on a lot of potential buyers.  The other reason is that some items do very well in auctions.  These items must be in high demand and should sell for higher prices.  By setting the Auction initial bid much lower than expected sale price, total fees can be minimized.

But what about the items that may not be in damand today, but may be in damand tomorrow?  This is the true power of Inventories.  At only 5 or 10 cents a month, you can list an item and forget about it until such time that it sells.  A whole year for a $25.00 item is only $1.20 for listing and $2.50 for selling, the total is 15% selling price.  Even with less traffic coming to an Inventory than an Auction, you can get a lot of visitors in that 360 days and only one needs to buy.

Another advantage to Inventory is that you can sell multiple items in a single listing.  You can do the same with Auction and Buy it Now, but the insertion fee is based on the item cost times the number of items.  For example, If you list an item in an Auction for $7.50, the fee is 40 cents.  If you listed two in the same listing, then you will get charged 60 cents because $7.50 time 2 is $15.00, and the insertion fee for $15.00 is 60 cents.  With an Inventory, the insertion fee is based on the cost of a single item.  For example, I could list 100 items at $24.99 each and still only pay 5 cent insertion fee, because 5 cents is what the $24.99 item fee is.

E-Bay offers 3 store packages, each at progressively higher fees.  The least expensive one, for $15.00 a month, is my preference.  The other 2 give you more support programs to use.  They are good programs, but since I like to set up my own spreadsheets I saw little need for me.  I am saving myself a fair amount of money each month because I took some time to do them, but I can understand why some people would rather pay for the convienence.

The best program you can have now that you have a store is Turbo Lister.  This will be a program you have to download on your computer and it will require you to play around with it.  Some features are not as obvious on Turbo Lister as they are on the Sell page of e-Bay, so do become familiar with listing things on e-Bay directly before you go to Turbo Lister.  Once you do know what features you want, then start using Turbo Lister.  Turbo Lister is still not terribly fast, I average about 6 minutes per item, but it is much faster than using the e-Bay Sell page.  Turbo Lister keeps record of every listing you make (unless you delete them).  By duplicating a similar item and making the necessary adjustments, everything you list has the potential to be an easily accessed template.  You also can control when they get listed.  Many times I have been creating a series of listings only to realize I've made a recurring mistake in them.  Since I haven't uploaded them yet, I can easily make the corrections.  When the listing are ready, it is a simple matter of highlighting all the new listings and uploading them into the e-Bay data base.  Features also allow for making corrections in the Turbo Listing data base and updating their corresponding e-Bay listings.

When you do create your listings, make sure you identify all new items as new.  Much of my competition does not do that.  I also guarentee next day shipping with an over night service, something else my competition does not always do.  If these three blocks are checked, then the item will automatically be entered into E-Bay Express.  I have had few sales from E-Bay Express, but since it does not cost me time or money, that is of no concern.  The fact is that those who did buy through E-Bay Express rarely see anyone but me with that item.  Take advantage of free advertising whenever you can!

Another thing to consider is to offer free shipping.  Of course, shipping is not free and you will need to adjust your asking price accordingly.  But buyers can greatly reduce the number of items to look at by limiting thier search to items with Free Shipping.  Again, few items that I sell have other stores offering Free Shipping, so again I come to the top.  Even if a customer doesn't specify free shipping in his or her search, when the list of items comes up it will show that I have free shipping.  It is one of the peculiarities of the human mind to focus on Free, even if the net cost would be less by paying for shipping.

I can't put a number on how many sales I made solely because of this, but the fact is that I went several months charging shipping and had several hundred items listed before I decided to make the conversion.  When I did make the conversion, it took me a couple more months to change every listing.  Over 75% of my sales were items that I had just converted.  At first, I was frustrated.  I said to myself taht I would have updated something else had I know that these items were about to sell.  But after a few weeks of always selling the recently converted items, I realized that this was not bad luck, but proof that Free Shipping was getting my stuff noticed.

One final thing to consider getting yourself noticed above your competition is selling items as lots.  If what you sell has more than one component, then sell it as a lot.  Buyers sometimes look for better deals by buying in lots.  To help them, e-Bay allows them to only search listings that are sold as lots.  Very few sellers do this, however, so there is little competition for those that do.  My code of ethics is that if a group contains components that could exist and be useful by seperately, then it is a lot.  An 8 piece tea set is therefore a lot of 8 items because each component could be used independantly of the others.  A deck of cards, however, would be a single item because it is rare that anyone would want a single card.

Outside of e-Bay, it would be wise to become a licensed retailer if you open a store.  By law, ALL sales need to be declared within the US.  What you did or didn't do as a non-store seller I am not going to talk about.  I will tell you that when you open your store, you should go ahead and make it all legal.  It is not that painful and can even be helpful.  You do have to pay a fee to get your lisence, the costs and terms vary from location to location, but this is very small.  Sales to people outside your state must be reported to the state, but in most cases is tax exempt.  You will have to pay sales tax on sales within your state, but e-Bay can let you pass those costs on to the consumer.  There is a place in the listing worksheet that  lets you specify which state to charge tax to and at what percentage rate.  It is at the bottom of the e-Bay worksheet and fairly obvious, but on Turbo Lister you will actually have to tell it to show you those options.  You will have to submit regular statements and payment to the state, usually monthly.  I hope I have shown you that paying sales tax is not terribly painful, but how can it help?  The main reason is that you are legal and don't have to fear an audit.  I admit that avoiding trouble is not a big motivator, but the other reason is.  You will need it if you want to buy items wholesale.  Distributors will not sell to you discounted items unless you can prove that you are a legitimate business.  If you have a state tax ID, then you are legitimate.

Although this will be the focus of another guide, I do want to point out a key advantage to buying wholesale.  By selling new items instead of used ones, you can standardize your inventory and save lots of time.  it takes no longer to create a listing for an item that you have 10 of than one you only have 1 of.  Even if you sell out, it only takes seconds to relist an item when the back order arrives.

I have briefly gone over the different ways to list an item on e-Bay, with a bias towards Inventories.  I have talked about useful marketing strategies in reducing the competition for similar items.  I have also touched on the usefullness of becoming liscensed.  I hope that this has helped you in your entrapaneourship.