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A Comparison of Different Earning Strategies on eBay

Sep 12, 2008
Generally there is only one earning strategy employed by eBay sellers. Buy low and sell for a profit. Sellers may be cruising yard sales on a weekend, op shops, or bargain bins in department stores, or they may have access to suppliers of wholesale goods (including dropshippers). But the strategy is still the same. This is the easiest and most direct method to make money on eBay as it involves listing an item for sale and then within days or weeks seeing a return on the investment.

Sellers may be able to repeat the sales that they have achieved, as in the case of goods obtained in bulk from a wholesale supplier or dropshipper, or they may have different items to sell in each listing. There are many people making excellent money on eBay from this strategy by all accounts and so it obviously works. I do it myself.

There is another strategy, hardly employed on eBay by sellers, which can also earn money for the account holder. That is using eBay as a vehicle for generating traffic to a seller's other items, located off eBay, or for the seller to create affiliate sales of other peoples' products. I will endeavour to explain the workings of these two strategies in more detail below.

Buy Low - Sell High

There's definitely nothing new about this. It has been the backbone of trading since time began and essentially eBay is just an extension of any shopping mall or market place where trading goes on - the only difference is that a lot of eBay sales are conducted by auction, which is somewhat unconventional in a traditional commercial sense.

There are a number of ways that eBay sellers utilise this method of selling and trading on eBay. As mentioned, the auction format is perhaps the most used, or at least the most commonly noticed method of trading on eBay. This may be used predominantly for items that are personal possessions being sold off on eBay, such as old DVDs and clothes, where the seller would be happy to accept any value for the goods seeing they have already used up their value by using them themselves.

It is also used where an item is rare and this is where eBay has built its global reputation as being the place of choice for selling such items so that sellers can attract a global audience to fight over the product.

Sellers often also utilise a fixed price format, or include a buy-it-now price on their listing to encourage quick sales or to set a reserve price on an item in categories in which this option is not available using the auction format. Fixed price format sales are also used for eBay store owners where the listings are generally listed for a month at a time rather than for a week or 10 days or less.

There are advantages and disadvantages to owning a store for different sellers and different items, but as regards the benefits of a store for listings I'm not going to go into that here.

The costs of listing and selling items on eBay, apart from the purchase costs of the items that are being offered for sale are:

* the listing fees payable to eBay calculated as a small percentage of the listing price upfront and the sales price in arrears

* the cost of promoting your listing through use of pictures, highlighting and a premium for promoting your listing on search results or on eBay's featured listings pages

* a percentage of the total sale amount (including postage) for buyers who use PayPal

* postage costs (although these costs are usually totally offset by the buyer)

* eBay store subscriptions and other eBay subscriptions such as Picture Manager and Selling Manager Pro

Another cost that too many eBay sellers don't take into account when they start selling stuff, particularly low value (and hence low margin) items such as books and DVDs, is the value of their time. I don't know about you, but my time is worth money during the day at least. I also put a value on the time that I have after working to spend with my family, or having fun, resting, exercising and eating amongst other things.

When valuing my time monetarily I put a higher value on the time that I spend out of work, just as I would expect to be paid extra for overtime. This time is an important part of any eBay seller's strategy because it takes time to put up listing, pack and post products, respond to email queries and perform other administrative tasks. And this time is usually time spent after work, i.e. the most valuable time.

All up I allocate at least 30 minutes to a unique listing and 15 minutes to an item I can repeatedly re-list. That means that if I value my time at $20/hour then I wouldn't list any unique item that doesn't make me $10 profit or a $5 profit on items I list repeatedly.

If you can make some money selling on eBay with this strategy then there is no limit to what you can do with your business as all you have to do is multiply the number of items that you sell to increase your profits. There are even eBay sellers that employ people to do their postage and packing or other administrative tasks where they are selling more than they can handle on their own.

eBay as a Traffic Generator for Other Products

No doubt, affiliate marketing is a huge money maker on the internet. There are probably millions of products that can be sold as an affiliate and usually all you need is a website or some content, whether in the form of a regular newsletter or blog or articles, to get into the game. eBay is another great place to ply affiliate products, or even your own products, outside of the usual eBay sales channels of auctions and fixed price listings.

If you want to sell anything on the internet then you need some sort of product and some webspace on which to advertise and sell it. Duh. Well eBay is a free platform that you can use to do that - and I'm not just talking about your listings. Every eBay account comes with an opportunity to create an About Me page on which you can tell the world who you are and what you are about.

You can include text, graphics, video and even HTML on that page and unlike the very strict policies that eBay maintains and enforces in regards to the content and links that you include on your listings eBay is much more lenient on the stuff that you have on your about me. About the only restriction is that you don't link to other auction sites or sites with a catalogue of products for sale (ie eBay's competition).

You can link to your home page, your blog, your granny's poker club - anything - including sites that sell certain products that you can refer people to and earn affiliate commissions. This is best done with information products in my opinion, or by inviting visitors to your about me to leave you their details through a web form so that you can send them newsletters (though which you can sell anything you want). This is a very poorly tapped opportunity on eBay.

I use my about me page to invite visitors to my online business website where I have a form to capture their name and email so that I can send them info about building a home business. I've worked out that for ever 100 people that view my listings about 15 go to my about me page and approximately 1 goes on to check out my business homepage. Small numbers at this level, sure, but seeing as I average about 1000 listing views per day, that's 10 people visiting my online business and they convert to leads on my website at about the rate of 2%. So I get one lead from eBay each week.

It's still a trickle, I'll give you that, but it's a FREE trickle that I wouldn't otherwise get and each year I make about $3000 this way. I'll take $3000 for free, wouldn't you?

If you don't have an online business then you can just promote someone else's. Just go somewhere like Clickbank and sign up as an affiliate there. Easy money if you ask me.

You can also set up a link in your eBay store header that can take your store visitors to your online business or affiliate business (though I'm not entirely sure if eBay approves of that). I haven't found anything that directly says it's a no-no & I haven't asked or had my store suspended (yet). Until then I'm getting another trickle of traffic there as well.

Conclusion

Correct me if I'm wrong but I think that the key to any successful business is optimising your opportunities. You only have so many and if you are not making the most of each one then you are not going to be in business very long. You should be using all that eBay offers to build your trading business and also adding additional streams of income that you can profit from where available as well.

Buying low and selling high is going to be your key weapon in your business strategy and part of this is going to be finding a good supply of items from which you can profit (though I haven't gone into that here), but you should have an affiliate stream built in there as well - especially seeing that you don't have to pay anything extra for the privilege and it's so easy.
About the Author
James Finnila (jimmyvanilla on eBay) is a successful eBay seller and author. To find out how to sell on eBay and make money online quickly, go to: www.eBaySuperSelling.com
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