While eBay became famous as an online auction site for selling anything and everything, the platform has changed significantly over the past two decades. There are plenty of money-making opportunities for eBay sellers, but you’ll need to take an approach that works with the platform and its audience today.
This article outlines the key concepts you need to know to build a profitable eBay business, broken down into the following sections:
- The Four Keys to Making Money on eBay
- The Most Profitable eBay Selling Strategies
- How to Choose the Right eBay Selling Strategy
- Important Tips for Success as an eBay Seller
- The Best Items to Sell on eBay
- Ebay Selling FAQs
Four Keys to Making Money on Ebay
There are several approaches you can take as an eBay seller, but if you want to build a serious business — whether as a full-time operation or as a side hustle — here are the keys you should be focusing on.
1. Understand Why People Shop on eBay
Although it’s possible to sell the same products on several different marketplaces, it’s critical to understand the differences between platforms like Amazon and eBay and the people that shop there.
Consumers search at Amazon, eBay, Etsy, Walmart and other marketplaces for specific reasons.
Today, eBay is much more than an online auction site for buying collectibles and other used items, but the site’s history still impacts the shoppers it attracts. Buyers are much more likely to head to eBay than Amazon when they’re looking for used items, vintage goods, collectibles or anything rare or hard to find. They’re also looking on eBay for deep discounts and refurbished items.
Some customers also prefer eBay because they feel like they’re buying from an individual or small business rather than a giant corporation. Even though third parties now sell most of the products on Amazon, the user experience is almost identical whether you’re purchasing from Amazon or a third-party seller. eBay provides more of an identity to sellers, and many buyers prefer that.
2. Have a Replenishable Source of Products
One of the most common ways to get started as an eBay seller is to list items bought at yard sales or flea markets. While this is a legit way to make some extra cash, it’s difficult to scale. You’ll need to shop for new inventory constantly, and since the profit you’ll earn from many of these products is small, you might wind up spending more time than it’s worth.
When you’re sourcing products at yard sales, flea markets, auctions and estate sales, the success you’ll have at finding the right items will be inconsistent. You may also struggle during the winter when people aren’t having yard sales or garage sales.
To build a more stable business that will produce long-term profits, you’ll need a way to constantly source products at a stable price that allows you to earn a profit. Various business models involve different approaches to solving this problem, and we’ll look at those options later in the article.
3. Have a System (and the Capacity) to Handle Order Fulfillment
One of the most significant challenges you’ll need to overcome as an eBay seller involves fulfilling and shipping orders. Of course, you want to make sales, but there’s a lot of work to be done after the sale. As your business grows, you’ll need to fulfill orders efficiently.
eBay customers expect their orders to arrive on time and in excellent condition. You don’t want to disappoint customers with slow fulfillment, or you’ll wind up with negative feedback that damages your ability to make sales in the future.
You could set up your own process for fulfilling and shipping orders. You may want to hire someone in your local area to help so you can focus on other aspects of the business. But if you’re going to scale your business, a better option is to use an eBay fulfillment service. Deliverr will help you streamline your process and get orders to customers faster. And if you also sell on Amazon, you could use Amazon’s Multi-Channel Fulfillment.
In addition to reducing your workload for running the business, outsourcing order fulfillment may also help you qualify for “Fast ‘N Free” tags on your listings, which will increase sales.
4. Practice Exemplary (and Pre-Emptive) Customer Service
As an eBay seller, you’ll need to prioritize customer service. Customer feedback ratings are critical to your ability to make sales on the platform, and your customers will have high expectations. You’ll need to commit yourself and your business to provide customers with an outstanding experience, promptly deal with any issues that arise, and most importantly, take steps to prevent problems from happening in the first place.
Whenever a customer reaches out to you, you’ll need to respond as soon as possible. The faster you respond, the better chance you’ll have of satisfying the customer. Selling on platforms like eBay, Amazon and Etsy, where reviews and feedback are essential, may require you to bend over backward at times to keep your customers happy.
There’s not much margin for error since just a few bad experiences for customers can significantly damage your feedback scores when you’re getting started. You need to have a plan for handling customer service from day one rather than waiting until your sales volume increases.
You can prevent some issues by properly packing and shipping items to avoid damage and ensure they arrive in good condition. Be sure to communicate clearly with customers and encourage them to reach out to you with any issues. You may be able to resolve their issues, keep everyone happy, and avoid negative feedback.
Profitable eBay Selling Strategies
Let’s look at five different strategies or business models that can work for growing and scaling a business on eBay.
Dropshipping allows you to sell products without ever touching the inventory or paying for merchandise before it sells. Instead, you’ll list the products you want to sell on eBay, and when a customer purchases the product, the supplier will ship it directly to the customer. You’ll pay the supplier for the product and keep the profit based on the price the customer paid.
The benefits of dropshipping include:
- Lower capital requirements to get started.
- No need to deal with order fulfillment and shipping.
- Low overhead since you’re not purchasing or handling inventory.
- Sell a wide variety of products since you don’t need inventory.
- Easily test different types of products with low risk.
eBay’s dropshipping policies require you to purchase the products from wholesalers, which is what legit dropshipping really is. You’re not allowed to list products on eBay and purchase them from another retailer or marketplace and have it shipped directly to the customer.
As the seller, you’re still responsible for getting the product to the customer on time. If the shipment is late or there are other issues with the order or delivery, you’re responsible, not the supplier.
Of course, finding the right supplier is essential if you want to run a dropshipping business. This list of dropshipping suppliers and directories for Amazon and eBay is a solid starting point.
If you’re looking to learn more about the business of dropshipping, Shopify has an excellent free webinar that dives into the business model and how to get started.
2. Long Tail Inventory
The idea behind this business model is to offer and sell many different low-demand products, but all with a common theme. You may not make a lot of sales with any individual product, and each sale may generate a relatively small profit, but the cumulative sales add up to something significant.
Let’s take a look at two examples to explain the concept clearly:
- You could sell collectible trading cards like Pokemon and Magic: The Gathering. There are thousands of individual cards within each property, and while the value of the average card is relatively low — many of them worth $1 or less — they’re easy and inexpensive for you to acquire. That allows you to carry a very broad inventory and make a lot of sales each day based on having so many different products listed. Plus, the low price point means that customers often buy multiples; if they’re looking for 10 cards and you have them, it’s easier to buy them all from you than splitting that order across 10 different sellers.
- Another option would be to focus on mobile phone accessories. There are many different accessories (cases, protective covers, chargers, stands, headphones, etc.) and countless styles, colors and variations of each. These products are relatively inexpensive, but you could make steady sales every day with hundreds or thousands of listings. The benefit of a product type like this is that specializing in a niche makes you better at sourcing and pricing, helping you get products for less and sell them for as much as possible.
Another general benefit of the long tail approach is that these items tend to have less competition, which reduces the pricing pressure on each item. When you’re selling a high-volume item, you’re going up against hundreds or even thousands of other sellers. But when you’re focusing on something with fairly limited demand, you have much more control over the selling price.
Taking this approach will require you to build up your inventory, but it’s possible to start small. Since your sales will be spread out across a large number of products, you’re not dependent on any single product or listing.
Pro Tip: If you have the ability to customize products — e.g., a smartphone case with someone’s name etched in it — that can increase your profit margins. If that’s the case, consider selling on Etsy. See our guide on “How to Make Money on Etsy” to learn more.
3. Private Labeling
The private labeling business model involves hiring a manufacturer or supplier to create a product with your brand name on it. Private labeling is extremely popular with Amazon FBA sellers, and it can also work on eBay.
As a seller, it’s possible to create the appearance of a much larger brand or company by using this business model. You’re outsourcing the manufacturing of the product, and if you’re also outsourcing the order fulfillment, it’s possible to reach a significant sales volume as an individual seller or with a small team supporting you. When customers see your product for sale online, they probably have no idea that your business is not actually manufacturing your own products.
Finding a manufacturer or supplier is not as difficult as it might seem. Alibaba is the most popular platform for connecting with manufacturers. However, a simple Google search also makes it easy to find manufacturers for most types of products.
The downside to private labeling is that you’ll need to invest in the inventory upfront, and manufacturers typically have minimum order quantities. You’re likely to need to purchase hundreds or thousands of units of a product, and there’s no guarantee that you’ll be able to sell those items.
The upside of private labeling shouldn’t be ignored either. Profit margins are typically higher than most other types of business models, so some significant pros and cons need to be considered.
In general, private labeling is a good option for someone who wants to build a brand of their own rather than selling lots of products from different brands.
4. Retail Arbitrage
Retail arbitrage is a popular business model used on both eBay and Amazon. As a seller, you’ll purchase underpriced items at retail stores (usually clearance or closeout items) and sell them for a higher price on eBay. Online arbitrage is a very similar approach, except it involves buying the items online instead of in retail stores.
Note: The term “arbitrage” refers to the difference in a product’s value between two marketplaces. For example, an item might be worth more on eBay than its retail price in a store, or might cost less in one country than in another.
One of the main advantages of retail arbitrage, or online arbitrage for that matter, is that you can start on a small scale. Unlike private labeling, you don’t need to invest thousands of dollars in inventory. Instead, you can start by purchasing a few products, or even a single product if you want. It’s possible to scale up without ever going into debt for inventory.
Another advantage is that you don’t need to build your own brand. You can buy and resell products made by companies that customers already know and like.
The most significant downside of retail arbitrage is that you’ll need to find new products regularly. Established sellers who take the retail arbitrage approach usually have a few stores they visit on a regular basis to find whatever items might be for sale at very low prices. These stores are the replenishable source of products mentioned earlier, but you won’t have control over the specific products available at any given time.
The retail arbitrage approach is appropriate for someone who isn’t interested in building their own brand and is good at finding deals.
The last option we’ll cover involves selling products without the need for inventory. With print-on-demand, the products will be printed as they are ordered, which means you don’t need to invest any money for inventory until you’ve made the sale.
There are many types of products that can be sold with the print-on-demand model including t-shirts, hats, mugs, bags, calendars, books and much more. Some print-on-demand products are customized and personalized, but that’s not always the case.
The downside to this strategy is that higher costs per product will leave you with a smaller profit margin. You also won’t have the same flexibility to significantly lower your prices if needed.
Starting a print-on-demand business may be an ideal option for sellers who want to get started without taking on financial risk.
Choosing the Right Selling Strategy
Mitchell Stern, the founder of SideHustle.Tips, has been selling on eBay since 2004 using a few different strategies like dropshipping and private labeling. In his view, the product you sell should help determine the business model you use.
“For example, if you’re selling t-shirts, it makes the most sense to use the print-on-demand model because you can offer your shirts to customers without having to buy them from the manufacturer beforehand,” Stern says.
“If you’re selling something large and expensive like electric scooters it makes the most sense to use dropshipping because you’ll save big on warehousing and you won’t have to compete with Amazon. If you want to offer your own line of beauty products, then private labeling makes the most sense because you’ll be able to control every step in the process. It all just depends on your product.”
Important Ebay Selling Tips
Regardless of which business model or selling strategy you choose, here are some tips to improve your chances of success.
Tip #1: Use Best-In-Class Photos
Quality photos are essential for selling on eBay. Thumbnail photos show up in the search results and shoppers will typically click on the listings with the best images. Once the visitor is on your listing, they’ll pay more attention to the photos than the rest of the listing. In many cases, buyers don’t even pay attention to the written description.
If you’re using either the wholesale to retail or dropshipping business models, you may be able to get quality photos of each product from your supplier. They often have professional photos that sellers are allowed to use on listings.
If you’re taking a private label approach, or if there’s no professional photo that you have permission to use, you’ll need to take the photo yourself. Be sure to use a clutter-free background to avoid distractions. eBay provides a full article on photography tips to get the best photos for your listings. If it’s a product that you’ll be selling over and over again, you may want to hire a professional photographer to ensure the quality of the photos.
Tip #2: Don’t Run Auctions
Although eBay is known as an auction platform, the novelty of the online auction has worn off. Most buyers prefer fixed listing prices so they can buy something immediately instead of waiting several days to see if they have the winning bid in an auction.
For you as a seller, selling with a fixed price, or a “Buy It Now” price as eBay calls it, allows you to know exactly what you’ll make from each sale. You can calculate the fees and profit margin to avoid unpleasant surprises. But with auctions, you don’t know what the item will sell for.
Plus, because the demand for auctions is so low these days, they often lead to sale prices that are well below the item’s fair market value.
Tip #3: Don’t Chase the Lowest Price
Competing on price isn’t the best approach, because eBay is full of super-casual sellers — regular people who are just leveraging the site to unload their unwanted stuff. As a result, they’re often willing to sell their items for below market value.
Instead of dropping your price, let them sell through their inventory first.
It’s also important to note that the eBay search algorithm doesn’t necessarily prioritize the product that is the cheapest price. Users can sort the results by price if they want to, but eBay favors other factors in the search rankings. Focus on providing the best possible customer service to get a high feedback rating, and create compelling listings (including quality photos).
Tip #4: Leverage the “Best Offer” Feature
When you create a listing, you’ll have an option to turn on the “Best Offer” feature. If this is activated, shoppers will see the option to make an offer on the listing. Buyers may choose to make a lower offer rather than paying the “BuY It Now” price. As the seller, you’ll have the option to accept the offer, reject it, or make a counter offer.
Sean Marmo of YourBraStore.com has been selling on eBay for three years and highly recommends utilizing the best offer feature.
“The best offer feature is a great tool. It allows customers to tell you what they want to pay. As a retailer, you know how long an item has been in stock and can discreetly accept prices below your published price,” Marmo says.
Tip #5: List Items Daily (Not In a Single Batch)
New listings are more likely to show up near the top of search results. It’s a good practice to continually add new listings to maximize your visibility. If you list 50 products at one time, they’re likely to drop down in the search rankings as those listings get older. Instead, add a smaller number of new listings each day and you’ll always have some that are getting the new listing bump in the search results.
This in turn can lead to more cross sales, as eBay customers love combining items to save on shipping.
The Best Items to Sell on Ebay
It’s possible to sell just about anything on eBay, but it’s helpful to know which products and categories are the most popular. eBay provides some detail in their list of top-selling categories.
From that report, you can see that jewelry and watches, computers/tablets and networking, and cell phones and accessories are currently the top three categories. CED Commerce also provides a helpful report on the top selling products on eBay, with some specific numbers for certain products.
Whatever category you decide to sell in, there are a few general characteristics the make items good for selling on eBay.
- Small: Shipping costs are an essential consideration, and small products are typically cheaper to ship.
- Similar in shape and size: Order fulfillment is much easier when all or most of your products have a similar shape and size. You can use the same boxes and shipping materials and you won’t have to spend time trying to figure out the best way to pack it or how much it will cost.
- Unlikely to be damaged in transit: Avoid fragile items or anything that’s likely to get damaged in the shipping process. Damaged goods are more likely to lead to negative feedback and they’ll be a hassle for you to deal with (refunds or replacements).
- Have a low customer defect rate: Certain types of products are more likely to result in customer defects — a fancy way of saying “any negative customer experience.” Clothing, for example, has a high return rate. Cheap electronics sourced from overseas are also likely to have a high defect rate; they may be dead on arrival, or customers may just be unhappy with the quality. Try to choose products that are simple, manufactured well and likely to result in a happy customer.
- Are not high-profile fraud targets: Scams and fraud are common on platforms like eBay, but they’re more common with certain types of products. For example, high-priced electronics are common targets. It’s best to avoid these products until you get more experience as a seller, as scammers specifically target new sellers who are less likely to leverage anti-fraud best practices like requiring signature delivery for high-priced items. Also keep licensing and copyright in mind. The “Disney” products you find on Alibaba are most likely not officially licensed and you could be violating the law by selling them.
Another characteristic of great eBay items is that they’re unique or not widely available on other marketplaces. Here are some examples.
- Autographed items.
- Car parts.
- Hand-made jewelry.
- Previous generation technology.
- Vintage jerseys.
- Vintage unopened toys.
Ebay Selling FAQs
Yes, you can sell handmade items on eBay. Etsy is obviously more popular for handmade goods and you may be able to sell for higher prices (eBay buyers are usually looking for better deals), but some sellers have had success with handmade goods, especially jewelry, on eBay.
One of the most common pieces of advice people give new eBay sellers is to sell thrift store, yard sale/garage sale and flea market items. And while the answer is “yes,” you can definitely make money this way, the truth is that it’s difficult to scale and it takes an enormous amount of commitment and work. Our opinion is that the business models presented in this article provide better opportunities for scaling and building a profitable eBay store.
As a general rule, the answer is “no.” eBay tends not to be a good platform for creating passive income because it’s a service-intensive platform: customers expect you to respond to their questions promptly and ship items almost immediately. The one possible exception is if you leverage eBay for dropshipping, much of which can be automated. It still won’t be truly passive, but you can create systems that limit how much time you need to dedicate to the business.
The most common eBay scam is when a customer asks you to complete the transaction off of the site; this is always a scam, and it violates eBay’s terms of service. Never accept payment by check or process transactions outside of eBay, this these payments are typically reversed. Finally, always ship with tracking, and for higher-priced items, require a signature on delivery.
How to Make Money on Ebay: Final Thoughts
As the second-leading e-commerce platform, eBay provides a huge opportunity for sellers. While many eBay sellers approach it casually and are only looking to make some extra cash on the side, you’ll need to approach it differently if you want to build it into a full-time business.