Learning how to sell on eBay is the easy part. You make an account, set up a listing and wait for the sale.
Profiting and building a business is the area that no one ever seems to talk about. So the million dollar question still stands:
Can you make money on eBay and afford to eat more than Pizza Pops and Kraft Dinner?
Here’s the good news:
You can be the least sales savvy marketer, the most socially awkward person and still run away with a profit killing machine selling butterflies and rainbows.
Selling on eBay is easier than it looks and profiting happens before you reach the end of the rainbow. No unicorns required.
Anyone can sell on eBay for free.
They have a whopping 145+ million users (May 2014) making lead generation effortless. They’ve already built an audience for you.
All it takes is a systematized process and a few minutes out of your day to tackle these 3 steps.
My case study is going to demystify making money on eBay by demonstrating how a beginner turned a zero dollar account into a $300,000 store in 9 months.
To put the cherry on the top, I collected over 300,000 travel rewards miles…
…enough to travel the world 4 times and catch a show with the wife.
If you’re ready, let’s hit the ground running.
The 3-step process to start your 300k journey
You don’t need a regression analysis to start selling on eBay.
The concept is simple: you buy stuff for less and sell them for more. There’s no need to over complicate the principles.
Your goal doesn’t need to be $300,000. It can be $3,000,000, $30,000, $3,000 or $3.
Whether you have a magic number or not, successful eBay stores all start by following these 3 steps.
Step 1: Create an eBay and PayPal account.
Step 2: Find products that sell backed with hard data.
Step 3: Choose a strategy that best suits your financial goals, condition and risk.
The first two steps can be done today before you’re done reading this article and the third one comes with a little discernment.
Heck, if you’re an eager beaver, you can have your first eBay sale within the next hour. Hot dam!
Lame/amazing jokes aside, this 3-step process works.
Committing to a Blind Journey of Buy and Sell (December 2013)
I had sold a few things here and there on eBay, but nothing substantial.
I decided to give it a shot and planned my strategy with a budget of $20,000.
I set an aggressive goal to turn this into $40,000 by the end of April for part time hours.
I jumped into the cell phone niche because it’s what I knew. I bought $14,000 worth of iPhones in varying conditions.
It was too bad I didn’t know how to fix the ones that were damaged (80% of them)…
I found some DIY tutorials, followed them, permanently broke a few phones (including one that I threw against the wall), but managed to fix the majority of them.
I was finally ready to start selling by the New Year.
I went live on January 6, 2014 and here’s what happened:
I had profited about $4,000 and still had quite a bit of inventory left from the original load.
I upped my budget to a total of $60,000 since my strategy seemed to be working. I expanded my inventory to pretty much all consumer brand electronics and continued the buy and sell game on eBay.
Why Reach a Goal when you can Destroy it?
I almost met my $40,000 goal in just one month. Hitting a net credit of $35,246.23 was pretty exciting to see.
May was no different
I eventually hit a plateau in August 2014 at $38,190.32 selling iPhones and a few other consumer electronics.
The massive difference between April and August Revenue
There was about a $3,000 difference which isn’t mind numbing, but the difference was in what I had built.
I had created a viable business with multiple streams of revenue.
In January 2014, I built a simple website where customers could opt in for exclusive sales and be in direct communication with me.
The trust had already been built.
It was safe to assume that if a customer had received a product (exactly as described), they would be happy to purchase again or refer a friend without hesitation.
These are the exact results I got.
I now had eBay, Amazon, a direct sales channel and a wholesale system that were working synergistically to maximize profits.
I was cutting out the middleman, which meant greater profits while expanding my network of loyal customers.
How did I know what things to sell on eBay? Why did I choose them? Where did I get them for such a bargain?
Let’s dig deep into the step-by-step process I followed.
Step 1: Get Past the Sign ups.
Let’s face it. No one likes signing up for new accounts, but there’s no other way around it when using this awesome sales platform.
There are two accounts required to start selling on eBay.
a. Create an eBay account
Making an eBay account will allow you to create listings and sell your products.
Visit eBay.com or one of their partner sites. This will define your primary currency and target demographic market.
Head over to the register link and enter your details.
Follow the step-by-step onscreen instructions to complete your eBay account setup.
If you’ve signed up for an email address, you can set up an eBay account.
b. Make a PayPal account
PayPal is eBay’s merchant services company that allows you to receive payments for your eBay sales. You will need to create a PayPal account to both receive and withdraw money to your bank account.
Visit PayPal.com and sign up for a premier or business account. After you’re done, you can start selling immediately.
If you already have a personal account, you can upgrade it to premier or business status by logging in, visiting the profile tab and clicking on upgrade to a business account.
Next, you will want to add and confirm your bank account so that you can withdraw your earnings. This doesn’t need to be done immediately, but I would strongly advise getting it over with since it takes about 3 business days to complete the verification process.
Step 2: Find the best products to sell backed with solid research
Knowing the best things to sell on eBay normally starts with items you can get your hands on. But where can you find these mysterious items?
First, you need to know how to conduct market research on eBay.
Here is a bulletproof way to find out if your items will sell and be successful on eBay.
- Visit eBay.com/.ca/.co.uk or the country of the currency you will be selling in.
- Click on the advanced search link (right of the search box)
- Enter in a keyword phrase (ex. iPhone 5S 16GB).
- Check off the sold listings box under the search including heading.
- Hit the search button.
By default, a list of sold items for your keyword phrase will show up giving you statistics on previous sale prices, dates, and links to the auction listings.
You can laser target your results by using the filters in the left column. I would recommend selecting a condition (new, used, not specified) and the most suitable category at the very least.
It’s important to investigate some of the listings that sold for more or less than the median. Some sellers mark an item as “used” when the item is in fact damaged.
A few key questions that will help identify if your products are popular on eBay are:
- Can I get this item for less?
- Why do some sell higher than others? Can I make mine a higher selling item?
- Is the frequency of sales consistent enough to restock the item (compare dates)?
Sourcing your products
You probably won’t get calls from suppliers offering you a bunch of iPhone 6s for $20. If you do, then don’t fall for it. Or if it’s the real deal…give me a call.
In order to find the best items to sell on eBay, you need to immerse yourself where the sellers are.
I’ve tried getting direct contracts with big name manufacturers, but my volumes weren’t even close to what they wanted. Authorized distributors would offer items that were $25 more than what I could sell it for on eBay because my volumes were not high enough.
Here are a few places you can start finding hot items to sell on eBay:
1. Local stores and chains
Have you ever seen a crazy deal at a major chain store? Well not everyone knows about that same deal.
You can find some easy things to sell on eBay right in your local Walmart, HomeSense and Target stores.
Sign up for their newsletters, do your research and buy when it makes sense.
Keep in mind that storage is a huge factor for any retail store. When it’s time to come off the shelves, items are marked for clearance or they’re sent back to headquarters for an online clearance.
This is where the majority of my travel points were gathered.
2. Local auctions
These can be an absolute gold mine. Local auctions are usually smaller and have some popular items you can sell on eBay for more than 200% margins.
I sold these speakers for $187.44 and purchased it for $40.
Live auctions usually have a pre-show where you can inspect the items available for bidding. Take a look through the items, do your research and bid accordingly.
3. Storage Lockers
I have yet to explore storage lockers, but plan on going to one sometime. These $100 lockers can turn into $30,000 ones if you happen to be lucky.
To be completely transparent, I only want to attend one to say “yuuuuuup” but probably never will.
4. Alibaba and DHgate
The majority of sellers on these sites are from Shenzhen, China – manufacturing central.
There are a ridiculous amount of scams you can run into, but with some due diligence and payment protection, there are some products you can find behind this magical rainbow.
From my experience, never send a wire transfer on your first payment, and if the deal is too good to be true, it definitely is.
DHgate is China’s eBay. It’s a safer solution to purchase items with PayPal and further negotiate on larger quantities.
Take note: any major brand being sold on these sites are fake. Don’t bother trying to pick up Beats by Dre, iPhones or any major consumer items here.
5. Google for Suppliers
This can be hit or miss, but it never hurts to look.
If you found some popular items to sell on eBay, do a quick search and send off some emails. Here are a few examples of search queries you can use to find baby products:
- intitle:”baby wholesale”
- intitle:”baby liquidation”
- intitle:”baby clearance”
Step 3: Three Strategies to Choose From and Some Sick Math
Now that you know how to find some top notch items to sell on eBay, we need to choose a plan of attack.
Regardless of the strategy you choose, there is one commonality that makes all of them successful: customer service.
Solid customer service converts leads into sales. In fact, 34% of the people who asked a detailed item related question (pre-sales) purchased the item within 24 hours of receiving a reply.
Here’s a common example you can expect to see by delivering detailed answers promptly:
The magic words when selling on eBay are turnover and liquidity. The last thing you want is dead inventory.
Here are three profitable strategies to consider which will depend on your level of risk and cash flow.
In its simplest form, each strategy is centered around three variables (MVP):
- Margin –Profit margin = Gross Profit / Total Revenue.
- Volume – the number of products sold
- Price – the price at which they are sold
1. Lower margin, lower volume and higher price (medium – high risk)
Margins are around 5% – 30%, while volumes are usually limited by a budget. The plus side is that profits convert into higher dollar figures.
I followed this strategy by selling what I know: cell phones and other consumer brand electronics. My cost on items ranged from $15 – $400 per piece.
The lower cost items usually fell in the range of 30 – 75% margin and the higher priced items were in the 5 – 20% area.
This strategy in particular requires wise budgeting and solid inventory control. Deep pockets certainly help.
2. Higher margin – higher volume – lower price (low – medium risk)
Generally speaking, with high margin comes a low price. Aftermarket cell phone accessories seem to be one of the hottest selling items on eBay.
People will generally sell them for $0.99 – $12.99 and will purchase them from anywhere between a penny to ten bucks a unit.
At the end of the day, if you purchase an item for $0.10 and sell it for $0.20, your profit margin is 100%, but it’s still only a $0.10 profit.
Sellers running eBay stores on less than a dollar margins usually ship from China and move massive volumes.
If you’re in a high cost shipping country like Canada (booo), you may want to reconsider selling these items internationally and focus on a domestic market.
A good chunk of buyers are loyal to purchasing from their own country and prefer getting their items quicker without the risk of it getting stuck at customs.
I haven’t explored this strategy a whole lot, but popular stores like eforcity (US company) recorded over 40 million dollars in revenue in 2008.
3. Sell your personal belongings – limited volume and no investment required. (low – no risk)
This is the most profitable way to do some spring cleaning and make a quick buck without spending another penny.
Take a look through your basement, attic or storage locker and put some of the shippable items up for sale.
For larger items that aren’t worth the cost to ship, you can set a “local pick up” option in your listing.
It should only take a few minutes to make each post.
This is an awesome way for those without a budget to fund strategy one or two.
Before you choose your strategy, let’s do some sick math.
The cost for selling on eBay is free. Making a sale is not.
eBay is a business. They let you post for free (up to 100 listings/month) but will take a commission for each successful sale.
The brilliant part about their model is that they own PayPal (merchant service) who will also take a piece of the final sale.
So, how much does it cost to sell on eBay?
Here is a list of expenses you should account for and some proven eBay selling tips to maximize your revenue:
|eBay final value fees||4-10% depending on the item type/category|
|PayPal transaction fees||2.9% + $0.30 per transaction for < $3,000 in monthly sales|
|Cost of product(s)||Variable|
|Warehouse or Storage||Variable|
Minimize your eBay Expenses – Maximize your Revenue
Yes, eBay and PayPal fees are high. In fact, that is the single greatest complaint about selling on eBay.
But come on…
They are essentially selling the product for you. They provide a selling platform, find you a buyer, process your payment and provide protection if something goes sour.
eBay fees in the cell phone niche have a whopping 10% commission in addition to PayPal’s 2.9% + $0.30 transaction fee.
And don’t forget about shipping…
eBay Fees Explained:
Yikes is right! Shall we run through an example?
Let’s assume I had 10 iPhone 5s and sold them at $320/piece with free shipping over the period of one month.
Using the eBay fees calculator, this is what my cost structure would look like:
|eBay fees for selling||$32.00 x 10 = $320.00|
|PayPal transaction fees||$9.58 x 10 = $95.80|
|Cost of product(s)||$220 x 10 = $2200.00|
|Shipping||~$12 x 10 = $120 (Canadian shipping)|
|Labor||~$10/device x 10 = $100.00|
|Warehouse or Storage||$0.00 assuming you are shipping from home|
|Total Cost for Selling on eBay||$2835.8|
Not a great profit.
Here’s how we can increase our profits dramatically.
|eBay store fees (month to month plan)||$19.95/month|
|eBay final value fees||$19.20 x 10 = $192.00|
|PayPal transaction fees||$9.58 x 10 = $95.80|
|Cost of product(s)||$220 x 10 = $2200.00|
|eBay fees on Shipping||$0.00 – variable cost to buyer|
|Labor||~$10/device x 10 = $100.00|
|Warehouse or Storage||$0.00 assuming you are shipping from home|
|Total Expenses||$ 2607.75|
Let’s break this down:
eBay Store Fees:
By registering for an eBay store, you are entitled to a discount on the final value fee and can post up to 150 listings per month.
In the cell phone category, the fee is brought down from 10% to 6% – no questions asked.
The cost for an eBay store is $15.95/month on a yearly subscription or $19.95 month to month.
So when is it worth getting an eBay store subscription?
If you intend on staying within your listing limits, the break-even point is about $500 in gross monthly sales.
Here’s the math:
|None||$500 x 10% = $50.00|
|Basic Store||($500 x 6%) + $19.95 store fee = $49.95|
Your PayPal fees remain the same. Since you’ll be accepting more than $3,000 in this month, you move on to the next tier. Your next month will be discounted further by PayPal to 2.5% + $0.30 per transaction. This is a $15.50 in savings assuming you sell $3,200 worth of goods in the next month.
You have 4 options when setting your shipping rates:
- Free shipping
- Fixed shipping within a country
- Calculated shipping based on the weight and dimensions of the parcel
- Local pick up
Let’s get into the mindset of a buyer.
1. Free shipping
You’ll notice that more established sellers set their items to have a free shipping option.
There are two very good reasons for this:
- They want to sell their products faster.
- They have higher margins where they can eat up the shipping costs.
All of my auctions had a free shipping option for these very reasons. I also added an express shipping option for an additional $9.99 to $12.99.
The strategy behind adding an additional shipping option was twofold:
- Provide value to those who want their item quick.
- Make the upgrade affordable enough to entice the buyer, while keeping my net shipping cost low. In fact, the $9.99 was more than enough to cover the difference between my standard and express rates.
Everyone loves free shipping. If your goal is to get your items out the door faster and your margins are significant enough, this is a great way to move items quickly and to stay liquid.
2. Fixed Shipping
This shipping model is ugly. I’ve seen way too many eBayers doing it, and it pains me to see it every time.
Fixed shipping costs deter local buyers from wanting to purchase the item because it’s usually too high. It also forces buyers to mentally calculate if the deal is worthwhile.
Don’t force your customers to think more than they have to.
Others go as far as listing a $100 item at $20 with a $79.95 shipping charge. The click through rate on your listing will likely be higher, but prospective buyers may find it manipulative.
eBay’s fees on shipping used to be less than the final value fees, but they caught on quickly.
Another disadvantage to using fixed shipping is the chance of getting low detailed seller ratings (DSRs). When a buyer leaves feedback, they are able to set the shipping costs to the dreaded one star for any reason they believe to be fit.
Free shipping and calculated shipping can eliminate low DSRs on shipping costs and raise your chances of reaching top rated seller status for further discounts to your eBay fees.
3. Calculated Shipping
This is the option I use for timed auctions. Setting up an auction is unpredictable. You can sell for way above your desired price, but it normally goes the other way.
Also, you eliminate risk in shipping to high cost rural addresses.
You select Calculated: Cost varies by buyer location.
Then set the package weight and dimensions. The buyer is then able to get an exact shipping cost based on their ZIP/Postal code.
Best of all: no low DSRs allowed on the shipping cost category.
This is great for items with low margin or if you are the type that doesn’t know how to take a loss (raises hand).
Although you may not get the snap purchase because of free shipping, you can offer delivery to various countries without having to worry about it cutting into your profits.
4. Local pick up
If you’re in a highly populated city, people will likely want to pick the item up from you.
Providing the option is a plus for buyers but an annoyance for sellers. I personally did not have any local pick up options available in my store but received multiple requests on a weekly basis.
Let’s get your item listed
There are two ways to list your item:
- Click the sell button and follow the on-screen instructions.
- Visit an active or previously sold listing and click on the “Sell now” button below the featured image.
Here’s how you can get your item listed in less than 5 minutes:
- Upload a picture (30 seconds)
- Set a description – it doesn’t have to be an essay (1 minute)
- Set a price (research sold listings)
- Select a timed auction or fixed price (new accounts may be limited to timed auctions only). This can be avoided by purchasing items first and having your feedback score boosted by other sellers.
- Define your shipping costs (free, fixed, calculated, local pick up)
Now list it.
eBay has a massive list of regular users. Your shop doesn’t require any fancy marketing, a million dollar budget or hi-tech coding to be successful.
The beauty of eBay is that the products sell themselves.
Your Final Step
Now it’s time to put this simple, yet powerful strategy into action.
To make life easier for you, I’ve created a checklist to summarize this massive 3600+ word article into a few actionable pages.
There will be a whole lot of hand holding and rump shaking goodness in there.
I’ve done all of the research and added some extra tips and resources to save you the pain in searching.
It’ll be like your friend telling you that Big Macs are on sale for $0.99.
Click the image below and enter your email to gain exclusive access to the checklist.
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