Making money with an eBay Store, Part 2: What is it and do I need one?
August 4th, 2007 | by
mbhunter |
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(This post is part of a series on Making Money with an eBay Store. The Introduction and table of contents to the series is here.)
In the Introduction I mentioned some of the fruits of starting a side business, especially the feeling of empowerment over one’s financial life that it can bring. One avenue I’ve started to take is my eBay store. Now, there are as many ways to start up a side business as there are businesspeople, and an eBay Store might not even be appropriate for you. So …
What is an eBay Store, anyway?
Basically, eBay Stores are just what they say: they’re stores on eBay. The fact that they’re stores implies that things are sold in them. With very few exceptions, just about anything can be sold in an eBay Store that can be sold in a regular store, plus a lot of non-material, but nonetheless valuable, things that aren’t normally sold in a regular store.
The fact that they’re stores, though, differentiates them from other forms of business that do not involve selling things, such as affiliate marketing, some service businesses, or internet publishing. An eBay Store has to have something to sell. This may seem like a silly point to make, but if you don’t have something to sell or have an idea what you want to sell, you should nail this down before thinking about signing up for an eBay store.
EBay Store items are listed (offered for sale in the store) in either a “Buy It Now” format or a “Buy It Now or Make Offer” format. “Buy It Now” basically translates to a price tag: “Here’s the price at which I’ll sell the item.” “Buy It Now or Make Offer” translates to a price tag with wiggle room: “Here’s the price at which I’ll sell the item now, but I’ll entertain lower offers, and if I accept your offer, you’ll buy it from me.” These are only two of a number of ways that items can sold on eBay. EBay Store items can be “sent to auction” to draw attention to them and to draw more traffic to the rest of the Store’s items. (I’ll talk about why this is a good idea to do in another part of the series.)
It’s not necessary to have an eBay Store to sell items in the Buy It Now format or Buy It Now or Make Offer format. So what’s the benefit to having an eBay Store if I don’t need it to sell items in fixed price format?
Do I need an eBay Store?
Assuming you have stuff to sell (it is a store, right?), then the short answer is that it depends on how much you’re selling and how regularly you’re selling it. To quantify this, I’ll explain the differences in the fee structures for selling without an eBay store and selling with one.
- Selling without an eBay Store. There is no subscription fee to sell without an eBay Store. You can sell one item a year and pay just for the listing fee, the final value fee, and any PayPal fees for that one item. The listing fees currently start at 20 cents for up to seven days (going up to $4.80 if the starting price is over $500), and the final value fee is currently at most 5.25% of the selling price. There is at least an additional five cents for Buy It Now listings.
- Selling with an eBay Store. There is a subscription fee for the Store that’s at least $15.95 per month. This is a flat fee, independent of the number of items in the Store. The listing fees are less, starting at 5 cents per thirty days (10 cents per 30 days for items with prices over $25). Some of the upgrade fees are dirt cheap, like gallery pictures for a penny per thirty days. The final value fees are higher, though, and are currently not more than 10% of the selling price. A good chunk of the final value fees can be refunded if the traffic resulting in the sale was driven to eBay from outside the site. (This will be discussed in a later part.)
Given these costs of doing business on eBay, a couple of conclusions can be drawn:
- If you’re an occasional seller, you probably do not want an eBay Store. The monthly subscription fee will eat you alive if you don’t have a lot of items to sell.
- If you have a lot of items to sell, and expect to sell year-round, an eBay Store is probably a good way to go. The sales volume will justify the Store subscription fee, and the listing fees are less than without the Store.
- If you have means to drive traffic to your store, an eBay Store is almost certainly worth a look because the final value fees from the sales due to the referred traffic will be mostly refunded, greatly reducing the cost of selling the items in the Store.
Now, notice that I said “probably a good way to go” and “almost certainly worth a look” because nothing is a sure thing. Having an eBay Store or not is mainly a decision of how much and how often you’ll be selling. But even if you have enough goods to sell year round, this will not make you money unless you can sell the items profitably on eBay! I perhaps assumed that (a) you have something to sell and (b) you obtained the product at a good enough price that you can sell it for profit. What sells profitably at a convention show, a brick-and-mortar store, or a flea market may not sell profitably on eBay because there are other costs of doing business on eBay that are not present at convention shows, brick-and-mortar stores, or flea markets. Here are some of the costs:
- Your store subscription fee. At least $15.95/month.
- Listing fees and final value fees. These can consume 15% or more of the selling price. For big-ticket items, the final-value fees can be substantial.
- PayPal fees. The financial transfer service owned by eBay charges fees for business accounts that consume another few percent of the total transaction.
- Shipping. This is either absorbed in the price or passed on to the buyer, but a buyer will factor this in as part of the purchase price.
- Packing materials. These can be free from the delivery services depending on how you ship the items, but they may not be, either.
So if you have enough to sell year round, and you can obtain the product(s) cheaply enough to sell the items at a decent net profit including all of the eBay-related fees, then starting up an eBay Store should be given some serious thought.
The next part will talk about aspects of setting up a business in general, and I’ll share what I did to put the framework in place for Back Mags Plus.
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