HOW TO BUILD A SUCCESSFUL EBAY BUSINESS

LATEST EBAY CHANGES

On January 29, 2008, eBay announced several changes that will affect all sellers. The changes affect the fee structure, the feedback system, the default search algorithm and PayPal protection for power sellers.

EBAY FEE CHANGES

In an effort to encourage sellers to list more items, eBay has lowered listing insertion fees across the board. The gallery photo listing upgrade will be free (formerly $0.35). Unfortunately eBay is far from being charitable. To make up for the loss of revenue from the reduced listings fees, they have raised the final value fee. The FVF increase will be felt most heavily for items that sell for $25 or less. For those items, the FVF increases to 8.75% from 5.25%. That is a 67% increase!

If you are a power seller, eBay will give you a FVF discount, provided your detailed seller rating is above certain levels for the past 30 days. You will receive a 5% discount if your detailed seller rating is 4.6 or higher. If the rating is 4.8 or higher, you will receive a 15% discount. EBay is trying to reward power sellers that have a high level of customer satisfaction.

Unfortunately, occasional sellers (not a power seller), won't be able to qualify for any of the discounts. This means your net eBay fees are going to go up.

The new fees will take effect on February 20, 2008. See eBay fee change announcement for more details about the fee changes.

EBAY FEEDBACK CHANGES

An overhaul of the eBay feedback system is long overdue. People were afraid to leave negative feedback because of the possibility of receiving a retaliatory negative feedback in return. This phenomenon has put off many new eBay users. To remedy this issue, eBay has decided to emulate Amazon's method of feedback where only the buyer leaves feedback for the seller. Buyers can only be left positive feedback by the seller. To help curb potential abuse, neutral and negative feedback left by users that become suspended automatically will be removed. Buyers that do not pay for their items will also have their feedback removed.

In an attempt to make the feedback score reflect more recent performance, the positive feedback percentage will be based on feedback received in the past 12 months. The feedback number is still the lifetime total. Again, occasional sellers are left out in the cold. If you only sell a few items a year and get one negative, you could end up with a feedback score in the 80% range even though you have a lifetime score of 99.9%.

The new feedback policies will go into effect May, 2008. See eBay feedback change announcement for more details.

IMPROVED SEARCH RANKING FOR GOOD SELLERS

In another effort to improve the buyer experience, eBay will be adjusting the way items are displayed in search results. Sellers with a detailed seller rating of 4.6 or higher within the last 30 days will receive increased exposure in the search results. Sellers with poor detailed seller rating scores will receive less exposure in the search results. This is a smart move by eBay that should have been done a long time ago.

EXTRA PAYPAL PROTECTION FOR POWER SELLERS

To help protect against fraud, PayPal is offering some extra protections for power sellers.

• Shipping to unconfirmed addresses is covered.
• The annual $5000 protection limit is removed.
• More international destinations are covered.
• Refund of feature listing upgrade fees for unpaid items.

Of course, you have to be a power seller to qualify for the extra protections.

SETUP YOUR ACCOUNTS

Before you can get started using eBay, you need to open two accounts.

EBAY ACCOUNT

The first thing you need to do is sign up for an eBay account, if you haven't done so already. It is free to sign up, but you need to give your credit card information before you can begin to sell anything.

To sign up for eBay, click on the following link eBay registration. The link will take you directly to the eBay registration page. All you need to do is enter your name and contact information and select a user ID. The whole process will only take a few minutes. Selecting a user ID that you like may take a bit of effort though. Most of the common user IDs have been taken already.

If you use one of those free email accounts (hotmail, yahoo) as your email address, eBay will ask for a credit card to verify your identity. This is eBay's method to make sure that you are not a scammer trying to open several eBay accounts using free email accounts. Until you verify your identification with eBay, there will be buyer and seller activity limits placed on new accounts. This will limit the number of items you can purchase and the types of items you can sell in a period of time. See eBay activity limits for more details.

PAYPAL ACCOUNT

BUYERS

Opening a PayPal account should be mandatory if you use eBay. It doesn't matter if you are buying or selling. Having a PayPal account is crucial for safe trading on eBay.

Buyers should make all their eBay purchases using PayPal. There are no transaction fees for buyers and you get up to $2,000 of buyer protection. If you fund your purchases with a credit card, you are also protected by your credit card company's fraud protection program. Since your payment is sent to the seller instantly, there is no need for the seller to wait for your payment to arrive in the mail. This will allow the seller to ship the item to you sooner. With all these advantages, there is no reason to make another eBay purchase without using PayPal. Avoid sellers that don't accept it.

SELLERS

After you have sold something on eBay, you will need to get paid. There are the usual forms of payment: money order, cashier's check, personal check and cash. However, if the buyer wants to pay using a credit card, you are stuck unless you already have a merchant account with your bank.

This is where PayPal comes in. It provides merchant services so you can accept Visa, Master Card, American Express, and Discover cards. PayPal is the most widely used payment method on eBay. It also happens to be the only payment service on eBay. This isn't surprising, considering PayPal is owned by eBay. Don't even try to use Google Checkout as it is prohibited by eBay.

In addition to merchant services, PayPal offers up to $5,000 fraud protection, foreign currency conversion, and automated end of auction email notification to the winning bidder, printing of shipping labels and packing slips, and package tracking. The shipping integration is a very valuable feature all by itself as it greatly simplifies the work you need to do to ship your items.

All these services come with a cost. There is a transaction fee for every payment that you receive. The fee is $0.30 + 1.9% to 2.9% of the total transaction. The transaction amount includes the shipping charges paid by the buyer. Be sure to take this into account when calculating how much to charge for shipping. Relative to other merchant accounts, Paypal is a great deal. To sign up, click on the following link www.paypal.com.

EBAY BUSINESS INFORMATION

Our website offers several pages that contain information specifically for people interested in starting an eBay business. Start Your Business talks about the various business licenses and permits that you need to legally start a business. If you have never started a business, you will find it to be a very useful resource. We also discuss eBay Tax Issues that you may encounter running your business.

For those interested in starting an eBay drop-off store, be sure to read the information on the Drop-Off Store page. We share our experience of owning a drop-off store for three years. The merits of buying an eBay drop-off franchise are discussed. We also talk about how to build a drop-off store and the techniques for marketing your business. We go over the advantages and disadvantages of using an eBay store. This is definitely a must-read for anyone interested in the drop-off store concept.

Whether you are running an eBay store or a brick and mortar drop-off store, you will need to drive traffic to your business. Internet Advertising discusses how to use search engines to bring traffic to your website. If you have never advertised on Google or Yahoo, this is a good primer to get you started.

EBAY SELLING TIPS

There is a lot of information for an eBay seller here. We talk about eBay fees and how to reduce them on the Reduce Fees page. If you are trying to figure out how much eBay fees you are paying, check out our eBay and PayPal fee calculator. EBay sellers are deeply concerned with feedback and rightly so. Poor feedback can ruin a seller. On the Improve Feedback page, we discuss how to build up feedback, when to leave feedback, avoiding negative feedback and feedback scams.

If you are looking for tips on improving your eBay auctions, check out our Selling Tips page. There are several tips to help you earn more money on your auctions. Also take a look at the Shipping Tips for ideas on improving your shipping. Many sellers overlook the importance of safely shipping the item to the buyer. Don't make this mistake.

Sellers are always on the lookout for more items to sell on eBay. There are many websites that promise access to all sorts of products for a price. Read the Finding Inventory to find out what is real and what is not.

EBAY BUYING TIPS

We are not just focused on sellers here. We have compiled an excellent list of eBay Buying Tips. Many tips focus on safety issues, but there are several tips on how to find bargains on eBay. Searching for spelling errors is a great way to find a bargain. We will be adding an eBay spelling error search engine soon.

Educate yourself on the various eBay scams. Read the Avoid Scams page to learn about eBay buying and selling scams. The more you know about eBay frauds and scams, the less likely you will become a victim.

USEFUL EBAY LINKS