7 Things You Need to Know Before You Sell on eBay

 

I've owned and worked in few small businesses over the last 30 years and continue to enjoy learning about business and marketing topics.

Before you start building your eBay empire, there are a few items to consider in laying a firm foundation for your future profits. Even if you don't plan on establishing an actual eBay empire, a little preparation will go a long way in saving you time, lowering your stress level, and maybe even saving you money.

When I started on eBay, I spent a lot of time agonizing over the wrong details while overlooking some of the most crucial preparation. To help you avoid the painful mistakes I made, here are my top tips for you to consider before you open your eBay account.

What to Consider Before You Start Selling on eBay

1.      Decide If You Need a Personal or Business Account

2.      Choose a Good eBay User Name

3.      Set Up a PayPal Account

4.      Know That Buyers Will See Your Return Address

5.      Get Shipping Supplies Before You List

6.      Consider If You Really Want to Sell Something for .99

7.      Remember That eBay Gets Paid, Too

When I started selling on eBay, I spent a lot of time agonizing over the wrong details while overlooking some of the most crucial preparation.

1. Decide If You Need a Personal or Business Account

Your first decision is whether to set up as a personal or business account. Unless you have already set up a business entity and are ready to start raking in the money, start simply with a personal account. If business booms, you can upgrade to a business account later without losing any transaction history. If you already have a business entity, either a bricks-and-mortar retail store or online business, then go ahead and set up a business account.

If you want to start a new business and open an eBay business account, then first make sure your business is set up legally. This includes registering your business name with your state and following your state's laws regarding sales tax collection.

Some people want to keep the account they use for personal purchases separate from their selling account. The advantages are that it can convey a more professional appearance as well as protecting your privacy by not showing buyers your list of purchased items.

Quick-Start Tip #1: Start simply with a personal account.

2. Choose a Good eBay User Name

Some user names make people wonder, “What were they thinking???” If you don't want to elicit that type of response from potential buyers, then choose a name that people will not find offensive, is not sexually suggestive, and doesn't convey a negative connotation or negative attitude. Check out eBay's guidelines to learn their criteria of what is and isn't allowed in user names.

A good user name is important, but don't put off opening an account while you dream up “the perfect name.” The good news is that eBay will let you change it later if you have a sudden epiphany after setting up your account. You can change your name as often as every 30 days (although that won't help you “build a brand”) and your feedback will still stay with you.

Quick-Start Tip #2: Already have an Amazon seller account or other e-commerce business name? Consider using the same seller name on eBay.

 

design Amanda Rose, photo StockUnlimited

3. Set Up a PayPal Account

You'll need a PayPal account if you want to get paid. This is the simplest option for new merchants, although there are a couple other options if you really hate PayPal. You can use your personal PayPal account or set up another PayPal account for your business.PayPal does allow users to have one personal and one business account, so it's completely legit to have two accounts. Each account must have a unique email address, bank account, and credit card associated with it.

If you're not setting up as an official business yet, then I'd suggest also holding off on the business PayPal accountant as you can change over later. Do be aware that using your personal account will show buyers your personal name rather than your business name on the payments they make to you. If that is a big concern to you, then you'll want to set up as a business with Paypal and eBay. That's more than we'll cover in this article.

Buyers don't incur fees when they use PayPal, but as a seller you will be footing the bill. The current fee is 2.9% plus .30 per transaction, with higher rates for international sales and discounted rates for merchants and non-profits. If this seems high to you, remember that all the stores we shop at pay to process the credit cards we love to use. This is part of the cost of running a retail business and you'll need to account for it as an expense and when calculating your per-item profit.

Quick-Start Tip #3: Start out using your personal PayPal account and upgrade later if the need arises.

PayPal Costs

Per Transaction	% of Total Sale
.30	2.9%

4. Know That Buyers Will See Your Return Address

Items you ship out will need a return address. If you don't want that to be your home address, then get a PO Box before you list your first item. I cringed when I realized that my full name and home address was going out on the shipping labels I had printed up through eBay. It surprised me and scared me a bit to lose that privacy. Now you know and won't be surprised!

You can get a post office box at the US post office, a UPS store, or a variety of other locations.USPS post office boxes start as low as $14 for six-months, but even that may be cost prohibitive if you are only listing items occasionally. You can read more about options in my ToughNickel article "How to Get a Business Address for Your At-Home or E-Commerce Business."

Quick-Start Tip #4: Use your home address until you start selling on a regular basis.

Don't Do What I Did!

I was in a hurry and overwhelmed by the details of my first listing on eBay, so I just accepted the shipping entries that auto-populated. I was advertising free shipping and figured I could work out those pesky little shipping details later. The problem was that the listing auto-populated as "expedited shipping". Shipping that item would have cost me twice the price it sold for! The buyer generously allowed me downgrade to priority mail and receive their item a day later than expected.

5. Get Shipping Supplies Before You List

When you list an item for sale, you will be asked to enter the dimensions of the box and weight. This means that you need to have the item boxed and any cushioning material added before you click to submit the listing. You MUST weigh & measure this shipment-ready package before you list the item.

Whatever you do – DON'T do what I did! Don't guess what size box the item will fit into or how much it will weigh all packaged and ready to go. And don't just accept the options that auto-populate based on what other sellers chose for their shipping! This could really mess up your shipping fees when the item sells. If the buyer is paying, they will expect to pay what was shown even if the actual cost turns out to be higher. If you are paying, well you could end up with a much bigger bill than anticipated! You really can't down-grade the shipping once the item is sold as it isn't fair to a buyer to get an item later than they expected.

Quick-Start Tip #5: Weigh & measure the shipment-ready package before you list the item.

6. Consider If You Really Want to Sell Something for .99

Think twice before following eBay’s listing advice to start your auction at .99 cents. You'll be safest having the buyer pay shipping costs if you do start with a low bid, so that a low ending bid doesn't end up costing you shipping and the product cost both as losses. Bidding wars don't always ensue and as a new seller you don't have the experience to know which prices are guaranteed to soar and which ones are going to sink you!

If it will break your heart (or your wallet) to sell that low, then you may want set a minimum opening bid. Set it high enough that you will be happy to sell and making a profit. You don't even have to list your item as an auction. You can use the "Buy it Now" feature, set a price you are comfortable and see what the market says. There is also a "Make an Offer" feature you may want to look into using, once you get the hang of the basics.

Quick-Start Tip #6: Don't start your auction at .99 cents unless you know what you're doing!

 

Do you know what your expenses will really be when you sell on eBay?

Amanda Rose, photo by StockUnlimited

7. Remember That eBay Gets Paid, Too

Don't be one of the whiners who say "eBay is a ripoff! I lost money selling my items on eBay!" Well, if you learn about eBay’s fees before you list your first item, you will know what to expect!

Understand that the amount an item sells for will not go directly into your pocket as profit. You will pay eBay for hosting your item, PayPal for processing the payment, shipping fees to the buyer (if you choose to pay them), packaging costs, the cost of the item itself, and any incidentals of business. What's left after all that is your profit. Every business has overhead; eCommerce is no different.

eBay charges an “insertion fee” to list the item and a “final value fee” when the sale closes. Those are just the basic fees and there are additional fees for other features to help you sell your items. As of the time of this article and based on auction-style listings, the insertion fee was free for up to 20 items per month (with some exclusions) and the final value fee was 10% of the total amount of the sale. The “total amount of the sale” is the sales price, shipping, and any other fees you charge the buyer.

Selling on eBay eliminates the need to sit outside at a garage sale all weekend or to pay rent and utilities in a standard retail location, but it doesn't guarantee a profit anymore than opening up the doors of a new store in a local mall guarantees a profit.

Quick-Start Tip #7: Consider all your expenses when calculating profit.

eBay's Fees

Insertion Fee	Final Value Fee
1st 20 items free each month	10% of total sale

Simple Is Good

Although getting started on eBay can seem like a daunting task, you can keep it simple when starting out and grow your business as you learn. The most important aspect of selling successfully on eBay is good customer service and positive feedback, so make that your initial focus of learning. Making money will mean nothing if you get poor feedback by disappointing buyers.

For more information, visit eBay's "Learning Center" under the "Customer Service" tab and work your way methodically through the “New to eBay” topics, use their "Search" to find answers to your burning questions and most importantly - take a look at eBay's rules and policies. (A list of links to important eBay seller information is included further down the page.)

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