How To Set Up A Successful EBay Business

How To Set Up A Successful EBay Business


The aim of this plan is to set up a profitable EBay business that will be run and managed online.
In this plan we will be looking at the rage of product we will be selling, where to source them, financial budget for the business, how to stand out from other EBay sellers, how soon we can get back the invested capital and finally selling beyond EBay.

Business Description
This business involves sourcing high end consumer goods from suppliers and auction houses and selling these goods on the EBay global market.

Product Range
For this business we will focus on consumer electronics, clothing shoes and shoes, and other new high demand product that are generally available to purchase from our suppliers and auction houses.

Targeted Customers
We will be targeting teenagers are that are interested in electronics and gadgets, ladies that are interested in bargain clothing and accessories and general consumers that are looking for cheap bargains.

Selling Strategy
Our major aim is to cut as short as possible the period of business turn over. This will involve us sourcing our goods in high volumes to make saving and passing this saving to the consumer by selling at lower prise to our targeted customers.

Quality Control
In order to run and manage a profitable EBay business we must make sure that all our goods are source with quality in mind. If we sell high quality goods, there will be low rate of returns, we will be giving better feedback that will help boost our EBay feedback.

Product Sources
Our products will be source from well-known suppliers, The following are some of the suppliers we will be buying products from;
• Argos Clearance
• iBidder
• John Pye
Our focus will be on brand new products only. Most of the used goods and return goods sold on these sites can be problematic to an eBay business as they do come with lot of challenges.
For this reason I will prefer we start with Argos Clearance as they do sell new products.


Start-up capital
In the first 3 months of the business I will recommend we start with about £1800.00, with this we will easily have space to store the products without going for a ware house and also have much leverage to build up the eBay account and eBay shop.
When you open a business account, it takes time for your seller limit to be increased by ebay. This increase is tired to your seller performance. Because we may not be allowed to list more than about 1000 items in the first couple of months, starting with a warehouse will lead us to incur irrelevant cost.
Once our seller limit have been increased to about 1000 + will have to raise additional capital to cover cost of warehouse and increase our purchasing power.

Business Cost
Normally I would have listed out the business fixed cost but due to the nature of this business we only have one time of fixed cost, all other cost are in proportion to sales.
Fixed Cost: Storage/ Warehouse
EBay Cost
• Insertion cost – £0.30 per set of listing made at a time
• Final value cost – 10% of monthly sales
Both cost appears in your eBay account and are paid monthly.

PayPal Cost
Because customers make payment with PayPal, we will be incurring PayPal cost at the end of each transaction. This amount is 3.4% of the total amount that comes into your PayPal account. PayPal automatically takes this fees from every transaction.

Postage cost
This is always one of the largest set of cost in eBay business. Understanding and reducing this cost can make a lot of difference between profits and loss.
The postage cost includes packaging cost and it’s also one of the eBay rating criteria. Because eBay don’t charge you on postage cost, they try to encourage sellers to incorporate postage cost in the item cost thereby listing items with free postage. By so doing they can profit from the postage cost you are charging your customers. If you make this cost too high, your items will attract low feedback, if its low of free, you will have to bear the cost yourself in competitive market.

How much is charge for postage
Courier companies charge in grams. Below are sample of postage cost of 3 different courier companies and the delivery times.
Courier Companies Delivery time 0-1kg 1-3 kg 3-5kg
Myherms 3-5 days £2.80 £3.20 £3.20
Collectplus 1-2 days £3.30 £5.20 £6.50
Royal mail 2-3 days £0.9-£3.20 £3.80-£5.00 £5.00-£8.00

With a business account you will cut down these per item cost up to 30%.

If all your items are new in box, you will spend less on packaging cost but if they are not in box you will have to buy packaging which can be very expensive also. I will not dwell on this as we will be dealing on new products. The only packing we may need will be postage bags which are relatedly cheap.
Targeted Profit margin
From experience, you can always make up to 100% profit from items purchase. Its not possible for you to make a loss on total purchase. There are times when you will not be able to sell certain product but you can sell them as job lot.

How soon can I get my investment back
The turn over period is always tied to how soon you start listing your product for sell. Because of the high volume of consumers that uses eBay, there is the possibility of your item to start selling the day it’s listed. Though you have to know how to list your item professionally.
With an eBay account with 100% feedback and a power seller, you can sell up to 2000 items or more on a monthly bases. This is based on the volume of your products and your level of feedback.

In eBay market there are always thousands of competitors. There will hardly be any point in time where you will be the sole marketer of a particular product.
In order to succeed you have to stand out from your major competitors. The following are ways you can stand out from your major competitors:
Quality- the importance of this cannot be over emphasized. You must sort quality products. If your items are not of best quality, it will reflect on your feedback and in some cased eBay will suspend your seller account.
Your listing – your product must be listed professionally so that it can come on top of eBay listing and be easily seen by consumers.
Packaging and Postage: When you made sales, items must be well packaged and post as soon as possible. Its always advisable that you post your item within one working days of sales. After postage make sure that you mark your items as dispatched.
Feedback- always leave feedback once item is dispatched and encourage customers to leave five star feedback for you also.

Selling Beyond EBay
Due to the high cost of selling on eBay, its always advisable to sell on Amazon which is relatively cheaper and have your own online shop. Its easy to build your business online shop but it will take time to build that level of traffic that you will need for turnover. In this business you ultimate goal should be to have your own personal online shop.