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How are eBay Entrepreneurs Doing?

By June 7, 2010

When eBay started in1995, were you one of the people who was endlessly fascinated by (addicted to?) this new way to buy or sell anything in a worldwide market? I certainly was.

I became a collector of...things: Saturday Evening Post magazines with Normal Rockwell covers, Playboy magazines from the Fifties and Sixties (for the articles, or course), and assorted other items. Purchases were expensive because the service was new and  supply/demand equilibrium hadn't occurred yet. As more buyers and sellers entered, the prices of many items dropped through the floor. I stopped collecting because the things I had already acquired became worth virtually nothing, so I was afraid to bid unless I really needed something, like a particular book or DVD.

On the other side of the transaction are all the sellers who started businesses selling collectibles that rapidly depreciated as demand slid. Some of them used to sell through franchised drop-off stores that sprang up, and then went out of business pretty fast. Yet, according to eBay officials, an  average of 250,000 small businesses  have been selling on the eBay platform over the past five years. The company would not tell me how that number has trended during that time (if you have a source of that data, please let me know).

To be sure, eBay offers some excellent advantages as a business platform for entrepreneurs and small businesses.  Dinesh Lathi, eBay's VP of Buyer and Seller Experience, explained the three core advantages of eBay: It's fast, easy and cheap compared with setting up your own online store; setting up a payment account with sister company PayPal is simpler than opening a credit-card merchant account; and you have instant global reach to 90 million active users. EBay does $2000 in transactions every second, so there's a decent chance someone wants to buy what you're selling. (Like the pair of rarely used Rollerblades and the Sharper Image massager that I got out of my closet and banked $150 for, thank you very much!). As Lathi says, "In the time it takes you to have lunch, you can be up and selling with eBay as a small business."

Also bolstering the eBay small business market is the increasing number of mobile applications. The eBay iPhone app has been downloaded more than 9 million times, Lathi says, and it's installed on 30 percent of iPads. The company expects $1.5 billion in transactions to be completed on mobile devices in 2010.  Social networking is also helping fuel eBay sellers' businesses.

Which brings me to my question:

Are you an eBay small business/entrepreneur? Please comment on your experience with eBay, how your business is faring, and what you think the future holds.

July 29, 2010 at 6:42 pm
(1) ken says:

Been selling on ebay since 2003. It used to be a pleasant and “fun’ occupation, easy to do and to manage, and was fair to both buyers and sellers. However ebay has slowly changed into a selling system weighted very much towards favouring the buyers, although ebays success actually comes from the sellers, who pay the fees and provide the entertainment. It is also no longer an Auction site, being predominently a showcase for ‘buy it now’ sales. Sellers now have to contend with lots of regulation, star award systems and not being able to take action against poor buyers. Buyers have no responsibilities apart from bidding and paying promptly and it costs them nothing to take part. We sellers pay fees to ebay for entering the auction, final value fees and for also for using paypal, which is owned by ebay. Like many others I am now considering using other auction sites which have a better attitude to those taking part. Thankfully I sell very unusual items, so I do in fact turn over items well, but it is not easy anymore, and I can see the day coming when ebay becomes just too difficult for the average seller to use confidently.

August 3, 2010 at 5:22 pm
(2) Perry Ford says:

I bought and sold on eBay for years and have left in the past year. And since I only sold about $120,000 a year, and gave eBay and Pay Pal over a third in fees, eBay treated me like a bad piece of meat. Once they set policy that buyers could buy things from me and remove the parts they needed, return the items for full refunds without no recourse from me, that was the final straw. All I had left was brand new items missing parts. They even refunded the postage I paid out of my pocket. A great place to steal if you are a buyer, but a bad place to sell if you are an honest seller. I don’t see eBay’s survival in the distant future.

August 4, 2010 at 8:27 am
(3) jimmy says:

ebay used to be fun, too many rules for sellers and fees!

September 22, 2010 at 4:45 pm
(4) Dan says:

I’m a small time seller on Ebay, selling about 1000 items over the past 5 years or so. All I can say is that Ebay has changed by favoring those sellers who use auction format selling methods. You can now list items in auction style formatting starting at $0.99 or less for free, and the final value fees for those auction style listings are now only 9% verses the old 12%. So, if you’re a seller who likes selling in auction style formatting then you have the advantage over those who sell by using the “buy it now” option. I for one like these changes, makes selling on Ebay a bit more exciting again.

I seen a comment above stating that Ebays success comes from the buyers, I totally disagree with that comment. That $2000.00 in transactions per second is generated from the buyers… everything trickles down from them including Ebays overall success. The more buyers there are, the more money there is to be made, Its just that simple.

October 8, 2010 at 9:30 am
(5) Baz says:

Started selling on Ebay Australia 2 years ago full time, margins were good and it was almost impossible to loose. Was normal to make at least 50% margin per sale. Over 200% return on capital per year was easy.

2009 the margins dropped per sale after the best match system was introduced = PRICE WARS – In 2010 since April we have seen a collapse of prices and a flood of sellers into products who are selling on margins as low as 10%, some are new sellers who do not understand that they are actually loosing money per sale if you factor in returns etc. We started on less than 50K AU$. In the current climate to have any chance on Ebay AU (not selling fakes that is) you would need at least 200K start up capital per person and do not expect to draw a wage for at least 12 months.

The strong AU$ has caused an influx of new sellers/unemployed/too many foriegn students who can not get main stream jobs/general retail price deflation = PRICE WARS that mean products become poor investments relative to the risk.

Its a very tough market and based on our figures, I have a business degree, marketing major and am an ex banker, I can not see a future for many sellers unless they have 200K + at their disposal as a starting point. A number of sellers here have stock levels over 5 million and they can survive this period but they will eventually start to loose.

If it does not improve I will invest money elsewhere I am sure its not only my company thats feeling this, no one writes the kind of info I have put in here. We will see how it goes over the next 6 months and if it does not improve we will put capital outside Ebay for a better ROI.

May 1, 2011 at 11:12 am
(6) kozmickid says:

This is an old thread, I see. I just returned to eBay today to see if anything was going on, and I see pages and pages of items with no bids.

I began selling on eBay in 1999 when the site was fairly new. I became a super seller when I kept at it, selling beads and hand-dyed fabric that I had dyed myself.

Eventually, though, I got fed up with all the changes and the increased fees, so I left eBay in favor of another site that is easier, more effective, and with fewer rules and regulations.

eBay is now a clearing house for the likes of Pottery Barn and Chinese sellers. If you’re looking for electronics and vintage items, you may find a deal there. Sellers now have to price low if they even want to get a gander.

eBay may still be successful, but they abandoned a long time ago the business model, ethics, and small businesses that made them successful.

July 31, 2011 at 11:06 am
(7) Dee46 says:

The good old days of ebay are long gone. Started with them in 1996 and had a great time for years. Feebay then became greedy and arrogant and then more greedy and more arrogant. Kicking their sellers to the curb over and over with increased TOS that allowed scammers to steal from legitimate hard working sellers and ebay backed the scammers. No support from ebay for sellers on issues brought to their attention, NO support on anything. Feebay has used every tactic they can uncover to gouge more money from sellers while providing NO support of any kind. I have left feebay and am using other on-line sites that while not as busy yet at least they have not kicked me in the teeth while they smile and ask for more of my profit. Feebay has become a scammers haven and is a bad and dangerous place to sell your products. I see feebay going down in the next few years, they rode their horse into the ground with their arrogant who needs you attitude. Remember….if you sell it on ebay and the buyer wants a refund….for any reason. feebay/paypal will refund the money with or without your consent and you may or may not get the item back. You are hostage to the buyer in every case and the scammer/buyers are well versed on this. It has happened to me but no more. Ta-Ta feebay.

August 9, 2011 at 2:30 pm
(8) pissed off eBayer says:

eBay is a JOKE! They only care about their buyers! I’m not sure what they are up to…but they are either trying to be like Obama and bankrupt their company or get rid of all small sellers? They already charge close to 10% give or take. They act like they are alway giving new discounts and deals. The only thing they do is tack more on the back end and other new ways of getting money out of you. You used to get 12 super sized pictures for .75 cents on parts. Now it’s 6 for .75 cents and 12 for $1.00. Now they charge a percentage on shipping cost at somewhere in the 3% range. Then Pay Pal is almost 4%. So when you are done paying all the insertion fees, rip you off fees, back end fees and more fees. Somewhere in the range of 15-20% just for eBay not including your tape, feul, and other packaging supplies. And then pay the government. So what do you make off eBay? Maybe 50% of what your item is worth. It’s almost not worth selling their anymore. Your better off a flea market. If you want to take half of what something is worth. At least you walk away with cash…

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