Can eBay Make You Rich?

adamlazz writes "For 11 years, eBay has been a great resource to buy or sell goods without leaving your computer. And with many stories of people getting rich exclusively from doing business on eBay, NewsFactor has decided to go in depth with these stories, and explore what it takes to really make your million on eBay. From the article: 'A tiered system designed to reward qualified sellers, the PowerSeller program is by invitation only, and has a number of criteria that must be maintained to keep the designation. At the lowest level, Bronze, a PowerSeller must average at least $1,000 in sales per month for three consecutive months; have an account in good standing; and get an overall feedback rating of 100, with at least 98 percent of the comments marked as positive.'"

Comments

Why couldn't you get rich via EBay?

[0racle]

If you have enough of something people want at the right price then why couldn't you get rich selling things on EBay? It's not really any different then selling things in a shop or through your own website.

Re:Why couldn't you get rich via EBay?

[TWX]

It's like anything else. It's a little bit of creativity, a little bit of business savvy, work, and time. For those of us who are too lazy to go through this route to make our way there are 9-5 jobs. There are those whose job is solely to buy wholesale and sell retail, and they've been there since the day of the trader with his horse-drawn cart rolling into town. eBay just tweaks the rules a bit.

I don't personally want to use something that could leave me high-and-dry if something goes awry, and I'm too lazy to research aspects that mitigate the risks. So, I don't eBay. I work a state-level IT job. Not a lot of reward, but not a lot of risk either, and I don't have to worry about stability.

Re:Why couldn't you get rich via EBay?

[1iar_parad0x]

If you're bringing in $100,000+ per month in sales, you probably should get your own site. EBay is great for the 'small-time' or 'early-stage' seller. It's a robust engine that can handle heavy traffic and activity and is reasonably secure. However, if you've got sales as high as mentioned in the article, I can't imagine how EBay could provide an adequate solution for you. If you sell big ticket items, you probably want some binding contractual arrangement. On the other hand, if you have an incredibly high volume of sales, you probably want to better cater the shopper's experience and would have an E-commerce site of your own. Not to mention the fact that you'd need some internal system (even an Access database) to track all of your sales and shipping data. Maybe EBay's API allows you to do some of these things. I'd certainly be happy to hear about anyone experiences with it.

Re:Why couldn't you get rich via EBay?

[pthor1231]

It seems to me that some of these people that do have a high volume of sales do have e-commerce sites, but use eBay as really cheap advertisement. Most regular people look to eBay as one of the first sources when they buy stuff. If the actual sale amount is cheap, then the percentage cut eBay takes isn't much, and the listing fees are constant if you do a high enough volume, which amounts to have much reduced cost of hosting, advertising, developing, and you reach a huge audience.

Re:Why couldn't you get rich via EBay?

[billcopc]

A big eBay seller opening their own independent site could be the death of them. eBay is like the super mall, it brings in a whackload of potential customers and everyone's marketing efforts sort-of cooperate in that environment. i.e. if your competitor's ad brings in people to the mall, they will also see your store and maybe you'll get a sale too, for "free". Just as if someone's looking at one eBayer's item list, then glances down at the "related items" table they might come across one of your sales.

The prime difference when it comes to eBay, and the one that makes it horribly dangerous, is that very same easy access to other shops. There is ZERO customer loyalty on eBay, people just check your feedback once they have already found what they want. You could be selling some doodad at the same price as a competitor, but that other fellow may charge a dollar less for shipping and you've just lost the sale. People come to the real mall with a specific store in mind, then walk around the rest to see if there's anything else they want. People come to ebay with a specific product in mind, and they will compare everyone's offerings to get the best deal. It's the Walmart effect, automated and unsupervised.

Re:Why couldn't you get rich via EBay?

[MrNougat]

When the profit margin on the products you're selling is constant and eBay constantly raises the fees, then no, you can't.

If your profit margin was constant while eBay was raising fees, you would have to be raising your selling price (so that the increased fees were not cutting into the profit margin).

In other words, yes, you can. If eBay raises its fees, then you raise your price (or reserve). If you are still unable to compete in the marketplace, then you need to figure out how to spend less capital on something else (because, if you're unable to compete, then someone is succeeding, and you need to do what they're doing).

More generally, when the market changes, businesses must change to keep up. Unless you're the RIAA/MPAA, in which case you can wave your arms around and sue people a lot.

Re:Why couldn't you get rich via EBay?

[Destoo]

As far as I can see, the money is in the shipping.

Companies like UPS and probably others can "markup" your shipping cost.
So even if you see the UPS invoice, which will show what the send wants to see as "shipping cost", the real cost could be lower and the sender will get his cut at the end of the month/quarter/year.

Re:Why couldn't you get rich via EBay?

[stuartkahler]

The problem with ebay is that most sellers don't make their own product. So if you find something that sells at even a $5 profit after all expenses, you either kill your own sales by flooding your own market, or someone else undercuts you at a $4 profit. Any way you slice it, there is usually someone else willing to sell the same item for a smaller profit; eventually, everyone reaches a profit margin of zero or less.

I've told the following to many, many people who wanted to sell on ebay as a primary source of income:
1. Find alternate sources of cheap product (e.g. buy used cars locally and sell them on ebay) or deal in unique/collectible items (e.g. movie props from the studio you work at or jewlery from your pawn shop). You can't make money buying at wholesale because your competitors are doing the same thing. Before you know it, you'll be listing at $1 over cost and spending 12 hours a day packing items and wondering if McDonalds is hiring.
2. Have a secondary revenue stream with reasonably profitable addons. e.g. If you sell electronics, have model specific batteries, memory cards, cables, etc. that you offer at 50% over your wholesale cost.
3. If you're doing enough sales to reach powerseller (even bronze) status, you should quit ebay and sell directly through your own website.
4. Your reputation is your only valuable asset. Even 98% is a terrible feedback score. Buyers only leave negatives when they've been badly screwed or to be jerks (these can be removed). If you lose 10% on your selling prices because of your feedback, that's probably your entire profit margin. BTW, don't overcharge on shipping, it just pisses people off and reduces your final selling price by an equal amount.
5. Don't openly connect your local store to your ebay ID. People will expect you to take returns at the shop, and your shop customers will expect you to sell to them at your ebay prices. This assumes that you're selling regular inventory rather than closeouts.
6. Be overly descriptive in your item descriptions and check your spelling. I once sold a used soundtrack CD for an obscure Anime title for 3X the going price (reg $15, new) because I listed the composer. People searching to expand their collections will pay top dollar. Typos will cost you a ton of money because prospective buyers won't see your item. Ur l331 $p33|{ |$ @ L1@b1L1TY.
7. Even after all of the above, you'll quickly realize that ebay is only good for two things: liquidating excess product at cost or building your customer base.

I used to sell on ebay a LOT. I built my feedback score up to over 1000 100% positive with bronze power-seller status, and eventually quit ebay alltogether. I quickly realized that between paypal and ebay, my fees on a $10 item were about $1.50 for a no-frills listing. I was then adding about $0.20 for a service to streamline my auction listings. All this for the privelage of selling at rock bottom prices. I now consider ebay useful only as a glorified garage sale (it's original intent).

Re:Why couldn't you get rich via EBay?

[MrNougat]

Mother-Mary-on-a-piece-of-burnt-toast

eBay is the perfect place for unique, must-have items. For example, my wife is trying to find an extra baby blanket to match the one my daughter uses, just to have an extra one. The price gouging is insane; people are asking $50 for these blankets that sold new for far less. Of course, since they're not produced new anymore, Random People On The Intarweb are the only place to get them. And said People know full well that a desperate parent will shell out the cash in a pinch.

1) What about the children?
2) ???
3) Profit!

Better question

[Umbral Blot]

A better question than "can you get rich on ebay?" is "is getting rich on ebay worth the time, boredom, and effort?". I think the answer is no, at least for me, as there are more interesting things I would rather be doing (see sig.).

Well

[thealsir]

There are a bunch of spammers selling tons of things in various uncontextually related categories so they get the most bid. They have polluted ebay with noise, and it seems little is being done to stop them. It makes searching for some products (especially specialized ones) such a pain.

"Getting rich on ebay" is akin to "keyword spamming with listings."

There is a group that makes money legitimately. However, that group is not insanely rich.

And the answer is...

[Anonymous Coward]

Because we vastly overestimate the intelligence of people. Some idiot sold a million pixels on his website for a million dollars, but we sit here thinking people expect something that's, well, worth something ...

Instead, all they want is pointless, worthless crap, or space on a giant banner ad site no sane person would ever visit save out of morbid curiousity after seeing an article carried by the AP. And no, I'm not about to link to the wretched thing.

Thus, the formula appears to be:
1. Invent completely something idiotic, yet popular[*]
2. ???
3. Profit

[*] These traits are entirely too compatible. For example, take Adam Sandler or Jim Carrey...

Re:And the answer is...

[mjh]

Instead, all they want is pointless, worthless crap, or space on a giant banner ad site no sane person would ever visit save out of morbid curiousity after seeing an article carried by the AP.

Why do you care? If the thing that I want seems pointless to you, what do you care? I'd bet that you purchase some things that seem pointless to me. But the advantage of me earning my money and you earning your money is that we each get to decide what to do with it, even if it seems pointless to someone else.

Just out of curiosity, how would you propose that purchasing be done? Are you suggesting that we prevent people from purchasing what you think of as pointless crap? How would you implement that? What if that enforcement agency looked at slashdot, saw all of the -1 rated posts and concluded that this was a pointless purchase? Don't you think that you'd feel your freedom was impinged upon? Don't you think that if you enforce purchasing controls, that ALL people who aren't allowed to purchase something they want (even if it's "pointless crap") will also feel that their freedom was impinged upon?

Personally, I don't see any way of solving the pointless crap problem without dramatically curtailing individual freedom. IMHO, I'm happy to live with the problem of folks buying "pointless crap" if it means we get to keep individual freedom.

Re:And the answer is...

[Anonymous Coward]

Just out of curiosity, how would you propose that purchasing be done? Are you suggesting that we prevent people from purchasing what you think of as pointless crap? How would you implement that?

I think you might need to tone down the meds and relax a little. I read nothing in the post implying or stating that anybody should be preventing anybody else from buying "pointless crap." The author was saying that it is difficult to make money on ebay because people don't always buy the things that would seem worth purchasing, but people often do spend their money on popular but useless things. It is difficult to predict which useless things will become the popular ones to buy, therefore it is difficult to make money.

Personally, I don't see any way of solving the pointless crap problem without dramatically curtailing individual freedom. IMHO, I'm happy to live with the problem of folks buying "pointless crap" if it means we get to keep individual freedom.

Again, it seems that you are inferring ideas that are not there. I didn't see anything in the post indicating that there is or should be a 'solution' to the "pointless crap problem." The author was answering a "why" question with a "here's why" answer. There is nothing saying "if only we could solve the 'pointless crap problem' then we could all get rich selling on ebay."

Why does this sound like Amway?

[Nefarious Wheel]

Why does this sound like Amway?

Tiered sales .... um, hint #1. Invitation only, hint #2. Minimum sell to achieve "privileged" status ...hm.

Can't I just buy the box of soap and go home?

Re:Why does this sound like Amway?

[Megane]

Tiered sales ....

Well, you've just shot your argument down right there with the first two words. Recruiting new members to sell stuff is not part of PowerSelling. The invitation only comes after you've already sold stuff on your own, with nobody else in the program making money off of you on your way there.

eBay is a flea market

[Bing Tsher E]

As is the case with any flea market, there are going to be people who think like 'businesspeople' and make loads of money from the operation. But for the rest of us it's a good place to exchange cool stuff with each other easily and with less hassle than in many other markets or forums.

The trick is to figure out who the 'hustlers' are so they can be avoided like pariahs. eBay can and is a peer-to-peer environment for many of us. I get cool older/odd/unobtainable tech there and don't regret participating in the least.

Anyway, most of the 'hustle' people are similar to the same sort of people at the flea market. Their 'booths' suck.

Ebay is getting rich, not you

[Britz]

Prices are very low on ebay. For someone selling stuff on an auction site you never know how much you are going to make on an item. But you can be sure of one thing. Ebay will make more on that sale than you will.

Make a Million profit on ebay 2006? No way.

[mrshowtime]

I used to be on ebay as a powerseller in the heydays of 1997-2001 and made a lot of money. Now, I would not touch ebay with a 12 foot clown pole. The only way you can make a profit now is if you have something that is a true collectable or very valuable or very hot. For instance, if you got your hands on 20 PS3's you could stand to make about $20,000 if you sell the day the PS3 is released. There are rich people out there for whom money is no object and you can profit off of them. The downside on ebay today is actually paypal BUYER fraud. Let's say you do manage to get your hands on 20 PS3's and put them up for $1,500 each. You will get buyers who are legitimate and very rich. You will also get a lot of scam artists who will use paypal to try and defraud you. All the buyer has to do is say "not as described" and paypal will hold the money till they investigate fully (read actually do nothing till YOU send them proof--guilty until proven innocent). Catch 22, if you don't accept paypal, then you can't protect yourself from dummy bids (someone using a zero or low fb id, bidding a rediculous amount or just simply "buy it now"-ing all of your auctions. Also, since you don't accept paypal it actually makes you look shady! Plus the public has gotten used to paying for everything immediately and if anything the people on ebay have gotten worse and worse over the years. Make a million on ebay? Sure, no problem. Take home a million profit? No way.

Re:Worth the effort?

[Umbral Blot]

Well if you are already committed to physically selling and buying items as a way to make money then you are certainly right, there is no reason not to use ebay. What I was pointing out is that there is no "free" way to make money. Beyond ebay's transaction fees you must also commit a decent amount of time and energy making it work and moving enough inventory to support yourself. I think that in the eyes of many doing this kind of job is so boring that it isn't worth the money, and that we would rather be doing something else even if it pays less.

make a million accepting money orders

[sl4shd0rk]

You can get ripped off very easily with them, they are nearly impossible to track, and the best the banks can usually do is tell the remitter when they've been cashed. That's it.

And the answer is...Prison for bad shoppers.

[Anonymous Coward]

"Personally, I don't see any way of solving the pointless crap problem without dramatically curtailing individual freedom. IMHO, I'm happy to live with the problem of folks buying "pointless crap" if it means we get to keep individual freedom."

Amen! You'll notice the "pointless crap"* meme is used often here. e.g. movies, music. I suppose we should all ask "I didn't know you cared so much about MY purchasing habits".

*"Because we vastly overestimate the intelligence of people." aka "we're better than you (note the people who use this meme always exclude themselves from the 'norm')...you idiots!" is the other meme. No wonder geeks and nerds are shunned. Who the hell wants to associate with someone who has a superiority complex?

Re:And the answer is...Prison for bad shoppers.

[Anonymous Coward]

"No wonder geeks and nerds are shunned. Who the hell wants to associate with someone who has a superiority complex?"

As opposed to one having a debilitating inferiority complex where one shuns any association with geeks and nerds because of the perceived superiority of others intelligence.

Alternative for sellers and for buyers?

[Rich Klein]

I hear a lot of sellers and buyers saying that eBay isn't what it once was, and that it's too easy to get screwed on either side of the transaction.

So, I ask you former eBay merchants: where have you moved to?

And where are you finding bargains as buyers?