Starting an Ebay Business: A Step-by-Step Guide

starting an ebay businessI have been selling stuff occasionally on Ebay over the last 10 years or so.

I knew that a bunch of people had ebay businesses, but I didn’t realize how many.

The last figure I heard was that there are over 1 million Ebay businesses.

I am sure some of them are part-time businesses, but that is just amazing to me that there is that much potential available.

You may want to read about starting an Etsy business as well.

Deciding to start an Ebay business

I decided to try it out and see if I could start a part-time ebay biz. The great thing about it to me was that I could essentially turn it on or off when I felt like it. If I needed some extra income for a vacation I was saving for I could sell some stuff for a month or so and then when the vacation rolled around I could temporarily shut it down just by not listing any items.

It is this freedom that makes it a lot more enticing than the traditional “brick-and-mortar” businesses. I thought to myself that maybe I could turn it into a full-time income as well – if it was what it was cracked up to be.


1. Starting the Ebay biz

As I mentioned in an article I wrote called 7 steps to selling on Ebay for beginners I started by selling junk around my house. This is the best way to get your feet wet with Ebay. Actually, I take that back. The best way to get your feet wet is to purchase a few items on Ebay. This will benefit you in two ways:

  1. It will help you to understand the Ebay community a bit better than you will if you just start selling. It is not the “virtual garage sale” that it once was and it is a rare case when you can imagine something that hasn’t been sold on Ebay.
  2. I mentioned that Ebay is a community. This is not a cause for worry, but you do need to be aware that since it is still lightly based on an “honor system”, you need to prove yourself. Buying a few items and proving that you are an upstanding member who pays for items will help you out when you start selling.

I won’t go over the basics of Ebay selling since you can read that in the previous article mentioned. From here on I will assume that you know the basics of selling on ebay. So, let’s get started on the steps I took to start my Ebay business.

2. Picking a product to sell on Ebay

It may sound easy or difficult. It is some of both actually. I set out to supplement my current income, not necessarily to generate a full time income from it. Because of this I was able to take more of a chance by NOT picking the right product. I felt comfortable that if I jumped into an over-saturated market I could jump ship and try a new product.

I wanted to find something that I at least knew something about, since in my previous experiences of selling some of my wife’s clothes made me very aware that I know nothing about women’s clothes. I would get questions from buyers asking me how many inches it was from this to that. I didn’t even know what areas they wanted measured, let alone know how to measure them. Do yourself a favor and know at least a little bit about what you are planning on selling.

I finally found a product that was related to something that I knew a decent amount about, since it was a hobby of mine. No, I am not going to tell you what it is, because I am sure I would see a surge in competition a week after this article gets posted 😉 My “biz” is currently turned off, but who knows when I may turn it back on?

3. Finding a supplier

Google “(Your product) + wholesale” and combinations similar to find a supplier who will sell to you at wholesale prices. I know some people run small ebay businesses by finding clearance items at retail stores and reselling them on Ebay, but your profit margins will probably be smaller than if you bought them wholesale.

Most suppliers are going to want to make sure you are legitimately interested in becoming a dealer for their products, rather than just trying to get a deal for yourself. This process is probably going to be slightly different for different products. For me, I found some suppliers on Google and I asked a friend who he used.

Once you have an account with the supplier you should ask for a catalog and a pricing guide. If they have a website for dealers available, that will work as well.

The better option

I never did this because I wanted to start out the simple way, but thinking long term with this, you will probably want to turn your biz into a drop-ship business (where the supplier sends the product directly to the customer for you, without you ever touching the actual product).

Since I was only doing an experiment, I was okay having 8 products in my living room, but if I had turned this into a real business it wouldn’t have been cool having my living room and garage overflowing with products.  This is why drop-shipping has become so popular.  Your profit margins will be a little smaller, but you don’t have to deal with inventory, shipping, or a variety of other things.

So just keep that in mind and the biggest dropper-shipper I’ve found is called Doba and they have millions of products available to dropship.

4. Testing your Ebay market

Once I got a price guide from the supplier I was then able to see exactly what my purchasing price would be for the items that I would be selling. This is a very important number to get, because without it you won’t be able to test the profitability of the item.

Once I knew the price I would be paying for my items, I went on over to Ebay and did a search for each item. As you can see in the image below there is an “advanced search” link next to the search box. You can type your product in the field and hit the advanced search link.

researching selling prices on ebay

That will then pull up this screen…

ebay completed listings

Start by checking the ‘Sold Listings‘ box and this will show you all the items that match your search terms that have actually sold and the prices they went for. After that, I would check the ‘Completed Listings’ box. You will now probably see some listings that were completed without selling and some that did sell (green ones sold, red ones did not).

Ideally, each listing of your product would show as sold, but realistically I wouldn’t expect that. But skim through and get a feel for how many weren’t selling and see if you can figure out why.  Were they all priced too high, or are there just way too many people selling that product?  Hopefully, there is a good variation between what the items are selling for and what you can purchase them for. Even if there is, don’t get too excited yet, because there are still lots of other expenses to account for.

Knowing what the items sold for is going to be very helpful in deciding if you should move forward with the product you have in mind. But even if it looks good, keep in mind that you still don’t know how many times the seller had to list the item to get it to sell. Currently Ebay allows you to relist one time for free, but if the item doesn’t sell again then you need to pay them another listing fee to list the 3rd time.

The easier option to test your Ebay market

What I just showed you is what I did because I didn’t really know there was another option. But there is and it is easier and will provide much more information for you. Terapeak is a website that makes it easy to get tons of great market research info for Ebay.  They do charge for it, but they have an all-access free 7-day trial. If you are serious about finding a great product to sell, I would check them out.

5. Estimating other expenses

Now that I had gotten some solid numbers about what my item had been sold for in the past I had a starting point. From here I tried to get a best guess estimate (or exact if possible) of how much other expenses would be. These were a few other expenses that I had…

  • Shipping and handling from my supplier to me
  • Shipping and handling from me to my buyers
  • Boxes and packing material (styrofoam peanuts, tape, etc.). I bought in bulk from and got an average cost of about $1 per item.
  • Gas and wear and tear on my car from driving to the post office or bank. The post office is very close to my house, so this wasn’t very much for me.
  • Ebay Fees (mine averaged about 6% of my selling price. This figure can vary widely.)
  • Paypal Fees (my average Paypal fee was about 3% of my selling price.)

After adding up all these expenses I still saw that I would likely be able to make a decent profit assuming that I would be able to sell each item within a couple weeks. If I would have had to relist each item 10 times to sell it, the Ebay fees would have eaten up most of my profits.

I was estimating that I could make about $20-$50 for each of the products I was going to sell. This was good enough for me, so I decided to move forward with it.

6. Buying the products

This was actually the easiest part for me. I decided just to sell the exact products that I had seen sold in my research. I figured if someone bought it before, they would buy it again (This was not necessarily true – I will explain later). I then just called my supplier and gave them my order. Two days later the shipment had arrived.

7. The photo shoot

I could only find one picture of each of my items on the supplier’s website. Knowing how important pictures are to Ebay buyers I decided I was going to take the most detailed and best pictures I could with the tools I had to work with.

  1. I borrowed the best digital camera I could find from a family member.
  2. I found the cleanest and nicest looking background I could to shoot against.
  3. I grabbed about 5 bright lamps from around my house and placed them to get good lighting.
  4. I took about 10 pictures of each item. Some full shots and some detailed pictures.

I spent a good deal of time on this process knowing that it was work that would increase my chances of sales. But, the other motivation for investing a lot of time was that if I did it well the first time, I wouldn’t have to do it again later. Once I had good pictures for the items, I could always use the same pictures when I sold more later on.

8. Listing the items on Ebay

If you are looking to do this as a full time or even a part time gig, you may want to use a listing tool. I used Auctiva which I was pleased with. Just getting started it may be better just to manually list them with Ebay to get the hang of it, but as you progress always be looking for tools to simplify and speed up the process.

I knew that my items didn’t have a huge demand so I listed them all only with a BIN (Buy It Now) price. If I would have been selling iPods or something I may have been able to get away with a straight auction, but since I was willing to wait to make the sale at the price I wanted, I did BIN.

9. Analyze the results

My test run of selling 6 different items went pretty well. I listed all of them BIN as mentioned before. One item sold in the first listing and three more sold in the relisting. The remaining two items had to be relisted again (incurring another ebay listing fee) and one sold very quickly. The last item taught me a good lesson that I mentioned I would get to earlier.

I had assumed that if someone had bought it before, they would buy it again. This did not appear to be the case with this item. I should have used a bit of common sense, it was a very specific and random thing that not many people would have wanted. It just so happened that it was one of the recently sold items that I saw. I ended up just listing it again as a straight auction with my starting price being my cost. It did quickly sell and actually fetched a decent price.

Selling quicker for more profits

I chose to take my time selling these items because I wanted to see if I could get the prices I was asking for each of them. I could have lowered my prices and probably sold them all in the first listing, but that wasn’t my goal for this test.

Here is a breakdown of how the test went…

Ebay business profitablitity

As you can see, it is clear which items turned out to be more profitable. This is why I recommend doing a similar test if you can before jumping in head over heels after one product. Lucky for me, some of the products that yielded the most profit also sold the quickest!

What was exciting to me was to see that by selling just three products I could make $100. So, in theory if I could sell 30 products in a month, I was looking at $1,000. That’s not a bad part-time income! And if I were to start buying products from Doba as a dropshipper it would take a whole lot less time each month as well.

Final thoughts about starting an Ebay business

There is really a lot to learn and as you sell more you figure out more and better ways to minimize expenses. I have learned a lot from selling on ebay, but there is still a lot more to learn. Just don’t be intimidated or afraid to try it out if it is something you are interested in doing.

I’d love to hear from others about their successes or struggles (whatever the case may be) starting an Ebay biz. Feel free to share in the comments below!


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  1. John

    Thanks for the explanation on how to do this, Bob. It is very detailed and useful. I’ve only ever sold some personal stuff from around the house on ebay, but I’ve considered doing it in a more formal way. I will definitely refer back to this post when I decide to do so.

  2. bob

    no prob – the whole thing was a bit easier than I thought it would be going into it, but as I mentioned there is a lot to learn still!

  3. Big Winner

    I read that eBay is moving away from the auction format and towards more fixed-price listings since they say customers find the fixed-price experience easier to use than waiting for an auction to finish.

  4. mameecloset

    nice post, very detailed!

  5. bob

    @Big winner
    that doesn’t surprise me… The auctions have their advantages, but it does seem that there are a lot of buyers who prefer the fixed price listings…

  6. michelle

    Do you report the income on your taxes?

  7. bob

    yep, but I think if the income is less than $400 for the year you don’t have to. I am not a tax whiz by any means, so check my answer to make sure it is correct…

  8. Kevin

    Bob –

    Actually, I think you’re referring to the minimum income where you don’t compute the self-employment tax. You are required to report ALL income. Of course, you can offset those with any expenses incurred.

  9. bob

    see, that is why I am glad guys like you are around!! 😉

  10. Brent

    My username on eBay is Brentscard
    I started selling on eBay in April of 1998 and have a feedback rating of 148,000 +.

    I am planning to stop listing on eBay in 2009 and am in the process of pursuing a career change.

    eBay was an easier place to make profits if you were a seller in 1998 to 2003. Since 2003 there has been a steady decline, then in January 2008, I saw it start to get even more difficult.

    I have given eBay well over $1,000,000 in fees since 1998. They have already lost many people like me and are about to lose a lot more high volume sellers due to their high fees. eBay is concerned about short term profit to please shareholders and is not making efforts to keep long time loyal sellers like me.

    While online sales continue double digit growth each year, eBay’s share is decreasing.


    Amazon started to gain ground on getting online sellers in 2007 and continues to take sellers away from eBay in 2008. (Amazon does not charge listing fees, only a 15% commision on actual sales)

    Craigslist being free and being local has more appeal to many people than eBay. etc., are growing their online sales.

    There used to be a lot of excitement for bidders to get caught up in a bidding war on eBay. Now there is less interest in waiting 7 days and when there are so many buy it nows on eBay, eBay is just one of 100s of places to buy a DVD or Toy or Book, etc.

    Many specialty Collecter Niche websites or auction sites catering to specific collectibles have developed and collectors now have many more options than just relying on eBay.

    Since eBay charges a seller a commision on the selling price, but not the shipping charges, many eBay sellers have started charging inflated shipping rates to get around eBay fees. Buyers assume sellers are making lots of money on the inflated shipping and have gotten fed up with high shipping rates and have quit buying on eBay.

    • Joe

      I agree. Craig”s List is free and of course, there is no shipping cost. It is all cash.

      Selling a variety of items is a pain because of all the boxes that must be kept in stock to minimize size and weight and thus keep shipping costs low.

      If you could come up with one product, like a CD, then all the boxes would be the same size and the inventory of boxes would be acceptable.

      I cleaned out the garage and sold a lot of stuff on Craig’s List for free. Life jackets, etc. would not be profitable because of shipping.

  11. bob

    Brent thanks for sharing, I am glad we had an expert stop by to give us some of those details – so what/where do you suggest for sellers in 2008 or the future?

  12. NewssyLee

    Thanks to you

  13. Dan

    I can’t find any legitimate wholesalers! And yes I’ve googled it :\..anyone know any sites that are legitimate!? Thanks

  14. Stu Sokolowski

    Bob: Could you make the spreadsheet available (through a link) in which you calculated your profit? I sell about 60 items per month on eBay and still doing all the calculations the old-fashioned way! Thanks.
    — Stu

    • Bob

      here is a link to the spreadsheet as a google doc –

      it is open to anyone to edit, so I would copy it and create your own doc (or excel sheet) from it…

  15. sisi

    Hello everyone!

    Does anyone know the European equivalent or Ebay and Amazon? Do these sites work overseas?

  16. Amanda

    Hi! My name is amanda and im really interested in starting an ebay business. Not something huge, just something to sell some stuff i don’twant. We are currently moving and we have so much stuff to sell. Some worth some value, and others that could probably go to goodwill. Anyways, i have read two of your articles and i have a couple questions and concerns.

    First– What are all Ebays auction fees? Im in the dark about how that works.
    * Is it necessary to have a business name?
    And finally, being 17 and having a good bit of spare time do you think I should really start an ebay account?

    Thanks (:

    • Joe

      Use Craig’s list, unless you have a real antique or something that will hold it’s value against shipping costs. Ebay fees are around 25 cents to list and then 2.5% of selling price. Check eBay for exact costs. Create a paypal account. Buyer pay to paypal and eBay subtracts from that account and postage is paid from the same account. EBay/paypal will print up a shipping label and postage. Then just hand it to the mailman. My experience is that the profit margin on ebay is too small to make it worth while. But, if the product is free, as cleaning out the garage, and of high value, then it may be worth it. To find out how it really works, sell one item a week and see how it goes. Ebay works like magic, but the pay out is small. If you charge high shipping fees, then eBay does not get a cut of that action. Will the customer go along with it????

  17. Mr. Haynes

    Thank you very much. This was very helpful and thoughtful that youshared this with us. I needed to know how real this could be and ou did not supersized it, but madeit as simple as can be.

    Thank you!

  18. Robin

    Great article. I sold items on ebay for a couple of years but as someone else mentioned I could not find any legit wholesalers. I was really holding out to see if you were going to give us any further info on wholesalers. Thanks for the article

  19. Sheila

    Excellent site!!!

  20. Rick in Vegas

    I need a legitamate way of producing income for my household. I keep running into nothing but scams. Unemployment will run out soon and the bills ar piling up. If someone could email me about LEGITAMATE home-based businesses or help me to get started on EBAY -selling then I would be grateful.

  21. James

    I have sold various items on eBay in the past. Mostly used motorcycle parts, and extra stuff around the house. A good idea is asking family and friends for stuff they don’t need/use anymore. I have bought wrecked motorcycles and parted them out on eBay for a very decent profit.

    Also, your feedback score REALLY counts. The higher the better. I have not bought items due to a low feedback score (under 100).

    I hope this helps.

  22. Michael

    I was thinking about starting an ebay buisiness and was wondering about what I should do shipping wise. Should I do drop-shipping and Do the majority of ebay buisnesses ship there product through drop-shipping?

  23. Matt

    Very intriguing article, I am currently trying the Doba route myself. Although I am concerned with the negative reviews I have come across in searches regarding Doba… Are they a legit company?

    Also from the one week trial so far, it seems to me that the cost of Doba products and eBay fees along with PayPal fees leaves very little room for profit. I find myself marking the product up so much; I fear most savvy eBay users won’t pay. In my test so far, I have six Doba items listed for bidding with a reserve…

  24. YL

    I tried the link above for the spreedsheet but I got an error saying I didn’t have premission to access. Please help.

    Thanks bunches.

  25. Josh

    I learned a lot from this post. There seems to be a kind of an art to selling successfully on Ebay that I have yet to learn.

  26. Kumar

    Thanks Bob…

    just i was serching for this kind article to start eBay business…

    thank you once again for sharing your business secrete..


  27. Diane Klingman

    I read your article and looked at the table of examples of items you sold and your net profit. It seems that the net profit is rather low considering what your investment was. I wonder if this is typical? I am doing research to start my own business but this concerns me. I certainly don’t expect to make a consistent profit on items since it depends on many variables but just trying to figure out what it is really going to take to get it going.

    Look forward to your feedback

  28. Suzanne Cairns

    Thank you for all the information and tips that was very helpfull, I my self also have been seeling things from around the house the kids old clothes that kind of thing, I have just decided to try it out more as a business and have gathered funds to start my self off, deciding what products to go for though to me is the hard part.
    I am visiting Florida in 6 weeks and was thinking of grabbing some bargins to test the water.
    Do you have any tips as to what i could go for? thank you

  29. whitney torn

    thank you for the editorial!! it really was a good step by step breakdown. my husband is marine corp and even with as high a rank as he is.. any thing extra helps during a deployment yr. dipping out of the same account in two different countyies and trying to keep up with it is hard! i have been wanting to try ebay for the last coupke yrs, but was always as you said.. intimidated by it. thank you for sharing your experience!! i guess its time to try and get my feet wet now that my little ones are off too school and im out of school! lol thanks again!

  30. J. Ringo

    Hey all,
    Just a little warning about paypal. The day after you sell your first item you will probably receive a notice that all future funds will be held until one of two things happen. Either proof of delivery or a positive report on you. This works ok if you own these items you are selling and don’t mind sending them out and paying your own shipping and other fees out of YOUR pocket until paypal decides to release YOUR ? money.
    However, if you use DOBA this won’t work because they own and store the product as a wholesale drop shipper for you and you MUST pay first. So you must again front the money till paypal [believe me they are no pal of yours!] decides to release it. They have more rules than Quaker has oats that they seem to make up as they go. I have been buying and selling [mostly personal stuff] for about 3/4 yrs.I just recently started selling on ebay as a business . I have an absolutely perfect score of 100% satisfaction, and they still put a hold on [MY ?] money from time to time…REALLY ANNOYING!!
    So, bottom line…you cannot start your brand new business without some capitol to back you up. You need at least double the total price of your listings to stay solvent and operating smoothly.

    Another interesting? thing about paypal, while your money is just sitting there waiting for release,paypal has ALREADY taken their cut out…they get paid…. but OHHHH NOOO not little ‘ol you!!
    Be very careful or you could get in a real mess QUICKLY!!
    J. Ringo

  31. frank

    been thinking of starting a ebay business any further comments would be appreciated thanks.

  32. D. Sharp

    Dear Bob,

    May 10th my husband was in an accident that left him disabled, needing brain surgery and orthopedic surgery to repair a shattered pelvis. He and I never did all our finances together and through some very hard work and organizing I found about $11,000 in debt, this is not including new medical bills. We were heading to the mission field, but plans are definately on hold for now. What advice can you give us about home businesses that he can do. My job and his disability pay wont even cover the normal bills, such as rent, utilities, gas and debt reduction. We do have a plan in place, debts records organized – but not the income to meet the plan !

    • John Frainee

      D. Sharp, I’m so sorry to hear that your husband was in an accident! God bless you for wanting to go into the mission field, and you know, I’m sure the Lord can still use you both right where you are.

      I recently wrote a post on 3 Low Cost Online Business Opportunities which might help. A similar article along the same line of thinking is How Residual Income Works; this one will save you a lot of time. For many more ideas, be sure to check out Bob’s article 24 Legitimate Home-Based Business Ideas and Opportunities.

      God bless you as you help your husband and take on so many responsibilities. Our prayers are headed God’s direction for you. God bless!

  33. narendra

    I also started selling on ebay.. I want to do this business through drop shipper but in my country india, there are some drop shipper but they have limited products and I don’t like them… so want to know about any drop shipper that can ship any where in the world…

  34. suresh

    Drop ship point is good. I need to do some homework before I get into this business. Thanks

  35. Sayeed

    Hi Bob, Would it be legitimate to write this article in my local language blog with reference to this site and put a link in there if some one interested to read the original version? Do not laugh if it is a silly question.

  36. Angie

    I have recently started selling on Ebay and have to say it is a challenge, but I LOVE IT so far! I do, from time to time, get frustrated…especially with buyers who are never happy. I stress out so much about keeping my 100% feedback that I can drive myself nuts and I know the buyers that do this know that. I have lost profits due to some of these people…just to keep them from leaving negative feedback. They know they have that power, and so do I! Other than that, I really do love it. And, I follow-up with every single customer to make sure they are happy with their purchases and get a lot of wonderful responses. One of my greatest weaknesses is that I try way to hard to keep the customer happy. Anyway, enough on that. I, too, am looking for a steady wholesaler with a product I want. Currently I do the clearance shopping thing and rummaging consignment shops, which is okay but I want to be able to take the pictures one time, like you, and be done with them for awhile. With selling items around the house and buying items that aren’t always the same…I spend ALOT of time taking pictures with an 18 month old and 5 year old right there interruping me every few minutes. 🙂 Time consuming…at least right now…I feel like I live, eat, breathe and sleep Ebay (Yes, I often dream about it too). I just need to find that comfort level with it, and the magical product for me…one that I know will make most (even though never all) buyers happy.

  37. sam

    i am thinking of starting to sell on ebay. the notes are very helpfull.

  38. YAY


  39. Rob

    I had an Ebay business for 2 years and 1000 items. I lost money overall and found better opportunities elsewhere. My sales conversion rate was only 17% even with Pro help. It took on average 42 minutes per item to purchase, ship, store, create ad, photoshoot, place ad, check email to answer questions & find sales, secure payment, box, ship and handle returns, For a 1000 items that is 3 1/2 months. In two years, I sold around $12K in goods and had inventory left that was a total loss. That was below breakeven without any reward or salary. The biggest problems I faced were finding product at a low enough price to make a profit considering ebay discount buyers and the sales conversion rate I was getting at the moment. I would think very seriously before I attempt to do that again and so should you?

  40. Bebekoh

    eBay isn’t applicable where I am at. I like the idea of having an online business, but eBay isn’t exactly what I have in mind. I have nothing against eBay but it’s not the first thing that the locals go to when they want to busy something – even second hand. That’s what frustrates me. Not everything in eBay can be shipped internationally, and if they do, it’s really expensive. Might as well buy locally.

    Can you write something that are country specific (particularly the Middle East and Southeast Asia)?

  41. Jerry

    I am a bit skeptic with ebay. for the past five years it was good to sell something on this site until the news came out that a lot of people are being scammed. I think if yoiu want to engage in selling and in ebay, its better to be cautious, check and recheck the client if you are selling, vis-a-vis the supplier if you are a buyer.

  42. Nate Steuer

    I agree with Brent. I sold on ebay for years full-time under username Cheyenne999. I did not sell to the extent of Brent but did find that once everybody started finding the same wholesale distributors I was using they would undercut my listings and it made it increasingly harder to make a decent profit. Couple that together with the increase in shipping, Paypal and ebay fees I took it all to Craigslist where it’s still …FREE!

  43. Erin

    I am looking to sell comic books, hockey and other sports cards and other collectible items such as Harbor Lights lighthouse replicas and a few collectible dolls that I had collected as a child. The comic books aren’t necessarily rare or hard to find, as I see they have a lot of them on Ebay. I’m looking to make some cash to pay off credit card debt and student loans, not trying to start a business per se. Would Ebay be the best medium for selling these kinds of things (especially the comic books and cards)? I’d really appreciate any advice. Thanks.

  44. Sally Williams

    I am interested in starting an online home business. I have no money to invest. I think is going to be a good start. I am also considering selling Plexus. Any input on dos and don’ts would be greatly appreciated. Thank you.

  45. Jennifer

    Based on your chart, that seems like a large investment for such a small profit. Profit is less than 20%.

  46. Taf

    Wow great article. Very informative. I’m looking for extra income and I’ve only ever sold my own stuff when I was moving

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