Learn How To
Start Your Own eBay Business
Page 2

Picking up from the last page of the tutorial where we left off with how to keep track of your auctions, we will now move on into the next part of the tutorial.

Your Strategy

The primary key to making enormous profits on eBay is to develop a detailed and efficient strategy long before you list your first item. First you need to know what type of product you want to sell, where to find your niche market on eBay, and develop a profile of your average customer.

Additionally,you should already have determined which categories are appropriate for your product. Now you are ready to set your strategy for the business. Read this part of the manual very, very carefully.

I'm going to present you with a strategy that you can apply to virtually any product you wish to sell on eBay. I will generalize the outline so you can fill in the specifics related to your own particular niche market and merchandise.

There are two types of sellers on eBay which I will call High Volume Listers and Low Volume Listers. High Volume Listers are those who list more keep more than 10 auctions online at a time. Low Volume Listers keep fewer than 10 auctions online at a time.

The profit margin of the product you sell determines which category you will fit into. For example, if you sell real estate and make $10,000 per sale, you may only need to list a few properties each week on eBay to make a real killing with your internet business.

The same applies for the sale of expensive jewelry, automobiles, and other items with a large profit margin. However, if you sell magazines or other inexpensive items you may only make $5-10 per sale. In this case, you would need to list hundreds of items at a time to make large profits, and thus you would become a High Volume Lister.

I know what you're thinking - why would anyone go through the effort of listing so many items when it seems so easy to list a few large items and make a fortune? The answer cuts to the heart of internet sales itself:

BUYERS ARE MOST WILLING TO SPEND UNDER $50.00 FOR A PRODUCT.

This makes sense - would you pay thousands for something you have never seen? Another reason that High Volume Listers are more common and often make more money on eBay is that it is very easy to buy inexpensive items at wholesale prices, but very difficult to buy real estate or automobiles at wholesale prices.

Armed with this information, you must consider the product you're selling and make an intelligent, informed decision on whether to become a High Volume or a Low Volume Seller. If you have plenty of free time to devote to your new business, I recommend you opt for the High Volume option. But if you are an eBay seller at nights and on weekends, you may wish to start off with the Low Volume option until your business really takes off. Again, only you know best which option to choose based on the amount of time you have available and the profit margin of your merchandise.

Once you determine what type of seller you will be, you are half-way to developing a sales strategy on eBay. The next step is to integrate everything you have learned so far in this manual and project your selling strategy into the future.

For example, let's assume you have decided to sell jewelry on eBay. Here is a test case for consideration: You have identified your niche market and found the associated categories. You know that your buyers will probably spend $50.00-100.00 per purchase and you realize that the average profit of your auctions will be about $60.00.

You have plenty of time and your profit margin is low, so you decide to become a High Volume Seller on eBay and choose to list 100-200 auctions per week. You estimate that 70% of your auction will end with winning bids, which is the eBay average.

Based on this prediction, you calculate your weekly income at $6300. Using database software, you plan to keep track of your auctions and use the built-in market analysis feature to discontinue unpopular items and relist the popular ones. You have a wholesale account set up with your jewelry supplier and have already purchased enough inventory to cover your first week of eBay sales.

You plan to relist every auction as soon as it ends and place one weekly order to fill your inventory along with one weekly outgoing mailing to your buyers. Your basic sales strategy is set and you are ready to begin listing your auctions!

In the example above, you will notice that the seller thought of everything before listing a single item, making sure that he/she was prepared for the task ahead and establishing a solid game plan. Before beginning, you should project your sales strategy into the future and run through all possible problems, resolving them in your mind. If it helps, write out a paragraph like the one above and analyze it for errors of logic.

KNOW YOUR SALES STRATEGY BEFORE YOU BEGIN.

I strongly recommend listing all of your auctions as regular auctions before you begin. Do not feature them or use the Dutch Auction option at this time. Test out your sales strategy and evaluate the popularity of your product in its niche market for several weeks before continuing. The rest of this manual contains advanced tips designed for sellers who have mastered the concepts already set forth and who have performed a basic market analysis of their products based on the results of several weeks of auctions.

Advanced Selling on eBay

To Feature or Not To Feature

Featured auctions get more bids. They also cost more - a lot more. Before deciding whether or not to feature your item, you need to evaluate its popularity.

There are two types of featured auctions - those which are featured in category cost $19.95 and show up at the top of the item's category main page.

This ensures that anyone who visits that category will probably see your auction, as the normal browser scrolls down a few screens and then leaves. I recommend featuring your item in its category if it has an average sales percentage of 50% or greater.

In other words, after running regular auctions for a few weeks, you should choose the "featured in category" option if more than half of the auctions for that item have ended in a sale. I also suggest choosing the boldface title option whenever you feature one of your items, as it draws more attention to your product.

A regular featured auction costs $99.99 and generates even more bids than a featured in category. Of course, it also costs a lot more, and as such you should only choose this option if you your item(s) has a sales percentage of 60% or greater.

By featuring many popular auctions, you can make emormous profits on eBay. But the key to success is running those tiresome regular auctions for weeks to figure out which items to feature and which items to discontinue.

Trial and error works! NOTE: eBay will not let you feature auctions selling information, services, or adult material due to complaints from users. If you sell that type of product, you should run a featured in category auction only.

Dutch Auctions - Your Key to Making Millions

If you're a Low Volume Seller, you need to run multiple Dutch auctions to really make a killing on eBay. Consider this example; you sell designer watches on eBay for $150.00 each and you have 200 different types of watches. Therefore, you decide to run 200 separate featured in category auctions in the Jewelry and Jewelry & Watches categories.

If you don't make use of the Dutch option and list only one watch at a time, then your maximum potential for sales each week is 200 watches. If your profit margin is $75.00 and your average percentage sales equals 60%, then you're weekly income is $9,000. Not bad, but not $100,000 per month either!

Now let's modify that example. Instead of listing 200 auctions of one watch at a time, you should instead list 200 dutch auctions selling 100 watches at a time for each style of watch you carry. You would still have 200 auctions online each week, but your sales potential jumps from 200 to TWENTY THOUSAND (200 auctions x 100 dutch watches in each auction = 20,000).

Obviously, you won't sell 20,000 watches each week. If your product is popular, you might sell 5-10 watches on average from each dutch auction you feature.

Now let's recalculate your weekly income after running the Dutch auctions:

10 watches x 200 auctions x profit margin $75.00 = $150,000.

A little better than $9,000, isn't it? To be on the safe side, let's allow for a FIFTY PERCENT MARGIN OF ERROR in our calculations. Perhaps you only sell 5 watches per auction, or you only make $37.50 per watch, or you only list 100 instead of 200 different types of products.

You would still make $75,000 per week! Even if we allowed for ANOTHER fifty percent margin of error on the second calculation, you'd make $37,500 per week!

As you can see, Dutch auctions are the key to success on eBay. When you combine the dutch option with the featured or category-featured option, then you're playing a winning game. High Volume Sellers need not worry about Dutch Auctions in general, but Low Volume Sellers (the most common and often the wealthiest) must use this option to rake in the profits!

To continue on to the next page of the tutorial please click here. To go back to the previous page click here.