written by: J. Smith•edited by: Ginny Edwards•updated: 11/30/2010
Before you begin selling on eBay, you should develop a business plan to determine if the venture will be profitable. Review these factors and consider their impact on your business.
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Before you begin selling on eBay, you should develop a business plan that outlines the overall strategy for your business. The planning process is essential, as jumping right in can often lead to negative results. There are a number of factors that need to be considered before opening an eBay business. By understanding all of these factors, you can typically determine if your venture will be a success.
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Choose a Niche
Finding the right product niche is the most important factor when developing an eBay business plan. A lot of sellers choose to sell items that they are familiar with or are relevant to their interest. However, this strategy has both its benefits and its downfalls. By having knowledge of the product you will be able to effectively communicate with bidders and create detailed listings. However, if your niche is a common set of items it can be over saturated and less profitable than alternative niches. Conduct a bit of market research by searching the completed eBay auctions to see what items are the most profitable before settling in on a niche.
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Like any business, selling on eBay has a number of costs that play a major role in your auction business. Your eBay business plan needs to consider all of the costs that will come into play during the entire operation. The most obvious is the cost of the products you plan to sell. Finding a supplier can be challenging, so compare a number of different options if possible to find the best price. In addition, you must be familiar with the various Paypal and eBay fees that are charged for using their marketplace. Fees can change based on the settings you choose for your listings. Yet another fee you must consider is the cost of shipping. Shipment is another factor that can have a wide range of costs. Compare various shipping services and different shipment speeds to find an option that is not only affordable, but will make customers happy as well.
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Another thing your eBay business plan needs to consider is the daily operations and activities that need to take place for the business to function. Creating item listings can be a time consuming process, so you must determine if you plan to do it yourself or outsource the design to a third party. Additionally, you must create a shipping plan that allows you to package and ship your items in a timely and cost-effective manner. Furthermore, a very important daily activity is communicating with customers. Often buyers will ask questions throughout the entire auction process and responding to them quickly often determines if they will purchase from you again in the future. Finally, you must determine a way to keep track of all of the financial information relevant to your business to ensure you are still making a profit.