Can you make a living selling on eBay?

With over 80 million registered users, eBay is clearly the number one online venue for the buying and selling of goods. Sellers range from those looking to move a few unwanted knick-knacks to well-known retailers and manufacturers looking for another channel in which to move their products. In between, we've talked to enough small-businesspeople who use eBay as their primary source of income to say that selling on eBay can be a viable venture for someone looking to work from home. However, there are also plenty of potholes on the road to eBay success, including scammers looking to take advantage of those in search of shortcuts.

The Promise: Make millions selling on eBay.

The Reality: You can carve out a decent work-at-home income selling on eBay, but it takes time, perseverance, and an entrepreneurial spirit to succeed.

Selling on eBay is easy

The nuts-and-bolts task of selling on eBay is easy and straightforward, and requires only the most basic computer skills. You post your items for sale using a simple "Sell Your Item" form that includes context-sensitive help, and eBay also offers articles, workshops and tutorials covering virtually every aspect of creating a listing. Those looking to sell on eBay as a business can also take advantage of the site's free and subscription-based tools for things like bulk listings, inventory management, invoicing and listing design. On top of that, third-party tools are available for those and other tasks as well.

That said, some highly-successful eBay entrepreneurs such as Lynn Dralle, who calls herself The Queen of Auctions, eschew such tools. In an online workshop hosted by eBay, Dralle comments that she just sticks to the basic form because that's what she's most comfortable with. "Figure out what works best for you but the bottom line is list as much and as quickly as you can," she adds.

Finding what to sell on eBay is hard

With so many sellers selling so many different products, one of the biggest challenges would-be eBay businesses need to overcome is finding their niche. Some, like Dralle, make their business from hunting down garage-sale and thrift-store finds. Others build relationships with wholesalers and manufacturers to find new goods to sell. Those just starting out might want to avail themselves of a product sourcing company -- a firm that provides sellers with information about and/or links to other companies with products to sell. However, veteran eBayers say that the best course of action long term is to seek out suppliers on your own, that way you're not selling the same goods as everyone else.

Product sourcing companies are the source of much controversy, and disreputable ones are easy to find. They promise lists of companies looking to drop-ship (sell and ship single items on demand) or light-wholesale (sell items in small wholesale lots) products, but instead deliver mostly outdated information for their usually hefty upfront fees.

To help its users avoid the worst of the scammers, eBay established a Certified Provider program to "qualify third party companies with demonstrated expertise and experience at providing the tools or services an eBay seller needs." Thus far, eBay has certified five product-sourcing companies, many of which have extensive track records and positive ratings from their respective Better Business Bureaus. Examples include Worldwide Brands, Shopster.com and Doba.com, all of which have A or A+ ratings from the BBB.

However, being reputable and being an ideal solution for a new home business is not always the same thing. Doba.com and Shopster.com are drop-shipper intermediaries. They conglomerate large and small drop-shippers into one searchable marketplace. Drop-ship suppliers offer some powerful benefits, but have some equally-important drawbacks as well. For instance, they eliminate the need to invest in or stock inventory and let you sell a wide variety of products without ever taking possession of them yourself. On the downside, they leave you vulnerable to out-of-stock situations, wherein you sell an item to a customer only to learn that the supplier no longer has any available. In addition, the cost of the products is higher -- sometimes substantially higher -- than when buying at wholesale, leaving profit margins razor-thin and sometimes nonexistent.

Most product-sourcing companies charge an up-front or subscription fee for their services, but some allow for a short trial period, typically a week or two. Shopster.com is an exception, as it offers a free account that limits the number of items you can obtain from the site, but gives you full access to the site's "warehouse" of drop-ship products and suppliers. We took advantage of that to take Shopster.com out for a spin.

Shopster.com claims over 1 million products in their online warehouse, and there are certainly plenty of items to choose from in almost every conceivable category. However, finding items priced low enough to make a profit selling on eBay was another matter. In many cases, available products either sold for less on eBay than their cost on Shopster.com or they simply didn't sell at all. That said, in the time we spent on the site, we were able to identify a number of products that at least held the potential of producing a profit, albeit a thin one in most cases once eBay fees are taken into consideration. Speaking of which:

The cost of doing business on eBay

Regardless of how you obtain products to sell on eBay, sellers are also subject to an assortment of fees. Those include listing fees that you must pay regardless of whether your item sells, and final value fees (which can be substantial) if you manage to find a buyer. There's also an assortment of "upgrade" fees if you want to spiff up your listing to make things stand out from the crowd, say, with extra photos (the first is usually free) or a bold-face headline in eBay search listings. A full schedule of eBay fees can be found here.

If you sell a lot of items, as you pretty much need to do if you plan on making eBay your work-at-home business, eBay offers eBay Stores subscription programs that can reduce the fee burden substantially for heavy-volume users. eBay provides a fee illustrator that lets you see which type of subscription, if any, makes the most sense based on how you use the site.

In addition to the above, sellers have been required to make credit cards the only official payment method since October 2009. Checks and money orders are largely no longer allowed, though there are exceptions. For home businesses without a merchant credit card account, that means accepting payment via eBay's own PayPal system or a similar third-party provider, such as PayMate or ProPay. All of these online credit card processors charge a small fixed fee plus a small percentage of the transaction amount on each sale that they handle. PayPal's fee schedule can be found here.

The bottom line

Regardless of how you obtain your product, eBay and other fees can take a sizable chunk out of your bottom line. While it is possible to stumble upon a product to sell that can return a fat profit, that's the exception rather than the rule. Instead, most successful eBay sellers earn their income on volume, selling lots of items for relatively small profit. That's why Dralle's advice to list as much as you can as fast as you can is so valuable.

For those looking to learn more about eBay and what you need to do to start a successful home business based on selling on the site, there's a host of helpful tools available. The eBay University Learning Center includes links to tutorials about nearly every aspect of using the site. For those needing more hands-on help, there are links to live classroom instruction, conducted by successful eBay sellers, in many communities.

Speaking of communities, eBay provides a forum for a large number of discussion boards and online communities. Those include an online workshop board where instructional information provided by eBay's Certified Providers is posted. Not all of the workshops are as helpful as they could be, but we also found a lot of can't-miss information. Some eBay Certified Providers specialize in eBay education. Dralle is among those. While she charges for her books, courses and most other materials, there's also a free blog at her The Queen of Auctions website. There, you'll find no shortage of self-promotional posts, but also a decent assortment of practical and helpful advice.