A Realistic Assessment of Earning Income on eBay

Of course, I could give you the usual “shtick” about how much money you can make on eBay, and that’s undeniably what a lot of people want to hear. But that’s not what we’re going to talk about.  Instead, we’re going to use eBay as a case study for young internet entrepreneurs on why keeping up to date on market research is so important, especially before committing time, money, and man hours to a company like eBay. 

If you want to succeed in online business ventures, then you have to become more aware about the gaping lack of insider knowledge between Fourth Estate journalism (newspapers, cable news, and traditional evening news programs), and the internet-based 5^th Estate.

There is no better example of this information divide than eBay, and if you’re looking to make a full-time living on their platform, then I think you need to put your ear to the ground and actually listen to what long-time eBayers are actually saying about the company, especially since John Donahoe became CEO in 2008.  Donahoe helped to create an absolutely toxic business culture that is wiping out legions of eBay entrepreneurs and greedily destroying what was once one of the most loved companies on the internet.

Dubious business practices include gouging sellers on service fees that have forced many of them into bankruptcy, as well as sellers having absolutely no protection against rampant fraud and buyer scams (which eBay unofficially endorses by turning a blind eye to it).  The general consensus is that eBay is “cleaning house” by purging small-time sellers because they want to become a Walmart clone that focuses more on large corporations and Chinese manufacturers,

If you don’t believe me, then all you need to do is google “eBay getting rid of small sellers” and you can see the bloodbath for yourself.  Page after page after page of eBay sellers (many of whom have been with the company for ten to fifteen years) are getting destroyed by their new policies and are either going bankrupt or leaving on their own volition. 

If you’re going to try to start-up an eBay business, then you really need to go to chat rooms populated by eBayers and get their opinion on the situation, because most of them well tell you that the situation is pretty grim.  Those who still sell on eBay aren’t doing so because they really like the company; they’re only doing it because they have the largest amount of traffic in the game. 

Some sellers have already defected to companies like Facebook, Craigslist, and Amazon, while many others are hoping that emerging challengers such as Etsy, Bonanza, and Gazelle will eventually become large enough that they can pack-up and never have to deal with eBay again. 

Now, does this mean that you can’t make money on eBay?  No it doesn’t.  Does it mean there aren’t wildly successful people out there who are able to earn a full-time income off of eBay?  No it doesn’t.

But if you’re going to commit, you should know exactly what you’re about to confront as an entrepreneur.  They’re a company that loves to tout small-time sellers as a form of window dressing and advertising, while simultaneously trying to purge the “flea market” element out of their business model in order to embrace more profitable companies and retailers.

To help you along, here are four rules of engagement that you might want to take into consideration.

I) The days of eBay being a cool flea market with cheap but awesome knick-knacks are long over.  Because of their gouging on service fees, if you aren’t selling products that are at least $20 to $25 in value, forget about it.  Not only are you probably not going to make a profit, there’s a very good chance you’ll end up in the red (especially if a scammer locks onto you).

II) Record and keep track of the number of man hours you actually invest into your eBay business and then compare it to the profit you earn; the resulting cost-benefit analysis should tell you whether this is an industry that’s really worth it.  A lot of people really don’t understand the amount of time it takes to actually sell merchandise on eBay. 

The process includes hunting down good merchandise, doing research on each item in order to find the proper price point, photographing it along with writing a good description of all of its features and background, buying packaging and having to mail the product, and then of course having to deal with customer complaints, returned merchandise, and scammers.

Keep track of the number of hours you invest from finding a product you want to sell to the point where the sale is completely in the clear.  Please note what I just said; the clock doesn’t stop ticking until the sale is completely in the clear, because if you sign up to eBay not thinking that you’re going to have to invest a lot of time into customer complaints, returned merchandise, and scammers, you’re in for a very rude awakening.

III) Get ready to be absolutely powerless as a seller, because even when it comes to scammers, eBay almost always comes down on the side of the seller, with punishments including terminating complete access to their site.  “Conniving” and “boneheaded” are the proper terms to describe what eBay has done to their sales platform over the past several years. 

While buyers get to rate you, you don’t get to rate the buyers, meaning you have buyers that eBay knows are fraudulent, but they’re allowed to continue abusing sellers.  But considering that they’re trying to transition from a flea market company to a company more geared towards large companies and Chinese manufacturing, these scammers are actually doing them a favor by getting rid of smaller sellers.

But what does this policy mean to you?  Well it means you can slave away at building up a reputable business with an outstanding inventory of merchandise that you’ve spent hundreds of hours researching and cataloging, but one altercation with the wrong customer and it can all be terminated in a heartbeat. 

IV) Focus on the way eBay should be properly incorporated into your online income portfolio.  I would not try to make a living full-time on eBay.  However, it can be used effectively to create a supplementary income.  If you’re a person that likes going to garage sales, estate sales, flea markets, thrift stores, bidding on abandoned storage lockers, or you’re a pack rat looking to reduce the amount of clutter in your house and garage, if you view these activities as enjoyable hobbies, then there is money to be made on eBay.

Other professions that might profit are craftsmen who like finding “junk” in dumpsters, fixing it up, and then selling it, as well as people who have a knack for buying products in bulk at a discounted price, and then turning around and selling them for a profit.

Just be careful.  Yes, you can make great money if you enjoy some of these niches, but understand that the “Golden Age” of eBay ended a decade ago, and while still possible, it’s becoming harder and harder to earn an honest living from it.

Conclusion – As stated, there are other sites where you can sell merchandise such as Craigslist, although the drawback is that they don’t have near the amount of traffic that eBay does.  As a consequence, many sellers bite the bullet and continue working with eBay, while simultaneously praying that one day a competitor will turn them into the next Myspace.com. 

You remember Myspace, don’t you?  Fire breathing behemoth one day, whimpering poodle the next, that’s what a lot eBayers are privately hoping will happen.