How Much Does It Cost to Start and Run a Business on eBay?
This article will address:
- What are the Advantages of Selling On eBay?
- What are the Costs of Running an eBay Business?
- 5 Top Tips for Running a Business on eBay
If you want to open a retail business, but you don’t love the idea of running a brick-and-mortar location, an online eBay business may be right for you. This type of small business can be an excellent side hustle or can become a full-time gig if you choose the right product and build your business right.
However, it’s not for everyone. To help you figure out how to start and run an eBay business and how much it would cost you, we’ve created this guide. Let’s get started!
What are the Advantages of Selling On eBay?
While eBay is not the only online seller platform, it has been around for a while and still has a reliable base of shoppers. In fact, eBay offers some unique benefits that some other seller platforms don’t offer.
For example, eBay is a lot less competitive than Amazon but still shows up consistently in searches, especially for more specialty and collectible items.
In 2021, it was the second most visited online marketplace, surpassed only by Amazon. Not only did it receive 1.7 billion monthly visits as of April 2021, but it was rated the preferred online marketplace by sellers in a 2021 survey, surpassing Amazon by far.
Some of the other benefits of selling on eBay include:
- You can run your business from home. This is one of the biggest perks of starting an ecommerce business on a platform like eBay.
- You have the option to auction. This feature is what got eBay famous in the first place and is great for getting a high return on an item. Because only certain items, like collectibles, do well in auction-style sales, you also still have the option to list items for a fixed price.
- It has lower fees than Amazon. While there’s more that goes into exactly what it costs to sell on eBay versus other sites like Amazon, the average final value fee on eBay is lower (10%) than on Amazon (15%).
- You save on shipping costs. eBay offers a calculator that allows you to figure out the best shipping costs for maximum profit and if you set up an eBay storefront, you get a quarterly coupon for eBay-branded shipping supplies.
What are the Costs of Running an eBay Business?
While the idea of starting an eBay business can be exciting, it’s not free. If you’re wondering what the cost of starting an online business is, you’ve come to the right place.
When it comes to selling through a platform like eBay, Amazon, or Shopify, costs will always vary depending on what you are selling, how much you’re selling, and what kind of plan you get.
Because of its auction functionality, eBay is particularly well-positioned to be an excellent place to sell more unique and niche goods. If you have collector’s items to sell or you make one-of-a-kind products, eBay can be a great place to sell them.
There are a few main types of fees you’ll encounter when starting an eBay business:
- Insertion fees. These fees are charged when you list an item and stay the same regardless of the price of the item.
- Final Value fees. This fee is a percentage of the value of the item you’re selling, with an additional $0.30 per order. The exact percentage varies on the category that the item falls into but is typically 12.9% or lower.
- Subscription fees. Unless you are selling very limited amounts of items, you’ll need to pay a subscription fee to set up your store. There are different tiers for different business sizes and you can pay a monthly or annual fee.
- Listing upgrade fees. If you want to upgrade your listing for better results, there are a variety of fees for different types of upgrades. Using the listing upgrade features on eBay can be an effective way to get your first set of customers. Once you have your first few customers and positive reviews on your products and shop, it will be much easier to attract customers without paying for additional advertising or boosting.
When it comes to actually listing and running your business, there are a few primary scenarios for the type of fees you’ll have to pay:
- If you are listing less than 50 items per month with a personal account, there is no insertion fee. After you’ve used up those listings, you will be charged a $0.35 listing fee per eBay listing.
- If you choose to open a store with a business account, there is a subscription fee for each tier. The cheapest option that subscribers can choose costs $4.95 a month and gives you 250 free listings before you have to pay seller fees of $0.30 per listing.
- Regardless of whether or not you have a seller account, there are additional selling fees, known as final value fees, of 12.9% or lower on most categories, with an additional $0.30 per order.
Because it can fluctuate depending on the category you’re selling in and what tier your membership is at, it’s always best to check eBay’s website for exactly how much it would cost to sell your specific product at the volume you want to sell at.
There are a variety of other costs that you’ll need to take into account, regardless of where you decide to run your business. These are basic costs involved in getting your business off the ground and ensuring you have enough inventory and reach to actually be successful. Some of the costs you’ll need to take into account include:
- The cost to gather any materials to make or package your product
- The cost of sourcing the product if you’re re-selling
- Time and potential labor costs of making or packaging your product
- The cost of filing for incorporation (if you decide to go that route)
- Tools like lights and a good camera for taking photos of your products
The last big cost about starting an eBay business that you should factor in is not an upfront cost—it’s taxes. In the past, online sellers were not always taxed on their income from online marketplaces. Beginning in January 2022, the IRS is now requiring anyone who sells more than $600 worth of goods on any auction site or rival to report that money.
You likely won’t receive a 1099-K form detailing the transactions for the IRS unless you make more than $20,000 or have at least 200 transactions. But the good news is that it’s the platform’s job to provide you with that tax form, so as long as you’re following the rules, there’s nothing to worry about.
5 Top Tips for Running a Business on eBay
Once you’ve determined what you want to sell, if there’s an adequate market for it, and if you can afford to get started, it’s important to follow a few best practices for success.
Before you make your first listing though, you’ll need to come up with a business name and get yourself set up. From there, you can begin listing products. If you’re looking to turn selling products on eBay into more than a side hustle, dedication to these top tips right from the start will be crucial.
1. Use high-quality imagery
When you use eBay to sell your products, you want to make sure they stand out. You can think of your images as marketing tools that will entice potential buyers to want to buy it now.
Make sure you not only have good quality photos but that your photos show everything your buyer may want to see about your product. Get photos of different angles and show the details so that your buyers really trust you.
2. Write detailed descriptions
As a new seller starting a small business on eBay, you have to give your buyers a reason to trust you. On top of having great imagery, writing detailed descriptions with all of the information a prospective buyer could need can really boost your sales. Look at what similar products do in their descriptions and aim to do better!
Depending on the type of product you’re selling, your description could include:
- Dimensions of the product
- Material details
- A step-by-step guide on how to use the product
- Ideas for how to use it
- Troubleshooting tips
The main purpose is to give your buyer enough information to feel confident in their choice and ultimately increase eBay sales to grow your startup business as quickly as possible.
3. Use the eBay seller hub
This powerful tool can help you easily create listings as well as track the performance of your page. It also helps you decide on the best start price for auction items or price listings to maximize the chance that an item sells. Because it’s directly connected with your regular eBay account, it’s easy to set up and requires no extra input from you. Everything is automatic!
4. Start small, but keep your inventory stocked
When you first start your eBay selling journey, it’s a good idea to start small and gauge the market for your product. Not every product is a hit, and sometimes it takes time (or trying different products) to get a successful ecommerce business going.
However, once you are selling consistently and have an idea of what your turnover rate is, you should always make sure your inventory is well-stocked. This not only gives you peace of mind, but it ensures that you will always have enough product for your customers, even if there is a supply chain issue. To do this, you can buy in bulk from wholesale distributors, eliminating the need to frequently restock.
5. Offer good customer service
No matter what kind of product you’re selling and how lucrative it is, people want to buy from businesses they trust and who treat them fairly. This means that you need to go the extra mile to ensure you’re offering top-notch customer service right from the start.
This can include:
- Having an excellent return policy
- Taking different payment methods, like Paypal, credit card, debit, or even direct bank account payments
- Offering local pick up for customers in your area
- Answering questions from potential buyers
- Shipping promptly
Especially as a new seller, providing an excellent customer service experience to all buyers will only serve to improve your reputation and set you up for success going forward.
From identifying the product you’re going to sell, to determining a sale price, and more, there’s a lot that goes into creating a successful eBay business. With this guide, some research, and the right idea, you’ll be able to overcome those hurdles and be up and running in no time, just like Navneet, who used a Biz2Credit loan to purchase inventory for his business to have enough stock for the busy holiday season.