eBay business the smart way maximize your profits on the webs 1 auction site

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eBay Business the Smart Way


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eBay Business the Smart Way
Maximize Your Profits on the Web’s #1 Auction Site

Joseph T. Sinclair

American Management Association
New York • Atlanta • Boston • Chicago • Kansas City • San Francisco • Washington, D.C.
Brussels • Mexico City • Tokyo • Toronto


Special discounts on bulk quantities of AMACOM books are available to corporations, professional associations, and other organizations. For details, contact Special Sales Department, AMACOM, a
division of American Management Association, 1601 Broadway,
New York, NY 10019.
Tel.: 212-903-8316. Fax: 212-903-8083.
Web Site: www.amacombooks.org
This publication is designed to provide accurate and authoritative
information in regard to the subject matter covered. It is sold with
the understanding that the publisher is not engaged in rendering
legal, accounting, or other professional service. If legal advice or
other expert assistance is required, the services of a competent professional person should be sought.

Library of Congress Cataloging-in-Publication Data
Sinclair, Joseph T.

eBay business the smart way : maximize your profits on the Web’s #1 auction site / Joseph T. Sinclair
p. cm.
Includes index.
ISBN 0-8144-7202-8
1. eBay (Firm) 2. Internet auctions. 3. Auctions--Computer network
resources. I. Title
HF5476.S478 2003
381’.17’02854678—dc21
2003004617
CIP
© 2003 Joseph T. Sinclair.
All rights reserved.
Printed in the United States of America.
This publication may not be reproduced, stored in a retrieval system, or
transmitted in whole or in part, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of AMACOM, a division of American Management Association,
1601 Broadway, New York, NY 10019.
Printing number
10 9 8 7 6 5 4 3 2 1

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To my grandfather, Albert L. Hoener, Jr., and grandmother, Margaret
Zoe Lorene Fellabaum Hoener, together the light of my life in my early
years in Michigan

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Contents
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii

I. Introducing eBay Business . . . . . . . . . . . . . . . . . . . . . . 1
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Who Should Read This Book? . . . . . . . . . . . . . . . . . . . . . . . . . 8
eBay’s Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
You’re in Business Now . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Customer Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Find Your Niche . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
State of Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
VII


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VIII

Call to Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

II. Getting Started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2. Setting Yourself Up Legally . . . . . . . . . . . . . . . . . . . . .29

Sole Proprietorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Hybrid Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Virtual Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
And Then You Grow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

3. Business Details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Sales Tax License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Business License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Independent Contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Bank Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Tax Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Merchant Credit Card Account . . . . . . . . . . . . . . . . . . . . . . . 61
Trademark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

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IX

Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Manual Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Branding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

4. Equipment, Supplies, and Space . . . . . . . . . . . . . . . . . 71
Hardware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Internet Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Home Router . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Long Distance Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Business Machines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Office Furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Office Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Office Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Storage, Packing, and Shipping . . . . . . . . . . . . . . . . . . . . . . . 83
Tax Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Inexpensive Home Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
On the Road . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

5. Finding Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Basics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
The List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Go for It! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

6. Borrowing Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124


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X

Credit Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Relatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Angels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Other Lending Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

III. Business As Usual . . . . . . . . . . . . . . . . . . . . . . . . . . 137
7. Selling on eBay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139
Types of Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Listing an Auction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Taboo Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Illicit Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Passive Endeavor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
The Heart of the Matter . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161

8. Auction Details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .163
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Timing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Linking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
About Me . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
Where the Work Is . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

9. Photographs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .181
Taking Photographs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182

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XI

Digital Camera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Image Editing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
It's Your Call . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
Image Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196

10. Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
eBay Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
Online Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
Offline Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
Trial and Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
Selling Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

11. Special Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
Special Section Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Separate Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
The Reality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224

12. Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Drop Shipping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Normal Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
The Digital Goal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252

13. Receiving Payment . . . . . . . . . . . . . . . . . . . . . . . . . 257

Merchant Credit Card Account . . . . . . . . . . . . . . . . . . . . . . 258
If You Can't Get a Merchant Account . . . . . . . . . . . . . . . . . 261
Money Orders and Cashier's Checks . . . . . . . . . . . . . . . . . . 262
Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266


CONTENTS

XII

Online Payment Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
Cash on Delivery (COD) . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
Don’t Sell on Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
What Should I Do? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272

14. Selling Your Services . . . . . . . . . . . . . . . . . . . . . . . 275
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276
What to Sell? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284
Elance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287

IV. Unpleasantries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
15. Dealing with Buyer Fraud . . . . . . . . . . . . . . . . . . . . .295
Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
Remedies? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303
Some Afterthoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305

V. Making It Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
16. Software Features . . . . . . . . . . . . . . . . . . . . . . . . . .309
Auction Management Software . . . . . . . . . . . . . . . . . . . . . . 310

eCommerce Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314

17. Software Assistance . . . . . . . . . . . . . . . . . . . . . . . . .317
eBay's Programming Aids . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
Andale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322

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XIII

Merchant-Veeo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332
Auction Management Services and Software . . . . . . . . . . . 333
Custom Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336
Accounting Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336

18. Customer Service . . . . . . . . . . . . . . . . . . . . . . . . . . 339
Feedback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340
Credit Card Chargebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344
Escrow.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Square Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
Authentication Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
Timeliness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348
Full information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348

Offline Customer Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Experiment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Not Just This or That . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351

VI. Operate Smart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353
19. eBay Storefront . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355
What Is a Storefront? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356
Informal eBay Storefront . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358


CONTENTS

XIV

eBay Stores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360
What Else? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360

20. Other Storefronts . . . . . . . . . . . . . . . . . . . . . . . . . . .365
Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366
Website . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368
Domain Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370
Your Domain Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371
eCommerce Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374
How Many Domains? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379
Bonding to eBay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381
eBay’s Hidden Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383
About Me Webpage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391

21. Selling Internationally . . . . . . . . . . . . . . . . . . . . . . . .393
Selling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394

Buying to Sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403
Buying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405
Merged Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405
New Yankee Traders in Force . . . . . . . . . . . . . . . . . . . . . . . 406

22. Determining Your Profit . . . . . . . . . . . . . . . . . . . . . .409
How Are You Doing? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415
Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419

23. Developing a Strategy . . . . . . . . . . . . . . . . . . . . . . . .421
Commodity Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422

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Value-Added Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437
Not the Same . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443

24. Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445
eBay University . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447
eBay Live! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447
Books about eBay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
eBay Tutorials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
Business Seminars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
Business Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449

Web Development Tutorials . . . . . . . . . . . . . . . . . . . . . . . . 450
Web Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450

VII. Something for Business Buyers . . . . . . . . . . . . . . . 453
25. Buying on eBay . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455
Normal Buying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456
Buying for Your Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 456
Organizing Your Buying . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466
We Have Stories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466

Appendix I The Top 10 Tips for Beginning Sellers . . . . . 469
Appendix II The Top 12 Tips for Seasoned Sellers . . . . . 471
Appendix III The Top 8 Tips for Business Buyers . . . . . . 473


CONTENTS

XVI

Appendix IV Custom Database System . . . . . . . . . . . . . .475
Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476
Benefits and Disadvantages . . . . . . . . . . . . . . . . . . . . . . . . . 480
Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482

Appendix V Using Web Authoring Software . . . . . . . . . .483
Multimedia and the Web . . . . . . . . . . . . . . . . . . . . . . . . . . . 484
Composer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485
Chop It Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495

Appendix VI HTML Tutorial . . . . . . . . . . . . . . . . . . . . . .497
Defining a Web Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499
Markups Alphabetically . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
Anchors & Hyperlinks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524
Example Web Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525
Viewing the Web Page Source . . . . . . . . . . . . . . . . . . . . . . . 526
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527

Appendix VII Using Easy Image Software . . . . . . . . . . .529
Digitizing Photographs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530
The Digital Darkroom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530
File Formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536
There’s More . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .539

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Acknowledgments
My thanks to Charlie Craft, real estate and business entrepreneur and
ex-tax attorney, who brainstormed with me exactly what eBay businesspeople need to know about legal and business basics to get off to a good
start. Thanks to my agent, Carole McClendon at Waterside Productions,
who does a great job, and to Jacqueline Flynn and the folks at AMACOM, including Mike Sivilli, who contributed to the book. The clever
people at eBay continue to do a great job of creating a fabulous new marketplace and expanding it worldwide. Good work folks! And thanks to
my wife Lani, daughter Brook, and son Tommy, who endured with grace
the period of workaholic effort it takes to write a book. Well OK, with

grace most of the time. Finally, hats off to the many eBay entrepreneurs
who are setting the commercial trend for the new century, some of
whom have contributed indirectly if not directly to this book. Thanks.

XVII


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I
Introducing eBay Business


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1
Introduction
This book focuses on selling on eBay as a profit-making enterprise
for an individual, family, or small business. eBay is a dynamic new
marketplace that’s here to stay. With over 60 million registered
members already, it continues to grow rapidly. Since the first edition of eBay the Smart Way in 1999, I have compared eBay to the
stock and commodities exchanges when everyone else was comparing eBay to local flea markets. The fact is that today it is clear
eBay will soon be as much a cornerstone of American business as
3

4

EBAY BUSINESS THE SMART WAY

the New York Stock Exchange. But more importantly, it is a democratic level playing field for individual entrepreneurs. eBay is no
longer just for collectibles, garage sales, and flea markets. eBay
accommodates the sale of both new merchandise and fixed-price
items, and collectibles have shrunk to less than 20 percent of
eBay’s volume. In 2002, eBay’s sales volume was $14.87 billion.
The following are some statistics from the first annual eBay Live!
conference in June 2002.
eBay growth in registered users (first quarter of each year):
1998

4 million

1999

13 million

2000

30 million

2001

46 million

Number of monthly unique visitors in December 2002:
26 million
Average eBay customer:
Age

37

Household income

$63,000

Household size

3.1 people

Monthly visits to eBay

5.8

Minutes per visit

24.3

Distribution of participation across different regions of the US:
Lowest percent of norm

93

Highest percent of norm

108

This indicates very even distribution.

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CHAPTER 1 INTRODUCTION

5

Composition of sales first quarter 2000:
Collectibles over one-half
Consumer goods about one-quarter
Motors less than 5%
Composition of sales first quarter 2002:
Collectibles less than 20%
Consumer goods over one-half
Motors almost one-quarter
Online marketplace share of merchandise sales:
eBay

12%

Amazon

12%

JC Penny

2%

Target

1%

K-Mart

1%

Walmart

1%

Sample annual sales growth on eBay:
Computers

54%

Jewelry

49%

Coins & stamps

38%

Additional statistics culled from my own eBay books show the
number of items for sale (including the latest figure):
Jul 1999

2,400,000 items for sale in 1,600 categories

Jan 2001

5,000,000 items for sale in 4,000 categories

Feb 2003

12,000,000 items for sale in 18,000 categories


6

EBAY BUSINESS THE SMART WAY

eBay Statistics
At one time, eBay published statistics on its home page. It cut
back the volume of statistics and then finally quit publishing
statistics on its home page altogether. Now it publishes statistics
at its annual conference, and you can still find a few numbers
in the company overview on the eBay website.
eBay Magazine published great statistics quite useful for eBay
businesses. Unfortunately, eBay Magazine is now defunct. Statistics published by third parties about eBay are only estimates
and are prone to error.

This book covers the business basics of selling on eBay, such as
deciding the form of your business, getting assistance from people
without hiring them as employees, avoiding undue risk and liability, borrowing money, and getting a sales tax license (very useful).
Moreover, the book also shows you how to do inexpensively with

Web services what formerly occupied several employees, such as
inventory control, accounting, auction tracking, shipping, and
customer service. Also included is practical information on finding
inventory, being fee conscious, selling effectively on eBay, building
your eBay reputation, creating your own storefront website, establishing merchant credit card status, and developing a strategy for
profitability.
This book covers everything you need to know to get off to a quick
but low-risk start selling merchandise on eBay. It’s a timesaver that
enables you to focus more on your particular retail business and
less on researching the process of starting and operating a business.
The book also offers business buyers a few tips, such as how to buy
equipment and even bulk supplies on eBay. Purchasing on eBay is
a great way to cut your capital investment as well as reduce your

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