Different Ways to Sell on eBay

If you've never sold on eBay before, you should know that there are several different ways to sell your merchandise on the eBay family of sites. Yes, most merchandise sold on eBay is via the online auction format, but not all. Many businesses sell their items on eBay at a fixed price, just as they would in a conventional store. And there are more sites than just the auction site on which to sell.

Note

Learn more about PayPal (and PayPal's fees) in Chapter 16, "Managing Customer Payments."

Standard Auction Format

Selling an item via an eBay auction is quite a bit different from selling it off a shelf in a traditional retail store. In essence, an eBay auction works pretty much like an old-fashioned real-world auction, with potential buyers driving the price higher every time they place a bid. The only difference is that there's no fast-talking auctioneer online (the bidding process is executed by eBay's special auction software), and all the bidders aren't in the same room; potential buyers can be located anywhere in the world, as long as they have Internet access.

When you're ready to sell an item via eBay auction, you post a listing for that item, like the one shown in Figure 1.1. When you create a listing, you select the product category, length of the auction (1, 3, 5, 7, or 10 days), and the starting bid price. From there the auction process takes over, with interested buyers making increasing bids on the item; bidding starts at the initial price you specified and goes up from there. At the end of the auction, the bidder with the highest bid wins and pays you for the item. When payment is received, you ship the item to the buyer.

Figure 1.1. A typical eBay auction listing.

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eBay makes the entire process fairly simple for both the seller and the buyer. Just know that while you're using the eBay site to facilitate the sale (by hosting the auction listing), eBay is not a middleman in the transaction. The buyer pays you directly, not the eBay site. You, however, do have to pay fees to eBay for the services it offersas we've already discussed.

The thing that makes an eBay auction different from a traditional retail transaction is that there is no guarantee the item will actually sellnor do you know what the final price will be if it does sell. That's part and parcel of being an auction. If no one bids on your item, you don't sell it. And the final sales price is totally market-driven; the price will go as high as potential buyers are willing to pay. That can be both good (you could get a higher price than you anticipated) and bad (you could sell an item for less than you thoughtor not sell it at all). That's just the way it goes.

Reserve Price Auction

eBay offers several variations on its main auction format. One of the more common variations is the reserve price auction. In this type of auction, your starting bid price really isn't the minimum price you'll accept. You set a starting bid price as you would in a normal auction, but you also specify a reserve price somewhere above the starting price. This reserve price is the actual minimum price you want the item to sell for. Even though bids might exceed the initial bid price, if they don't hit your reserve price, there isn't a sale.

Many buyersespecially those just getting starteddon't like reserve price auctions, and shy away from them. They probably feel that way because these auctions appear more complicated than regular auctions (and they are, just a little), and also because the reserve price is never disclosed to bidders. In this case, lack of familiarity definitely breeds contempt, at least from a certain class of bidders.

Why, then, would you opt for a reserve price auction? There are two possible scenarios:

When you're unsure of the real value of an itemand don't want to appear to be asking too much for an itemyou can reserve the right to refuse to sell the item if the market value is below a certain price.
When you want to use a low initial bid price to get the bidding going more quickly than if the true desired minimum price (now the reserve price) were listed, the reserve price still guarantees that you won't have to sell below a minimum acceptable price. This is most likely the case when you have a higher-priced item to sell but want to attract interest with a more attractive lower price.

Remember, if no one bids the reserve price or higher, no one wins.

Dutch Auction

Dutch auctions are those in which you have more than one of an identical item to sell, and you want to offer all your items via the auction format. (If you have more than one item you want to sell for the same fixed price, there are other nonauction options available.) A Dutch auction is great if you have a dozen waffle irons, 10 copies of Ocean's 11 on DVD, or a hundred units of white extra-large boxer shorts to sell.

In a Dutch auction, you specify both the minimum bid and the number of items available in the auction. As in a normal auction, bidders bid at or above that minimum bid for the itemalthough, in a Dutch auction, bidders can also specify a specific quantity that they're interested in purchasing.

Determining who "wins" a Dutch auction is a little different from determining who wins a normal auction. In a Dutch auction, the highest bidders purchase the items, but all buyers pay only the amount that matches the lowest successful bid.

Let's work through an example. Say you're selling 10 identical copies of a particular Lord of the Rings T-shirt. You indicate the number of items available (10) and the minimum bid (let's say $5). Potential buyers enter their bids, which must be equal to or higher than the minimum bid of $5; each buyer also indicates the quantity (from 1 to 10) that he or she is interested in purchasing.

If 11 people bid $5 each (for one shirt apiece), the first 10 bidders will win the auction, each paying $5 for their items, and the last bidder will be out of luck. But if the 11th person had placed a higher bid$6, let's saythen that 11th bidder would be listed as the #1 bidder, and the last $5 bidder (chronologically) would be knocked from the list. All 10 winning bidders, howeverincluding the person who bid $6would have to pay only $5 for the item. (Highest bidders, lowest bidsget it?)

In a Dutch auction, the minimum price ends up being raised only if enough bidders place bids above the minimum bid. In our example, if 9 bidders bid over the minimum, but the 10th bidder bid $5, all bidders would still pay $5. But if the lowest bid was $6 (and the other bidders bid from $6 to $10), all 10 bidders would pay $6 (the lowest current bid). Posting a higher bid increases a buyer's chances of winning an item at a Dutch auction, but it also increases the risk of raising the price for everybody.

Sound confusing? It is, a little, even though eBay handles all the details automatically. For most sellers with large quantities to sell, going with either an auction with the Buy It Now option or a straight fixed-price listing is a better way to gowhich we'll discuss in a moment.

Auction with Best Offer

Here's one that I'm not too hot on, but some sellers swear by. eBay lets you put an item up for sale with the caveat that interested buyers can make you an offer that's below your initial listed price. You set up a fixed-priced listing (discussed in a few pages), but then add the Best Offer option. With Best Offer, a buyer can click a button (like the one shown in Figure 1.2) and suggest the price he's willing to pay. You can then accept or decline the offer.

Figure 1.2. An item offered for sale for a given priceor the best offer by a potential buyer.

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I'd recommend Best Offer when you're selling collectibles and similar rare, higher-priced items. You should also know that using the Best Offer option is more time-consuming than a normal listing; you have to manage all the correspondence associated with the offer, as well as make the call on whether or not to accept a particular offer.

That said, I know of at least one seller who uses Best Offer on a regular basis for lower-priced, commodity items. If you go this route, you should make sure you set your price high enough so that there's room for buyers to make an offer that is below your price but still financially acceptable to you.

Auction with the Buy It Now Option

eBay's Buy It Now (BIN) option lets you add a fixed-price option to your auction listings. The way BIN works is that you name a fixed price for your item, as shown in Figure 1.3. If a user bids that price, the auction is automatically closed and that user is named the high bidder; bidders can also make a bid lower than the BIN price, via the regular auction process. When you make a BIN sale, it's like selling an item via a traditional retail transactionbut on the eBay site.

Figure 1.3. An auction with the Buy It Now option enabled.

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The BIN option is popular among professional eBay sellers with a lot of similar inventory. That is, they're likely to place the same item up for auction week after week. In this scenario, the BIN price becomes the de facto retail price of the item, and you can ship items as soon as you find a willing buyer. You don't have to wait the standard seven days for a normal auction to end.

You might also want to consider the BIN option around the Christmas holiday, when buyers don't always want to wait around seven whole days to see if they've won an item; desperate Christmas shoppers will sometimes pay a premium to get something now, which is where a BIN comes in.

Using the Buy It Now option will cost you extra as a seller, however. Table 1.3 details the fees that eBay charges to add a BIN to your auction, over and above the standard listing fees (that we'll discuss in just a few paragraphs).

Table 1.3. eBay Buy It Now Fees
Buy It Now Price	Fee
$0.01$9.99	$0.05
$10.00$24.99	$0.10
$25.00$49.99	$0.20
$50.00+	$0.25

Note

The BIN price is active only until the first bid is placed (or, in a reserve price auction, until the reserve price is met). If the first bidder places a bid lower than the BIN price, the BIN price is removed and the auction proceeds normally.

Fixed-Price Sales on the eBay Site

Buy It Now isn't the only way to sell items for a fixed price. If you want to avoid the possibility for an item selling for less than the Buy It Now price (which is possible with a BIN-enabled auction), you can simply list an item with a fixed selling price. As you can see in Figure 1.4, eBay's fixed-price listings look just like regular auction listings and have the same duration (1 to 10 days, your choice), they just don't offer the option of placing a bid. When someone wants to buy your item, he clicks the Buy It Now button; there's no way to place a lower bid.

Figure 1.4. A fixed-price item listingno bidding allowed.

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Fixed-Price Sales with eBay Express

eBay's auction site isn't the only online marketplace offered by eBay. New to the eBay family of sites is eBay Express, which offers a more traditional retail approach to online shopping. As you can see in Figure 1.5, eBay Express offers a variety of merchandise for a fixed priceno auctions (except for those with a Buy It Now option). For buyers, it's the opportunity to buy merchandise from multiple sellers using a single checkout system. For sellers, it's yet another way to sell your fixed-price items.

Figure 1.5. eBay Expressa marketplace for fixed-price items.

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eBay Express offers a viable alternative to traditional online auction selling. Learn more in Chapter 26, "Selling Fixed-Price Items on eBay Express and Half.com."

Fixed-Price Sales on Half.com

If you have both new and used merchandise to sell, eBay's Half.com is another place to make your mark. As you can see in Figure 1.6, Half.com looks and feels a little like Amazon.com, and offers similar products for salebooks, CDs, DVDs, and videogames. Half.com lets you items in these categories for a fixed price, with quick and easy listing creation. (All you have to do is enter the item's UPC or ISBN code, and Half.com fills in all the other information for you.)

Figure 1.6. Half.comanother way to sell fixed-price items.

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If you sell in these particular categories, Half.com is worth a look. Learn more in Chapter 26.

Note

You can learn more about these selling options and a whole lot more in my companion book, Absolute Beginner's Guide to eBay, 4th Edition (Que, 2006). This book is also a good resource if you're just starting out as a seller; it offers detailed step-by-step instructions on how to create an auction listing, how to manage the auction process, and so on.