How To Sell On EBay

[Revised December 4, 2008.]

I've gotten a lot of hits lately on my EBay FAQ, and there seems to be interest in an FAQ for new sellers. Feel free to use the comments to offer feedback.

Q: How should I set my starting price?

Browse similar auctions. Use the "Completed Listings Only" search function to compare bidding patterns. Generally speaking, a lower starting price will attract more bidders. And you don't have to worry about people thinking your item must be flawed if your minimum is too low; many sellers use low minimums and rely on the market to establish a fair price. It's common because it usually works.

Q: When is the best time to start my auction?

Weekends, between 8:00 PM and midnight Eastern Time.

Q: Should I use "Buy It Now"?

Maybe. This is a neat feature that can benefit everyone involved. What you have to realize, however, is you're setting two different prices for your item; so now, in addition to competing with other sellers, you're also competing with yourself. A "Buy It Now" price of $69.99 might be reasonable compared to what similar items are selling for; but if your minimum bid is only $14.99, I guarantee you'll attract a cheapskate who isn't willing to pay the market value but hopes he can win your item for only $14.99. He'll place a bid, which causes the "Buy It Now" option to disappear for everyone else, and then he'll drop out of the bidding before it reaches a reasonable price.

Remember that bidding is free, so people have nothing to lose placing dozens of unreasonably low bids. If they get outbid, they simply shrug and move on; and if they win, they get your item for a steal. You need to set your "Buy It Now" price low enough to attract serious buyers; but if you're going to pay that fee, you can't set your opening bid so low that it attracts penny-pinchers.

Q: Should I set a reserve price?

No. If you have a minimum selling price, that should be your starting price. Using a reserve simply tells bidders that you're not being forthright, and many bidders will ignore your auction altogether. You also risk attracting bidders who will bid repeatedly until they discover your reserve limit; and once they do, they'll realize they didn't really want to pay that much and they'll retract their bids or refuse to pay. Regardless of what anyone tells you, there is absolutely no reason to use a reserve, ever. It's like Priority Mail, which costs more than First Class but often takes longer to deliver. It's a special service that is, at best, equal to the standard service; but as long as folks keep paying for it, eBay will continue to offer it. Don't use it.

Q: Should I offer free shipping?

You'd think this would matter to bidders, but it doesn't. Check similar items in your category. You don't want to be the only seller not offering free shipping; but if you think people will bid more on your item because you've promised free shipping, they won't. You're better off stating a reasonable shipping charge and setting a lower opening price.

Q: How much should I charge for shipping?

Figure out your cost. Remember that "shipping & handling" includes more than postage. Depending on what you're selling, you may have to buy boxes, padded envelopes, packing peanuts, bubble wrap, packing tape, etc. You should also consider the time you'll spend driving to the post office. If you're sending a package outside the country or via registered mail, you'll have to fill out forms. You should also know that it's standard practice to absorb the various fees charged by both eBay and PayPal into your shipping charge.

Make sure you clearly state your shipping charge in your auction. I can't stress this enough. Bidders don't understand how much it costs to sell and ship items via eBay; many of them think "shipping" should include only the cost of postage. This is a frequent area of contention between bidder and sellers, and the only way to avoid trouble is to clearly state your charges up front, before anyone bids.

Q: Should I purchase additional listing features like a second category, bold, gallery, etc.?

This depends entirely on what you're selling, but the bottom line is that you need substance to back up the gimmick. If your item is unique in a popular category, it's worth a few dollars to grab people's attention. But if your auction is just like everyone else's, bidders will know and you'll be wasting your money.

The blue-chip promotions like featuring your item on eBay's home page are strictly for auctions that will benefit from a high profile. If you're selling a piece of toast shaped like the Virgin Mary, it's probably worth your money. If you're selling an antique coffee grinder, it's probably not.

Q: Is the 10-day auction a waste of money?

Yes.

Q: Should I ship internationally?

You might attract more bidders and a higher selling price. You'll definitely have to pay more for postage and fill out US Customs Declarations. [Since 9/11, shipping to Canada requires a Customs Declaration.] Again, this question depends on what you're selling. If you choose to offer international shipping, I recommend specifying a separate, higher shipping price for international bidders.

Q: Should I post a photo of my item?

Yes. A photograph is probably the best way to increase your selling price. People like to see what they're buying. EBay allows you to post one photo per auction, free, and you should always do it. Whether or not you need additional photos depends on what you're selling. If there's a practical reason, like showing both sides of a collectible coin, then you should.

Q: Should I offer a return policy?

No. EBay works best when treated like a yard sale. If you clearly describe the item's condition and post a photograph, there should be no reason for a return. Having a return policy will just act like an open door for abusers to walk through. All such doors that can be closed, should.

Q: Should I accept personal checks?

No. After shipping charges, bounced checks are the second most common source of problems on eBay. There's absolutely no reason to accept personal checks. If your bidder needs to pay with his checking account, he can send an eCheck via PayPal. If your bidder needs to pay via mail, he can send a cashier's check or money order. Don't expose yourself to unnecessary hassle by accepting personal checks.

Q: Should I use PayPal?

Yes.

You've probably heard that PayPal is controversial. In a nutshell, the story is that PayPal makes a habit of "freezing" funds when a transaction is disputed or if PayPal thinks it's suspicious. Some of those people never got their money back. Let me be clear: I think PayPal does this on purpose, and I think it's blatantly unethical. I think some of the PayPal executives should probably go to jail.

However, the good news is that it's relatively easy to avoid being victimized by PayPal. You just have to remember one simple rule: PayPal is not a bank. PayPal is a payment processing service — and if you remember that, and if you follow my simple instructions, you'll be safe.

There are two ways you can link PayPal to your checking account. The first is automatic; as soon as you provide the routing information, PayPal can transfer funds into your checking account. However, PayPal cannot withdraw from that account unless you choose to "verify" it, which is the second option. This is a simple process: PayPal will make two small, secret deposits, something like 37¢ and 63¢, and you'll be asked to confirm the amounts. This proves that you own the account. PayPal is now authorized to withdraw money from that account (but only with your permission).

It's important to remember that you don't have to verify your checking account. If you choose not to, you can still deposit up to $400 per month from PayPal into that account. If you receive $560 from eBay sales in February, you'll have to wait until March to deposit the remaining $160. If you expect to make less than $400 per month, this doesn't affect you.

That's the safest option, to leave your account unverified. However, you shouldn't worry if you need to verify it. PayPal knows its legal limits. It can freeze funds left in its trust without exposing itself to serious legal repercussions, but making unauthorized withdrawals from federally-insured banks is another story. I wouldn't worry about this happening.

Now, here's the key: Don't leave money sitting in your PayPal account. When your customers pay, immediately transfer that money from PayPal into your checking account. These transfers are free and you can do it as often as you like. I recommend doing a transfer at least once every day while you're receiving payments. Each transfer takes about two days to clear — and once the money arrives in your checking account, you're protected by federal banking regulations. It's that simple.

You should use PayPal because it's convenient. It's convenient for you; but more importantly, it's convenient for bidders. People who shop online want to use credit cards. They expect to be able to finish their transactions online. Even if they tell you they would rather mail a check, they won't. They'll procrastinate, or they'll forget, or they'll change their minds. Trust me when I tell you: If you accept payment via mail, you will get deadbeat bidders. Accepting PayPal is the single most effective strategy for preventing that from happening.

Q: Should I email the bidder to confirm when I've shipped his item?

Yes. It's a small courtesy that bidders appreciate. Most sellers are poor at communication, and you can impress your customers by being an exception. Let your bidder know that you've received his payment and shipped his item, and give an idea when he can expect to receive it. Remember that the only thing customers like better than good surprises are no surprises.

Q: Should I buy shipping insurance?

If you're selling small items, offer it at extra cost. Most bidders won't buy it. If you're selling expensive items, however, you should always promise to use shipping insurance and build the cost into your shipping & handling charge. You'll probably never need it, because the Postal Service is safe and they're even safer with insured packages — but if you're shipping a $1,500 item between two strangers on opposite sides of the country, you should make sure everyone is protected. Use shipping insurance.

When you ship via First Class, modern post offices will automatically print a receipt showing the package's weight and destination zip code. If you're paranoid, you can request a 95¢ proof of mailing, which is a postmarked receipt noting the recipient's full address along with your return address.

Q: When should I leave feedback?

The transaction isn't complete until the bidder has received his item and expressed satisfaction. Some sellers choose to leave feedback as soon as they receive payment. That's noble, but I think it's unwise. There are a hundred things that could still go wrong, and I've seen some of them happen. Even if what happens isn't your fault, the bidder will be more likely to leave negative feedback if he knows you can't retaliate.

Q: Should I leave negative feedback for deadbeat bidders?

Yes. They deserve it — but more importantly, other sellers deserve to know. The guy who just stiffed you might have stiffed three other sellers last month; but because they didn't report him, you didn't know and you couldn't protect yourself. You can set your auctions to reject bidders with a certain number of negative feedbacks; and once a bidder receives three strikes, eBay suspends his account.

Some sellers refuse to leave negative feedback because they're scared of receiving retaliatory feedback. I've received retaliatory feedback and it's easily addressed: Respond briefly and professionally, and everyone will clearly see the retaliation for what it is. There might be bidders who will avoid your auctions when they see that negative, but I suspect those would be people more likely to cause trouble themselves. Honest bidders will recognize your professionalism in handling a deadbeat. It makes you look better, not worse.

Appendix
[Updated June 12, 2006.]

I've kept an eye on the referrer logs to watch how people are finding this page. I've seen a couple of questions appear frequently; and although they're not specifically related to a Selling FAQ, they are worth answering for everyone's benefit.

Q: What happens if I don't pay on eBay?

That depends. In the worst case scenario, you will get negative feedback from the seller and a Non-Paying Bidder warning from eBay. These warnings operate on a three-strikes rule: If you refuse to pay for three auctions, your account will be suspended.

You should pay. When you placed your bid, you agreed to a contract. The seller paid to list his item, and he waited a week to find a buyer. Maybe you changed your mind, or maybe you bid by mistake, but you should take responsibility. Your actions did affect another person, and you should accept the consequences.

Having said that: You might have a valid reason for not paying. If the seller is trying to raise the price after the auction has ended, he's violating eBay policy. You can report him to eBay, and his account may be suspended. If you think you're being scammed, don't pay. It's better to get negative feedback and a warning letter from eBay than to lose several hundred dollars.

Q: Can the seller sue me if I don't pay?

Yes. He probably won't, but he could. If the auction involved a large sum of money, or if the seller lives in your jurisdiction, then you should consider this possibility. But it's rare. No seller is going to fly across the country to sue over a $7 compact disc.

Note
[Updated December 4, 2008.]

EBay has modified several policies since I wrote this article. You can review the current rules by clicking here, but the bottom line is that eBay is now trying to focus on so-called PowerSellers (high-volume merchants who use eBay as their storefront) instead of regular people. PowerSellers can streamline their sales and use fewer resources, which makes them more profitable for eBay. And so, while eBay once tried to encourage people to sell on its site, now its focus is on encouraging people to buy. The rationale is that if the buyers come here, the sellers will follow.

Most of the advice above still holds true, but I should point out a couple changes. Most importantly, sellers are now required to offer PayPal or a comparable payment method. EBay no longer permits sellers to require payment by mail. This was significant because US Postal money orders were always the safest payment method. If you paid with a postal money order and a seller scammed you, he had committed mail fraud; and US Postal Inspectors take mail fraud seriously. So why did eBay change? (Apart from the fact that eBay owns PayPal...) Because that was the direction the tide was turning. As I noted several years ago, most buyers want to be able to complete the entire transaction online. That's the way Amazon and other websites work, and eBay wants to stay in the mainstream.

That led to the second major change: Sellers cannot leave negative feedback for buyers. This was a controversial move, but I don't think it's catastrophic. The most common reason for leaving buyers negative feedback was that they won your auctions but didn't pay. Deadbeat bidders were common when people paid by mail; they would win an auction and then change their mind on the way to the post office. Now that everybody is using PayPal, it's less of a problem.

Both of these policies make sense from eBay's perspective. Buyers can be discouraged by the prospect of unwarranted negative feedback, so eBay simply eliminated that problem. It's all about encouraging buyers to visit the site. The result is a loophole, where one malicious buyer can threaten to leave negative feedback for a regular seller without possibility of retaliation. I don't think this is a significant problem; the truth is, there are easier and more profitable ways for dishonest people to scam eBay nowadays. But you should be aware of it.

One final note. Amazon has become a central player in this market. If you're selling books, CDs, DVDs, etc., then check the item's page on Amazon and browse the "Used & New" third-party listings. Your buyers will be looking at these. For many of these items, Amazon is now the place to sell. Unless you're selling something rare or collectible, you can often get a higher price for less effort. But the market works in reverse: Instead of bidders competing to pay the highest price, Amazon sellers compete to advertise the lowest price. If you list a DVD for $15.99, you will often find that within just a few hours, someone else has lowered their price to $15.98. It's like The Price Is Right: Your listing can quickly become obsolete by just a penny.