How to Start an eBay Store
Do you have a product to sell and need a platform where you can sell it? Maybe you like to buy and sell antiques, clothing, or art. eBay is a great place to offer your products either as an auction sale or a fixed price sale regardless of your product. You could start your own eBay store simply and start selling your products immediately.
Almost every product imaginable is offered on eBay. An eBay store offers products that customers can either bid on auction-style or buy at a fixed price. When customers win an auction, they are committed to buying at that price, so they pay for the item, and the eBay seller ships the product to the customer.
According to Statista, eBay is ranked the second most visited marketplace online in 2021. Gross merchandise volume is $100 billion, and there are 159 million active users. The site receives 1.7 billion monthly visits.
Many people get Experience as a seller by selling a few items from their home or purchasing heavily discounted items from local retailers and reselling them. Eventually, you may want to focus on a particular niche, which will help build customer loyalty. To open an eBay store, you will need to sell a few items first through your eBay account.
More and more people are using eBay’s mobile app to make purchases. eBay is growing in popularity, with the number of active users in 2021 up 7.47% from the previous year. The number of users has been increasing steadily since the beginning of the 2000s, having more than doubled since then.
Your target market will be those looking for your specific product online.
Skills, Experience, and Education Useful in Running an eBay Store
There are several specific skills that you will need to open an eBay store.
- Experience. Experience in and a talent for producing the product you are offering are important. Your product will need to stand out from the competition.
- Business knowledge and Experience. You will need to have at least some basic understanding of marketing, finance/accounting, and human resources.
- Customer service skills. Positive feedback is essential to building a successful eBay business. Communication and customer service are essential to make your score and have more buyers trust buying from your store.
If you’re thinking about starting your own eBay store, there are a few things you should keep in mind before launching your business. Here is a checklist of the essentials to get started.
Step 1: Write your Business Plan
After coming up with the idea, the next step in starting your eBay shop should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate precisely what your start-up expenses will be and what your ongoing expenses will be.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect eBay store name can be challenging. Not only does the name have to reflect what you do and be appealing to buyers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for an eBay store, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: 3 steps to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
Most sellers start their eBay store from their home; however, a well run store will quickly take up a lot of space and may require a larger space to pack and ship orders. If running a business from home, be sure there are no city restrictions on running a home-based business.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
There are general licensing requirements for starting an eBay business from a variety of government agencies. A few common licenses and permits that an eBay business may need include a business license, sales tax permit, and an Employer Identification Number.
Step 6: Find Financing
Fortunately, the costs to start a new eBay store are relatively low as most of the costs are for inventory. While it’s recommended to not go into debt in starting a store, some people will still want to purchase sufficient stock. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
Marketing and acquiring customers will be your biggest challenge. There are around 790,000 active eBay stores, so you will face massive competition, depending on your product, and so you’ll have to spend money to get your store noticed.
An eBay store will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for an eBay store include social media marketing and online advertising. Developing a website can be a significant expense, but it can also give your eBay store greater visibility online. eBay also has tools that you can use to make your store more visible.
One important task while working on the marketing is developing an online presence. A website developer may be out of the budget, but Wix makes it easy for non-technical people to get a website running quickly and affordably.
Step 9: Get Business Insurance
There are several types of insurance to consider when running an eBay store. A few of these include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
The cost of insurance will vary depending on several factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hire Employees
You may need employees to help you run your eBay store. Make sure that you select people with appropriate experience and training.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hire your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your eBay store is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
There is software that will automatically sync with your eBay store to help automate getting the sales and shipping expenses to your accounting software.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start an eBay store?
Here are the typical costs you will face when you open an eBay store.
– Initial inventory $200-$1,500 depending on your product.
– Desktop or laptop computer – $500-$2,000
– Printer – $100-$300
– Shipping supplies $200-$500
– Internet connection – $30-$50/month
How profitable is an eBay store?
Your potential revenue is completely dependent on the type of product you are selling. You can research other eBay stores that offer similar products to see what prices they charge. According to Webretailer, over 35% of eBay sellers earn $10k-$100k each year and over 26% earn between $1 million – $10 million.
Are there grants to start an eBay store?
It’s extremely rare to find a grant to start an eBay store. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for an eBay store?
The NAICS code for an eBay store is 454110.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.