How eBay Online Marketplace Works Plus Steps To Get Started

Technically, eBay is the world’s online marketplace that even PayPal recommends. Buy it now or bid instantly. New or used, we process your purchases with ease. Login, check out, and wait for the mailman. From its humble beginnings in 1995, eBay’s evolved into a household name. Even if you’ve never used it yourself, you’ve probably heard others talk about it.

You may have even seen it on television, in the movies, or on the news, right? That’s because you can buy and sell nearly everything here, millions of transactions go through every single day. The real draw for eBay buyers and sellers is the utterly capitalistic nature of the site. An item on eBay is worth precisely what someone is willing to pay for it.

This means, that sellers can command very high prices for highly sought-after items — like collectibles, discontinued items, vintage items, etc. Or even unusual goods, and anything else in short supply. This has made eBay the go-to place for collectors, who can source things they wouldn’t find locally. So, what is it and how does it really work?

What Is eBay?

eBay is an online shopping marketplace website that’s best known for its auctions and consumer-to-consumer sales. It’s also extremely popular for online merchants to use as a sales channel. eBay’s available in many different countries. However, you can search for products available in your local area by just entering the zip code.

Alternatively, you can search for products available nationally or internationally. Anyone can open an account on eBay for free. You can opt to sell as well as buy products. When you have a seller account, there are fees associated with it — for example, listing fees. The costs vary on the price you sell your products for, as well as how long you list them.

Learn More: How Online Marketplace Works | 8 Top Marketer Strategies

Collectors have flocked to eBay for the incredible selection of items, the advanced search tools, the notification systems, the user-friendliness of the site, and the ability to avoid fraudulent transactions. All thanks to their anti-fraud systems. Some collectors spend hours each day on eBay making a living buying and selling collectibles.

Chiefly, asked about its mission, it describes its purpose as to ‘pioneer new communities around the world built on commerce, sustained by trust, and inspired by opportunity.’ And as for eBay’s vision, a 2016 report describes the company’s view on current marketing approaches to exploiting Big Data and Artificial Intelligence.

The eBay Revenue Model & Marketing Strategy Proposition

An ecommerce eBay shop enables sellers to display all their merchandise in one place. They look way more like traditional online stores than comparison to single eBay listings. With eBay shops, businesses can communicate their brand better via the web pages they’ve customized themselves.

If you see a red door-style icon, next to a seller’s user ID, click on it. That’ll take you directly to their eBay Shop. If you want to kickstart an ecommerce business using it, an eBay shop is the best to go about it. Sellers can make the most of its easy-to-use tools to build a storefront just how they want.

The platform provides brimming traffic that’s already there. Digital marketplaces like this boast hundreds of online shoppers who are actively searching for goods to buy. Furthermore, it spends a great deal of money driving consumers to its platform so that sellers can benefit.

Its Revenue Model

Ultimately, the vast majority of eBay’s revenue is for the listing and commission on completed sales. While it is best-known for auctions, 80% of UK sales now come through new items of which the majority are fixed price. UK marketing director Gareth Jones told Marketing Week he wants to focus on top-of-the-funnel considerations:

“it wants British consumers to see it as the first choice for buying new items as opposed to its historic online car boot sale reputation“.

For PayPal purchases, an additional commission fee is charged. The margin on each transaction is phenomenal since once the infrastructure is built, incremental costs on each transaction are tiny – all eBay is doing is transmitting bits and bytes between buyers and sellers.

Its Marketing Strategy

The eBay marketplace is well known for its core service which enables sellers to list items for sale on an auction or fixed-price basis giving buyers the opportunity to bid for and purchase items of interest.

Software tools are provided, particularly for frequent traders. Including Seller’s Assistant, Selling Manager, and Selling Manager Pro. Eventually, it helps automate selling, plus the Shipping Calculator, Reporting tools, etc.

Today over 60% of listings are facilitated by software, showing the value of automating posting for frequent trading.

An example of a new Shopper feature that is part of its OVP is the eBay ShopBot on Facebook Messenger. This uses artificial intelligence to provide a personalized shopping assistant that helps people find the best deals from eBay.

How To Sell More On eBay Online Shopping Marketplace Website

Did you know that an online marketplace like eBay makes as much as $65 million per month — that’s insane, right?! This then begs the question, is it possible to build and maintain a similar online marketplace? In short, yes, you can.

However, you’ll need access to a variety of toolkits such as WordPress, a web hosting plan, a marketplace theme — for example, WooCommerce, the WordPress WC Vendors Plugin, etc. In addition, you’ll also need to consider what niche you want to operate in i.e., what kind of merchandise do you want your sellers to advertise on your marketplace?

By sticking to a specific industry, for example, pets, beauty, weddings, etc. you’ll make your marketplace even easier. Particularly, in terms of promotions. Especially, when you’re first starting out. In our opinion, Bluehost out of all the web hosting services is the best regarding security, customer service, user-friendliness, and reliability.

Related Toolkit: Ecwid | Create Your Own Online Store To Sell Physical Items

You’ll also be pleased to hear; that you can access WordPress through your Bluehost account. Head over to CPanel within Bluehost; then under the ‘website builders’ section. Whereby, you’ll find a handy ‘one-click’ installation service for WordPress. Just click the WordPress logo to get things started. Learn how to navigate its self-help resources below.

Overall, eBay aims to increase the gross merchandise volume and net revenues from its marketplace. For example, by including more accurate descriptions with better pictures and avoiding excessive shipping charges.

Power sellers with positive DSRs will be featured more favorably in the search results pages and will gain additional discounts. On that note, below are some of the best ways to start selling more on the eBay online marketplace.

1. Show You Are Trustworthy

On the whole, new sellers make fewer sales than more experienced sellers — which makes sense, right? This is because buyers are far more likely to trust a seller who’s developed a good reputation on eBay’s feedback rating system. If you don’t know this already, eBay enables its customers to rate their experience by sending ‘positive’ feedback to the seller.

The more positive responses a seller gets, the more credibility they build- simple! However, gaining positive feedback can sometimes take a while to accumulate. As a new eBay seller, keep hustling, provide top-notch service, and be patient.

To improve your ratings, be sure to do the following:

• Start by selling small yet inexpensive items — to enable a high inventory turnaround, in a short time.
• Hopefully, this should result in plenty of positive feedback.
• For the best results, mail your goods within 24 hours of receiving the order.
• Spend plenty of time packaging your merchandise; you want your goods to arrive in pristine condition.
• If buyers contact you, message back as soon as possible. And, if buyers want a refund, don’t fight it- just do it.
• If the item was expensive, ask them to send it back first (to cut someone trying to get something for free!)

2. Spruce Up Your Photography Skills

High-quality snaps of your products boost conversion rates. There’s a lot to be said for highlighting your product in action. For example, have a model wear your clothes. Or, have your kitchen gadget performing its function- you get the idea!

If you can take and publish several photos, even better — buyers want to see what they’re spending their hard-earned cash on! But, before you start taking any snaps, there are things you’ll need to consider first.

Such as the following:

• Make sure the lighting’s adequate,
• Using a professional-looking background,
• Working out how you’ll capture as much detail as possible,

Sometimes, getting decent photos can be quite hard. So, surf the web and get as many pointers as possible. But, always keep in mind, that product photography may take a little time, but it’s certainly worth it.

3. Research Your Stock

If you want to charge a reasonable price for your goods, have a look around and see other sellers’ product pricing.

You should also note:

1. What photo angles are other sellers using?
2. How are they formatting their description?
3. Are they auctioning these goods?

Use the answers to these questions to inspire your own work. However, do NOT plagiarize. This is poor practice, unethical, and will only damage your brand in the long term. Instead, allow the work of others to guide you.

4. Reword Descriptions

There’s no need to write every product description from scratch. Instead, copy and paste descriptions from similar products and reword them. Having a loose structure will save you a lot of time and effort. Just ensure the copy is entirely original. Otherwise, you’ll damage your SEO efforts.

5. Become a Power Seller

If you’re taking eBay selling seriously, you want to become a ‘PowerSeller.’ However, gaining this elite status is a hard graft. Only sellers frequently making sales and providing top-quality customer services are gifted with PowerSeller status.

So, how do you become one? Well, eBay will recognize you as a PowerSeller when you’ve achieved a few set metrics. First, you’ve reached a 98% (or more) positive rating status. Secondly, you’ve sold more than 100 products.

And, you’ve generated $3,000 worth of sales in the last year. Thirdly, you’ve logged into eBay for at least 90 days, and so on. As you can see, becoming a PowerSeller takes time, but again, it’ll be worth it.

The Main Pros of Using eBay

Eventually, as an e-commerce seller, you’ll extract all the value eBay has to offer. At this stage, you’ll probably want to create your own digital store. If that sounds like you; before I let you know about the pros of selling on eBay, there’s some advice that I would like you to know while transitioning — something that’ll help you with the transition:

Like we’ve already said, when you first launch your own ecommerce store, you probably won’t get a lot of traffic. This is where leveraging your eBay store is worth its weight in gold. You can use your eBay shop to drive customers to your e-commerce store.

📢 Please be warned: If you add links directing eBay customers to your online store via your eBay listings- eBay will eventually ban you. Obviously, you don’t want this to happen.

Instead, use the About Me page section on your eBay shop to your advantage. Here you’re permitted to post a direct link to your e-commerce store- so make the most of this opportunity! In addition to this, you can also include marketing materials inside the packages you send eBay customers.

For example:

• Business cards with your online store address.
• Boxes with your URL plastered all over them.
• A catalog of your products, with a call to action to visit your e-commerce store.

You get the idea! Additionally, you can use coupons to encourage eBay customers to visit your online store. Ensure this discount entitles them to a cheaper deal than what they’d find on eBay.

1. Provides An Opportunity To Do More

In nutshell, eBay is a fabulous starting point for entrepreneurs wanting to experiment with e-commerce. However, as time moves on you’ll want to bite the bullet and launch your own digital store. There are advantages to scaling your business.

Building a loyal following and having complete control over your online store will eventually outweigh any benefits of using eBay. On the whole, eBay charges sellers between 12 and 15% of your transaction. So even giving buyers a five or 10%-off deal, will generate a more substantial profit than a sale on eBay. That aside, there are lots of other pros to know.

2. Reap the Rewards of High Traffic Volumes

As we’ve already alluded to, eBay gets a lot of traffic. It’s home to as many as 164 million active buyers! Think of what that could mean for your business?!- Obviously, not all of these people will become customers, however- there are tons of people searching for the products you’re selling. So, tapping into this resource (when done well) can be lucrative!

Nobody visits eBay looking for your brand. However, they may stumble upon your products- which they wouldn’t have ordinarily done. Once you’ve secured a buyer, you’ve then got an opportunity to turn them into a repeat customer. Although this is harder to do in comparison to Shopify, it’s not impossible.

With eBay, you don’t have to dedicate a ton of time and effort to set up your e-commerce business. eBay sellers also have the option of managing their store through a mobile app — an efficient method of running their business.

3. Online Shoppers Prefer Marketplaces

Customers love conveniently purchasing everything they could need, all from one place. This naturally attracts buyers to platforms like eBay. Consumers live busy lives, so people enjoy the simplicity of eBay online shopping. Plus, most online shoppers trust established marketplaces like eBay, rather than a digital store they’ve never used or heard of.

Setting up an eBay storefront is way easier than crafting your own e-commerce store. Just sign up for an eBay account and purchase a subscription that enables you to run a shop. From there, you can customize your storefront quickly and then immediately start adding products to your shop.

4. Enjoy Seller Protection & eBay Community Support

In the unfortunate event, eBay protects its buyers like when a seller isn’t paid by a buyer or a consumer files a ‘Money Back Guarantee’ without any proof the seller’s done anything wrong. It has protocols and procedures it uses to protect the seller.

Its community is a fantastic resource. If you’re new to the platform, learn how to grow your shop from others who’ve already enjoyed success. Utilize the discussion boards and question and answer forums and learn a thing or two from the pros.

5. Selling Options Which Doesn’t Compete With Sellers

Unlike other online marketplaces, eBay offers sellers the option of auctioning off their merchandise or registering it as a Buy It Now listing. Unlike, Amazon, eBay doesn’t sell products on their marketplace- which means they don’t have an incentive to hide your products.

On the subject of gaining visibility, your product listings on eBay benefit from a boost in SEO. On the whole, you’re more likely to rank your products higher using a platform like eBay because this domain commands a lot of authority.

The Main Downside of Using eBay

If you’ve done some research already, you may already know that on a platform like Shopify, the cheapest plan is $29 per month. This gives you access to an online store where you can list as many products as you like. On top of this subscription, you’ll be billed  2.9% and 30 cents.

Specifically, every time a consumer purchases goods using their credit card. However, if you utilize Shopify Payments instead, you won’t be charged anything extra. Conversely, eBay doesn’t charge its sellers a monthly fee. But, you’ll often be bombarded with other costs.

For example, “insertion fees” and “final value fees.” Put simply, eBay charges a small amount of money for every product you want to list on their marketplace. They also take a percentage of any sales you make. There are also other associated costs when it comes to eBay.

Consider the following costs:

• Publishing listings boasting a set duration,
• Using numerous product categories,
• Advanced listing tools,

As you can see, there are tons of fees related to running an eBay shop. These pile up pretty quickly, hence negating the benefits of not charging a monthly fee.

When you sell on eBay, you don’t get as much opportunity to develop and nurture a relationship with your customers. Whereas, with a platform such as Shopify, there are heaps of ways you can build a loyal following to boost your brand.

Related Toolkit: Etsy Online Marketplace | Key Tips To Buy & Sell Goods Safely

Technically, this is why more often than not when entrepreneurs first start selling physical goods online, they opt for both an eBay shop and a Shopify store. That way they can enjoy a quick burst of sales via eBay while they build a loyal following on their Shopify store. It’s worth persevering with Shopify.

Obviously because, in the long run, it’s a far more lucrative way to run an online store. Namely because marketing an eBay shop is difficult. Online marketplaces usually prefer to keep the email addresses of their buyers private. This makes it harder to use email marketing to advertise your promotion.

Or rather, to build a relationship with prospects. In other words, while there are plenty of advantages to selling on eBay, there are a few drawbacks to consider. Below are a few more:

Marketplace Fees With No Much Control

As we’ve previously mentioned, eBays marketplace fees are somewhat of a disadvantage. If you’re selling low-ticket products producing little profit, selling on eBay might not be lucrative. Therefore, if you’re considering eBay, you’ll need a firm grasp of your profit margins and the fees you’ll shell out.

Once you’ve made these calculations, you’ll have a better idea of whether eBay is the right sales channel for you. You also don’t have much control. As with any digital marketplace, these companies are out for themselves. They want to draw attention to the merchandise, not the specific sellers.

As we’ve already said, this massively impedes the ability to communicate with your customers and promote your brand. Plus, you don’t own your eBay shop- eBay does. This means, that you’re subject to their terms and conditions, which they could change in a heartbeat- scary stuff!

eBay’s Incredibly Competitive With Shippers Getting Lost

Although eBay doesn’t sell products themselves, there are thousands of other sellers competing for the same customers. You’ll need to find a way of setting your brand apart from the rest- which can be somewhat tricky. Similarly, it’s good to note the quality of the buyers. eBay has got a reputation for attracting bargain hunters.

This means, that most shoppers want products at the lowest possible prices. Therefore, if you’re hoping to sell expensive goods, eBay might not be the selling platform for you. Slow shippers also get lost in the crowd. eBay rewards sellers who offer buyers same-day delivery. So, if you’re unable to mail packages that quickly, you won’t get a good exposure.

Related Toolkit: AppSumo | The No #1 Marketplace For Digital Marketing Tools

In the end, this doesn’t auger so well with your business — it puts you at an immediate disadvantage. In January 2008, eBay announced significant changes to its marketplace business in three major areas: fee structure, seller incentives and standards, and feedback. These changes have been controversial with some sellers, but it aims to improve its quality.

Syncing your product inventory can also be problematic. For many e-commerce sellers, eBay is the second point of sale. More often than not, entrepreneurs struggle to configure a system that monitors and syncs stock levels across all their selling platforms. This can cause a logistical nightmare, requiring a great deal of care and attention.

Final Words:

It’s hard to believe that one of the most celebrated dot-coms has now been established for nearly 20 years. Pierre Omidyar, a 28-year-old French-born Software Engineer living in California coded the site while working for another company. Eventually, he launched the business site on Monday, 4 Sep 1995 with a more direct name ‘Auction Web’.

The site became eBay in 1997 but attracted no visitors in its first 24 hours. By 2012, it had 112 million active users globally — defined as users who have bid, bought, or listed an item during the preceding 12-month period. And, with the total worth of goods sold at $60 billion — equivalent to $2k every second —  with $8.7 billion in total revenue.