by RoxH

Created on: November 11, 2009

The success of eBay has opened up a great online business opportunity to many budding entrepreneurs and is an excellent way to start your own business online with very little start up capital. The success of the eBay format is unmatched and no other online auction site offers the same opportunity to reach a vast pool of customers all ready and willing to spend money.

However, for every eBay success story there are hundreds of people who have started a business selling via eBay only to fail, giving up after achieving few or no sales. Many people fail to realise that although setting up an online auction business is easier (and cheaper) than establishing a bricks and mortar retail business in order to build a profitable business online you need to put in just as much effort as with any other business. Not only this but there are added hurdles that the online retailer has to jump to win over customers.

The first thing you must do before getting your online auction business up and running is research. This is crucial to the success of your venture. You need to establish what sells and for how much, eBay Pulse is great for researching popular categories. This will give you some ideas about what areas you could focus your business on. Once you have your ideas you have to look at the competition and really look at how well items in your category sell. Look at current and completed listings over a period of time to get a real feel for your market.

You also need to research your competition, how many other people are selling the same items as you hope to, what feedback do they have? Even if they are very popular this can work in your favour, learn from them and make sure you offer equally competitive prices and good customer service. You need to offer as many payment options as you can so you don't put off prospective customers; Paypal is essential, most people prefer to pay this way as it's safe and simple.

The next stage is sourcing a good wholesaler or dropshipper (if you're starting up on a tight budget). You need to find a supplier that can offer you goods at a competitive rate. If you can't match the competition on price you will face an uphill struggle to win business. The very popularity of eBay makes it a highly competitive marketplace, meaning prices are really low in some categories so you need to be sure you can price your items cheaply enough. Make sure you take all factors into consideration, for example some categories are so fiercely competitive that

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