Home-based e-business - an option for the self-employed?
3.2.1. Auction Sites
The simplest way to sale physical products online is to list them in an auction site such as eBay [11]. It is not difficult to make a profit from buying and selling in auction sites but one will need to do some research. It is better to either select some rare item that people are willing to bid at a higher price, or some hot items that offer a lower than market price. The main advantage of selling through auction sites is that very little technical knowledge is required. One does not even need a web site or carry out other forms of promotion. The only requirement to sell through an auction site is a valid e-mail address. However, the way that the item is presented i.e. pictures and description, may affect the final price realized by the auction. Many traders sell their products through auctions exclusively, whereas others use auctions as means of generating traffic to their site. Traders can also use auction sites to test the market response to individual products.
eBay [11] is by far the most popular auction site and is an online marketplace that creates a powerful platform for the sale of goods and services by individuals and businesses. There are millions of items across thousands of categories for sale on eBay and it is an easy to use auction site. eBay enables trade on a local, national and international basis with customized sites in markets around the world. Sellers have to pay fees for listing their products and selling their products through eBay. Fraud protection is provided by eBay up to a value of US$250. There are a lot of options and strategies available for selling on eBay and other auction sites in terms of setting the open bid price, whether or not to set a reserve price, multiple item auction, and to pay more to eBay for extra exposure. Which is the best approach depends on the individual product and experience has to be gained through trial and error.
The charges levied by eBay on the seller are quite high, especially for low value items. If the seller chooses to accept payment via credit card through PayPal or other payment processors, then the final fees could be as high as 10% for items below US$25. Moreover, prices realized through eBay are usually at a marked discount to comparable products sold in online shops. Therefore the selection of the products is paramount to success in eBay. In general pre-owned items tend to do better than new items as pre-owned items have hard to compare prices. Collectible items such as pottery, porcelain, old toys or watches also do quite well on eBay.
A winning bidder or seller in an eBay transaction can leave feedback for other users. This is the only means by which a prospective buyer can judge the reliability of the seller. These comments can be positive, neutral, or negative, depending on your experience. Every eBay member has a feedback profile, this is an important detail when it comes to avoid being cheated upon. Therefore, it does take time for an individual to build up his reputation on eBay.
Individuals who wish to sell a quantity of product will use Multiple Item Auctions (Dutch Auctions). However, one has to be resident in the U.S. or have a feedback Rating of 50 or above. This makes it difficult for newcomers to eBay in Hong Kong who wish to sell a large quantity of a particular item in one go. The US$250 guarantee provided by eBay against fraud is vital as a confidence building measure for both sellers and bidders. Recently, eBay acquired PayPal, which is the most commonly used means of payment at auctions. This should lead to an enhancement of the service provided by eBay.