What does it cost to start a business on eBay? Tim Davies discusses the ins and outs of setting up a sales channel in the virtual marketplace.
eBay is no longer just a great place to convert all that stuff lying around your house into cash. Tens of thousands of Australians are now running profitable businesses on the site too.
In 2012, eBay reported that almost 160 Australian businesses each achieved $1 million or more in sales on eBay.com.au. So how did they get started? Surprisingly, many of them started at home and then moved into bigger premises as they grew.
Over seven million unique visitors come to eBay.com.au every month. That’s a lot of potential customers already searching for products you could be selling. The great thing about eBay is that the costs of setting up a business are minimal, and most of the costs are only incurred when you sell. That means the up-front risk is very low. So what are the costs?
Fees on eBay
There are four types of fees on eBay.com.au:
- Store fees
- Insertion fees
- Feature fees
- Final Value fees
Register as a seller on eBay
It costs nothing to register as a seller on eBay.
Open an eBay store
Without an eBay store, you will only be able to list single items for a maximum of 10 days. Opening an eBay store means you can create a listing for each product, nominate the quantity you have available, and leave it active until you sell out. (See all the differences between having an eBay store or not).
You can choose from three store levels to suit your business, and can change the store level at any time. eBay store fees are charged monthly. The more you pay for the store each month, the less you will pay when you make a sale. The monthly fees are shown in the table below.
Listing products on eBay
Products can be listed on eBay in either Fixed Price or Auction format. Every seller gets some free Fixed Price listings each month, so if you start with a small product range, it could cost you next to nothing until you make a sale. The table below shows the Insertion Fees for each store level.
Adding a subtitle to your listings or adding a Buy-It-Now price to auction listings will incur an additional Feature fee. Uploading up to 12 photos for each listing is free.
Making a sale
Every time you make a sale, eBay will calculate a Final Value Fee on the sale price. The rate will depend on which level store you were subscribed to when the item sold.
Certain product categories have lower or higher Insertion Fees and Final Value Fees. For details of all eBay fees, visit this page for a comprehensive breakdown.
Using the above table, you can quickly work out how much it will cost you to start your eBay business.
If you accept payments from customers via PayPal, make sure you include PayPal fees in your calculations. PayPal fees are charged at the time the customer makes their payment using PayPal, and reduces as more of your sales volume goes through PayPal. For further details on this topic, visit PayPal’s fees page.
Returns & refunds
Every time you refund a customer (conditions and time limits apply), eBay will also refund you the Final Value Fee charged on that transaction. If your customer paid via PayPal, and you refund them via PayPal, PayPal will also refund the PayPal fee.
As with any business, there are a wide range of costs to take into account including rent, staff, equipment, storage, delivery, office supplies, services and other overheads. If you plan to grow your eBay business, it would be wise to consider an eBay compatible trading solution which can save you time, and allow you to manage a bigger volume of inventory and transactions with a higher level of automation. With prices ranging from free up to $1,200 per month, selecting the right one will depend on your individual business needs. For details on some of the solutions available, there are further details available via our Seller Centre.
eBay recently launched this new Seller Centre with the intention to provide relevant and helpful information about running a business on eBay. If you’re thinking about starting a business on eBay, or already have one, this is the best place to look for in-depth information on the topic.