A lot of people have a general dislike for eBay, because when a sought after is sold there, it ceases to be worth what the market in general will pay for it, and gains instead the value of what some nutcase collector with more money than sense will pay for it. When presented with the opportunity to get their hands on something that ten other people also want by just paying a quid more than the next guy, the nutcase collector will usually take it. Unfortunately for him, so will the next guy.

Me, being some nutcase collector with more money than sense, I don't really mind this fact.

The problem as I see it with eBay, and other online auction, is that the bidding system doesn't really work as it should. People are supposed to bid as much as they are prepared to pay, and in the end, the person who is prepared to pay the most wins. But it doesn't really work like that. What people are prepared to pay is almost always "slightly more than the other guy is." Even though these maximum bids are hidden, you can usually, with experience, guess what the other guy has bid. And outbid him. And based on what I've said earlier, you can imagine what happens.

So instead, it becomes a waiting game. Whoever can get that bid in 20 seconds before the auction closes is usually the one who walks away smiling. Why give the other guy time to think, eh? Otherwise known as bid sniping. There's even software, and web based applications available that'll do this for you...

eBay also brought about some new words:

You can make a lot of money as an Ebay seller. But only if you know what you are doing. There are a few traps that are easy to fall into. These traps will either kill your business, or eat all of your profits.

The Community Pages

Ebay has a community section where you can post on message and chat boards that are geared towards a wide variety of topics. One of the biggest mistakes you can make is to use these boards. Imagine if everytime someone downvoted you on E2, that you would lose money instead of XP. That is exactly what will happen to you if you express any sort of opinion on one of the Ebay message boards. Read the message boards if you wish (chances are someone else already asked the same question, or expressed the same opinion as you anyway), but do not make the mistake of using them.

Shipping and Handling

Do not try and make a lot of extra money from handling charges. This will come back to bite you in the form of negative feedback (or much, much worse). I tend to do exact shipping cost on larger, more expensive items. While using a fixed shipping cost on smaller cheaper items. In the long run it is best to charge exact shipping, or exact shipping +$2. That way there is no confusion as to what your policies are.

Avoid selling these items

Some items are just nothing but trouble. I have sold a variety of things on Ebay, but all my problems came from a few small categories. Mainly music CDs and video games for modern console systems. The majority of my non-paying bidders, and my negative feedbacks came from the people buying these items. These items are only worth it if you sell them in huge numbers, and I do mean huge. Most bigtime CD and videogame sellers have a lot of negative feedback (1 to 3 percent or worse). It doesn't bother them, because, lets face it, people see that 1000 total feedback and don't even bother to check the real numbers. But it just isn't worth messing up your perfect feedback to sell a couple of $3 items.

In general you should avoid anything that attracts teenaged bidders. Music CDs, console games (newer consoles only, bidders on classic console stuff tend to be older), N-Sync stuff, etc. You could sell 100 coffeemakers to 30 year olds without a problem, while you would be lucky to sell 10 Playstation games without at least one non-paying bidder, negative feedback leaver, etc.

Don't sell collectibles unless you are familiar with the hobby. About a year and a half ago (back when I was a big Ebay seller), I saw a woman (who was already a successful seller), move into selling Beanie Babies. That was a big mistake for her. Apparently she smoked, and no one bothered to tell her that Beanie Baby collectors apparently like to smell their little stuffed animals. She ended up having to close her account and start over (because of the negative feedback, and pissed off beanie freaks screwing up her auctions).

Label your auctions correctly

Try and know what you are selling. I just bought an arcade spinner control for $5.00, that is not a $5.00 item, they are about a $30 item. Why did I get it so cheap? Because the seller labeled it as "Vintage Pong Controller". Now I couldn't imagine someone who wanted a spinner typing any of those words into search. So no one who was interested ever even saw it. I got it at the opening bid of $5, instead of the $30 that spinners consistently bring in (I got my Shark Jaws arcade game from a similar labeling mistake).

Finally, don't get suckered in to all those extras.

Ebay has about 10 million different things that are designed to suck money out of you. Bold listings, featured auction, slide show, etc, etc. All that extra crap can add hundreds of dollars to the cost of running your auctions, without producing hundreds worth of results. The fact is, people are going to search for what they want, that $2 extra you paid for a bold listing isn't going to do a damn thing. The same goes for paying Ebay to host more than one image for you (just combine all your pictures into one image file instead). The only exception to the extras rule is when you have something truly special. It is worth the $100 for front page featured auction if you are selling Elvis Presley's tombstone or something, otherwise it is just a waste of money. (One thing I see a lot of is people who pay the hundred bucks to get their dutch auction of "random $4 item" featured, and then end up only selling 10 or 12 of the item). If people want your item, then they will buy it, period.

Good luck on your auctions everybody, and if your 99 cent CD ($8 shipping) front page featured auction doesn't go over well, don't say I didn't warn you. =)

Legend has it Ebay started as a humble place for people to trade collectable Pez candy dispensers. That legend, created by Ebay's PR manager Mary Lou Song, was for a time quietly sanctioned by Ebay founder Pierre Omidyar. It seemed believable because it fits with the reality that most of what we use today in cyberspace -- the stuff that made people billionaires -- did not arise out of corporate R&D labs. They were the products of hobbyist who were in the right place at the right time.

Ebay was founded by Omidyar in 1995. He was an engineer and veteran of Silicon Valley start ups. While working at General Magic, he figured the net could turn the world into one big garage sale. His wife was an avid Pez collector and he knew the mind set. Ebay's creation coincided with the Beanie Babies craze. Big corporations lost hundreds of millions of dollars thinking people wanted to buy from them online. What people really wanted to do was buy pre-owned stuffed animals from each other. Word of mouth from satisfied Beenie Babies sellers and buyers got people thinking what else could be sold/bought on Ebay.

The company's name itself is a shortened version of a consulting business Omidyar used to own called "Echo Bay". Many people incorrectly assume "Ebay" is a reference to nearby San Francisco Bay. Omidyar would have named his auction company EchoBay but the domain name was taken. Ebay, however, was still available.

As Ebay grew, it made a policy of hiring its own users, especially for support/customer service positions. They preferred to hire "average" people, housewives, school teachers, bus drivers, etc. because those were the people actually using Ebay. It was a takes-one-to-know-one philosophy.

Ebay went public in September 1998. It's initial public offering was $18 a share and closed at $47.38 on its first day.

Ebay founder Omidyar was born in Paris. His parents relocated the family to Washington DC when he was a child. He graduated with a degree in computer science from Tufts University in 1988. He worked for Apple's Claris division and programmed MacDraw. In 1991 he co-founded his own company called Ink Development, where he created ecommerce software. In 1992, he joined General Magic.

Ebay's success helped spur on another technology that had been languishing for a few years, online payments. Financial institutions spent millions trying to set up "e-cash" systems but failed because they were too complex. To use them, a merchant needed to invest thousands in hardware and software. And if you were a small time operation, forget about getting these online payment companies to even return your call.

PayPal got around the technology/volume limits by allowing anyone with a credit card and an email address to send money to anyone with an email address. Small time sellers on Ebay quickly adopted PayPal as the preferred method of payment. To attract more users, PayPal gave each new customer $10, which many promptly spent on a $10 item at Ebay! This risk free introduction into the world of online auctions helped grow Ebay further.
10 Things you may or may not have known about eBay

An Insider's Perspective

I worked for eBay for over three years, until last October. There are a lot of interesting bits and pieces happening behind the scenes that aren't necessarily public knowledge. In fact there's tonnes of information I could share, as I was a Level 2 employee having access to restricted analysis data and financial information, however I do not want to be sued. Therefore I will keep my interesting tidbits too mildly inane, non-controversial information.

1. All of eBay's technology infrastructure is hosted in the U.S. If you're using one of eBay's "international" websites and notice it runs quite slowly, compared to other destinations in your country, this could be due to the site actually being hosted on the other side of the world.

2. eBay's European customer support team is all located in one central location, Berlin, Germany. eBay's US customer support operations are located in Salt Lake City, Utah. It is a myth that eBay does not provide any customer support via the telephone. If you are a seller registered with the eBay US Powerseller programme telephone support is available.

3. When making a Quarterly earnings statement eBay does not habitually break out individual countries' financial data. Usually earnings are reported for the corporation as a whole. In recent times, some favourable data for Germany and UK have been publically reported.

4. eBay employees are specifically prohibited to sell eBay branded merchandise on the eBay website. eBay loves to give its employees junk. Shirts, pens, keyrings, fleeces, mousemats, laptop shoulder bags - the list just goes on. Most employees have no use for much of this, but they are also not allowed to sell it on eBay to some addict prepared to pay a fortune.

5. eBay UK employees are paid monthly by personal cheque. They then must manually deposit this into their bank accounts.

6. For the last three years (2000, 2001, 2002) a joint eBay European Christmas party has been held in Berlin, hosted by eBay Germany. Each year the number of guests over from the U.S. on business at this time has increased.

7. At the time of writing, charities who use eBay UK to raise money by selling donated items or "money can't buy" events are required to pay all of eBay's selling fees.

8. By checking back through prior community announcements, it is almost possible to predict when eBay will hold its next Free Listing Day, where fees to start an auction are waived. These appear to occur on a Quarterly basis.

9. It is well known in the eBay community that most new features appear on the U.S. site some time before the satellite operations. One of the largest changes to eBay in recent times was the introduction of a fixed price buying format, Buy it Now, which does not have any auction element. This was launched on eBay's "international" sites before the original U.S. website.

10. In many eBay offices employees are provided with Herman Miller Aeron chairs.

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