Ready to start an eBay business?

Step 3: Manage the auction process
There are several types of eBay auctions. In a basic auction, you post your item with a starting price and wait for bidders to drive the price up until a closing time, which can be three, five, seven or 10 days later, when the auction ends. You are then obligated to sell to the highest bidder.

You can also set a reserve price, which is a hidden minimum price that is the lowest amount you're willing to accept. Buyers are not shown the reserve price, and if it is not met, you are not obligated to sell the item.

If you have two or more identical items for sale, you can post them in the same auction by using a dutch (or multiple item) auction.

If you don't like auctions, eBay also has a "Buy It Now" feature that gives bidders the option to buy your item immediately for a set price. Or you can choose a fixed-price listing, which simply puts the item up for sale at a set price, with no bidding allowed.

To sell on eBay, you'll pay a listing fee to post your merchandise and a final value fee (a small percentage of the sale price) when the item sells. These fees change from time to time, so be sure to check the eBay site to make sure you can pay all the fees and still make a profit.

A number of books offer advice on reducing the amount of time and effort necessary to create eBay auction pages, such as Marsha Collier's "eBay Timesaving Techniques For Dummies," Janelle Elms' "eBay Your Business" and Joseph T. Sinclair's "eBay Business the Smart Way." Entrepreneur magazine's Startup Guide #1824, "How to Start a Business on eBay," is available at www.smallbizbooks.com.

Software can also help you streamline the auction management process. Listing programs, such as Turbo-Lister (available for free from eBay) and Zdrop, enable you to create multiple auction pages on your PC and upload them as a "batch" to eBay. Full-service auction-management programs like Auction-Helper and Zoovy handle almost everything, from inventory management to label printing.

Step 4: Provide great customer service
Buyers will ask you questions about your merchandise, and if you don't respond promptly, they won't bid. Top-notch service also means shipping your goods to the winning buyer within two to three days after the auction closes, or as soon as you receive payment.

When an eBay auction is completed, the goods shipped and payment made, you and your buyer can comment on each other in eBay's Feedback Forum. Buyers rely on the Feedback Forum to determine how reliable a seller is. But watch out: If buyers aren't happy with your customer service or your merchandise, they will post negative or neutral feedback. Many buyers will not deal with a seller who has less than a specified number of positive feedback postings in the forum, or a seller who has too many negative feedback postings.

Unfortunately, some customers will threaten to leave negative feedback if you don't do what they want, even if they are being unreasonable. Most of the time, you're best advised to meet their demands because "the customer is always right," and because you want to avoid negative feedback on eBay at all costs.

In cases where a buyer posts negative feedback that is inaccurate or unfair, eBay affords you a limited opportunity to respond to the negative posting and tell buyers your side of the story. In extreme cases, eBay's SquareTrade service helps mediate disputes between eBay buyers and sellers.

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