Ready to start an eBay business?

Step 5: Build a brand on eBay
On eBay, sellers are offered a number of tools to help establish their brand identities, including:

About me: A free page that enables you to describe your business and any relevant information that would make buyers feel more comfortable buying from you.

eBay stores: A virtual storefront that puts all of your current auctions together in one place, so buyers can see everything you're selling at a glance. You'll pay a monthly fee based on the level of store services you want, plus additional fees for items listed and sold.

Customizing tools: A number of features (accessible from your "My eBay" page) that enable you to make your pages stand out from others offering similar merchandise.

Like any marketplace, eBay is constantly changing. "A lot of people get set in a comfort zone, especially if they have an initial rush of success," says Griff. "If you get to the point that you really feel comfortable you know what you're doing on eBay, I guarantee you there's a brick flying at the side of your head at 80 miles an hour that you're not seeing because you're not looking in that direction."

You can expect pricing and demand on eBay to change over time. As more and more people start operating on eBay, competition will increase and prices may decline slightly. Still, keep in mind that eBay has reached only a small fraction of its potential worldwide market. And it will continue to grow even faster as internet access becomes more readily available world-wide. "EBay is the leader in internet auctions," says Morphy. "It has such a strong hold on the market and such a huge following, you can't beat it."

Legal and tax tips for eBay sellers
When you sell on eBay, you're subject to most all federal and state laws, taxes and rules that apply to retail businesses generally. Here are some tips to help you stay out of trouble on eBay:

1. Set yourself up as a legal business. Get federal and state tax ID numbers for your business, as well as any licenses and permits your state requires for you to sell your merchandise. If you're using a trade name, register it with your city, town or county clerk's office as your state law requires.

2. Register for your state's sales taxes. If the winning bidder is a resident of your state, you'll have to pay sales tax on the bid amount. Put the following statement on all eBay auction pages: "Residents of State X [your state] must add ___% sales tax to their winning bid."

3. Sell only legitimate merchandise. If a random street vendor offers you a shipment of "genuine Rolex watches," watch out. Competing eBay sellers offering Rolex watches and Rolex itself can report you to eBay for selling illegal knockoffs, and eBay will cancel your auctions. Find out if the stuff you're planning to buy is legitimate by visiting eBay's Verified Rights Owner program.

4. Resist the temptation to "shill." If you (or a friend or relative) are ever tempted to bid against legitimate bidders in an attempt to drive up the price of your products (an illegal practice called "shilling"), think twice. Not only will eBay's fraud department shut you down permanently if they catch you, but many state attorneys general are bringing criminal charges against flagrant offenders, with eBay's cooperation.

Finding items to sell
As eBay becomes more popular, it's getting harder to find quality products to sell without bumping into other eBay entrepreneurs. Here are some product sourcing strategies your competitors might not have thought about (yet):

Estate attorneys are deluged with requests from grieving relatives to help them "clean out Mom's place" because they either can't bear to do it or don't have the time. Send a letter to the estate attorneys in your area (get a list from your local bar association), and tell them you specialize in online estate sales of any size.

Other eBay vendors often buy tons of stuff in bulk lots, and there's a lot of merchandise they just don't want to sell. Let other sellers know you're looking to buy certain categories of merchandise and will take excess inventory off their hands.

Take out an ad in your local newspaper and offer to take consignments of stuff to sell on eBay for a small upfront fee plus a percentage of each winning bid. Have your lawyer prepare a one-page consignment agreement for each new seller to sign. Keep in mind there's growing competition in this field (including nationwide franchises such as iSold It and UPS-affiliated QwikDrop), and your state may require you to get an auctioneer's license before you legally can take consignments.

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