EBay is a big market where you are able to sell almost all kinds of merchandises. You can go to eBay and browse through all the product categories to have an idea what are the products on sales. However, to sell merchandise on eBay, you will need to know about the characteristic of the product you intent to sell, in particular the product life cycle.
If you intent to sell a fast moving consumer product such as digital camera, PC, handphones, etc, you will need to know about the product life cycle as these products evolve very fast. Typically, the product life cycle behavior as a normal distribution curve or a bell shape curve. It consists of four phases, namely the Launching Phase, Full-Retail Phase, End-of-Life Phase and Liquidation Phase.
In the Launching Phase, this is the time where the product is just introduced into the market. It is new to the market where everybody is very interested about it and wants to get hold of it. As time goes by, the product will go into the Full-Retail Phase where you can find it selling everywhere and at the same price. During this phase, most of the people would have already purchased the product if they intent to have. And the purchased is usually done at retail shops. As times go further, the product will go into the End-of-Life Phase, where the sales and interest of the product start to decline. And finally, the product goes into the Liquidation Phase whereby the interest almost reduced to zero. Usually, at this final phase, a new product will be launched.
So how does these information helps you on the product selection? As can be seen from the behavior, there are two phases during the product life cycle you can exploit. They are the Launching Phase and the Liquidation Phase. In the Launching Phase, this is the time where the interest in high where buyers are looking for something new and hope that they can get a good bargain from eBay. At times, due to the great interest, the buyers do not mind to pay a little more.
Whereas in the Liquidation Phase, the buyer is really looking for some big bargain. They do not mind that the product is a bit out of fashion as long as it can still function. They do not mind the reduced in features as compared to those newly launched. So, you can see, if you are selling consumer products, these are the two phases where making a sales is more likely than the middle two phases. This is because, there are no reasons for the buyer to buy from eBay when they can get the products anywhere and at the same price.
However, this product life cycle may not be applicable to antique or collectibles. For this category of merchandises, there is really no time line tag to it. The buyer will buy as long as they like what you are selling.
So as you can see, knowing the product life cycle and the way how it is being marketed in the market is crucial in your eBay product selection. Choosing the product to sell when they are in the middle two phases may not be desirable whereas choosing the product at the two extreme phases may be the best option. It is reported that buyers are expecting a reduction of between 20% to 50% off the retail price when buying on eBay. You can only give these offers most likely at the Liquidation Phase as you are able to get the product at much lower cost. This is because, the manufacturer or whole seller are trying to dispose whatever stock they have to prepare for the new model.
It was also reported that liquidation product sells for 10% to 20% of cost. This means that, they are making a lost of 80 to 90%. It was also reported that for items that are in the Launching phase, they can sell anywhere from 10 to 100% above the retail price on eBay. This is particular true that during every holiday season, popular items such as toy are typically sold out at department stores and you can generally get it at eBay. This is the time whereby you can fetch a good price for your product.
Understanding the product life cycle will definitely help you in deciding what and when to sell your product in eBay and make profit. Knowing the right time to sell your items in eBay is crucial.
(Note: Figures taken from eBay Strategies by Scot Wingo. Prentice Hall 2005)
-- Gladys A.
A: With so many people selling on eBay these days this is a question I get all the time. To many eBay sellers the thought of running an actual business is about as appealing as getting negative feedback, so they go out of their way to convince themselves that selling on eBay is really "just a hobby" and therefore, should not be susceptible to income tax laws.
While you might think selling on eBay is just a hobby and the extra money you're making is not reportable as income, depending on the circumstances, the IRS just might disagree with you.
The IRS rules are clear: you must pay taxes on all personal and business income and that includes money you make selling on eBay.
In its most basic sense, the IRS rules mean that if you buy a vase at a garage sale for $10 and sell it on eBay (or elsewhere) for $20 you made a $10 profit and therefore must report it as income and pay Uncle Sam his fair share.
In reality, if you are a casual seller who only sells a few items on eBay every now and then it's doubtful the IRS is going to lose much sleep over the few bucks you make.
However, if you consistently sell on eBay the IRS may deem your activities to be business oriented and you will be required to file a Schedule C and claim the income.
The IRS uses a number of factors to determine if a hobby is really a business. These factors include:
1. Do you carry on the activity in a business-like manner?
If you conduct your eBay activities in a business-like manner, i.e. you keep business records, track profit and loss, keep a separate checking account, etc. then whether you think so or not, your hobby is really a business.
2. Do you spend considerable time working on your hobby?
If you put considerable time and effort into your eBay sales, the IRS may contend that you do so for profit and not fun. It seems the folks at the IRS don't believe in doing things strictly for pleasure. My guess is, neither do you. If you weren't making money selling on eBay I doubt you'd bother getting up at 4 a.m. to hit all those yardsales.
Then again, maybe you would... :o)
3. If you depend on income from your eBay activities for your livelihood?
If so, it's a business, not a hobby.
There are a number of other factors the IRS uses to determine if a hobby is really a business, but that covers the basics.
What's eBay's take on all this?
eBay is vehemently opposed to anything tax related (especially the forced collection of sales tax, which is a whole 'nother issue). It's understandable that eBay is not a fan of the IRS since trying to enforce tax rules on buyers and sellers would undoubtedly be detrimental to the way eBay does business.
eBay does not does not issue 1099 tax forms to sellers, nor does it report seller's sales figures to the IRS. eBay considers itself a faciliator, i.e. they provide a marketplace in which buyers and sellers come together to do business.
However, since eBay is not directly involved in the transactions that take place between buyers and sellers, it would be impossible for eBay to report sales figures. Furthermore, eBay does not track if a seller actually gets paid by the buyer, so they have no idea how much money actually changes hands, making it impossible for eBay to issue accurate 1099s to sellers.
On the bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including the cost of inventory, listing fees, shipping, envelopes, packing materials, etc. You might also be able to deduct things like the purchase of a computer for business use, office space (even if it's a home office), office supplies, and more.
I'm not accountant (nor do I play one on TV), so please do not take any of this as tax advice or legal opinion. Talk to your accountant if there's any doubt as to whether you should or should not be paying taxes on your eBay earnings.
Both Rose Mary & Prakash Singh are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Rose Mary has sinced written about articles on various topics from Gardening, Affiliate Programs and How to Sell on Ebay. Rose Mary.Freelance Writer on Various Interest Topics.Discover more about eBay opportunity at You can also get a free Bbay a. Rose Mary's top article generates over 6600 views. to your Favourites.
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