Millions of people trade on eBay every day; from private individuals with old clothes and DVDs to shift, to ‘power sellers' with eBay shops, the business opportunities are only limited by your imagination. There really is a market for everything and increasingly, more and more people are turning to eBay as a source of income.

But how do you maximise your returns from the website? To really make money you have to find popular items and source them cheaply. The nature of eBay is that people try and find bargains, so don't expect anyone to pay high-street prices for your goods. You'll make the most money if you drive up bids by finding a high demand and keeping supply low. A product with wide appeal is more likely to get bids and a limited number of listings will drive up the bid price.

The cheapest way to source products is by buying in bulk and there are three main options for this; drop-shipping, buying ex-chain store goods and buying from wholesalers. Drop-shippers deliver direct to the customer so the products don't go through you, which is great if you don't want the hassle of packaging and posting things, but not so good if you want a more hands-on approach and more control over your items.

With ex-chain store goods again you're somewhat constrained when it comes to your products. You'll only be supplied with certain sizes or certain brands so you limit your market. On the other hand, people always love a bargain and premium branded clothes still with the tags on sell like hotcakes.

Buying directly from a wholesaler and selling at a mark-up gives you the most control over your product. Firstly, you choose the wholesaler – the range of choice out there means you can change suppliers whenever you like to get the best deals. You choose your products and how many to buy. Some, like this jewellery wholesaler, have huge ranges so you'll always find something new. Sourcing just a few of each product is something you should be able to do with a good wholesaler, so your customers will be encouraged to bid against each other for rare items.

If you're just starting out and you're a bit unsure, keep costs low by choosing a wholesaler with a low minimum spend. That way, if everything really does go wrong you're only out of pocket a few pounds. Buying stock frequently but in small quantities will enable you to closely manage your cash flow and update your ranges often. If you find something sells well you can always order more from the wholesaler.

A strategy to make sure you never lose money on eBay is to set a minimum bid price. It might put some people off if they feel they aren't getting a bargain – sometimes a 99p minimum bid draws people in – but on the other hand you're protecting your margins. It doesn't hurt to try and if you experiment with small quantities of stock you'll soon find what works best in your market.

So sourcing something you're interested in, from a good supplier and watching your overheads are the key ingredients to running a successful eBay business. Start off small to find the most popular items and how much people are prepared to pay. Look for premium items to sell instead of low-value, low-profit ones. Perhaps most importantly of all, make sure to have a great relationship with your customers; eBay is all about service and a good seller with interesting products will find that people buy from them again and again.