Online Auction Entrepreneur The Buzz


People go online to buy and sell almost anything you could imagine. There are thousands of categories on online auction sites, from antiques to cars, clothing to coins, and computers to pottery.

And there are millions of people using these sites. For example, the most recent tally of registered eBay users was a record 181 million. That's a lot of potential customers to reach from your computer room while in your pyjamas!

Making Money

A lot of money is changing hands through online auctions. Internet-savvy entrepreneurs just need some determination to get their cut of it.

"If you put your time and energy into it, you can make it a way of living," says Stephanie Bass, owner of Cotton Tales Online Consignment. "I started by selling my children's clothing as they outgrew them. I used that money to buy new clothes."

Once Bass was established with online auctions, she created her own website.

Going from selling through online auction sites to making your own website is a common process, according to Eileen Von Haupt. She had a real-life retail store from 1985 to 2003, and began selling online in 1998. She started her first website in 2000 and began another in 2003.

Since closing her actual storefront in 2003, she has been conducting all her business online.

"You have to know your market and know how to write up an auction," says Von Haupt. "You can have the same items as another seller, but if you take more time and market them well, you can make more money than others."

Of course, finding a product to sell that has little competition will help your cause. Specialty or niche markets thrive online. Finding the right product and a reliable source to supply you with the product is an important task for an online auctioneer.

Starting Up

A big attraction for at-home entrepreneurs is low start-up costs. You don't need to find a retail location or worry about your landlord raising your rent. If you have a reliable computer with good virus protection and an Internet connection, you're almost there.

You should also have a digital camera, good lighting for picture-taking, packaging material and an accurate scale to determine your product's weight for shipping. The amount of room you will need for storage will depend on what you are selling.

Bass recommends that you start by selling things in your own home.

"Sell what you would normally put in a garage sale...then see where that leads," she says. "What are your interests or hobbies? Are you spring or winter cleaning? Do research...to see potential for sales."

Von Haupt also stresses the need for research before you jump in. "The main thing is to find a good product," she says.

She recommends searching completed auctions for 30 days to determine the prices different products are bringing in and whether competitive sellers are making high profits. Then you have to see how much you could buy a product for, and add your estimated packaging and shipping costs to see if you can compete with the competition's prices.

Another important part of your research is finding out just how these sites work. Al Von Haupt works with his wife Eileen as an online auction entrepreneur. He's always amazed by the number of users who don't read a site's online instructions.

"You have to take the time to read the entire user agreement on eBay. Don't just scroll down to the bottom and hit 'I accept,'" he stresses as an example. "At the top of any eBay page there's a 'help' button that you can click on to look practically everything up and find out more information."

Getting Paid

Another thing to research is how you'll be receiving your money.

"Know your payment options and the benefits and risk factors of each," warns Al Von Haupt. "Know how much you're prepared to lose."

Bass recommends online payment sites, which act as intermediaries between buyer and seller.

Many auctioneers also accept personal checks. Although there is always a risk of fraud, bounced checks and bidders using phony IDs or just not paying up, most eBay customers are honest.

"We've had over 1,000 experiences on eBay, both buying and selling, and 99 percent of those have been good," says Eileen Von Haupt. "There have been two bounced checks, one of which was corrected. Overall, for fraud, if you know what you're doing, it's low-risk."

Reality Check

Although it is possible to make a living doing online auctions, there are a lot of "ifs" involved. You can make good money if you have the right product, if you market it well, if you spend a lot of time at your computer, if you take good pictures, if bidders pay you on time, if you aren't undercut by competition and so on. Then there may be other problems such as hold-ups in the postal system or at customs offices between countries.

Worrying about all these possible mishaps can make this job very stressful, especially if you rely on it for your sole source of income.

Also, the competition is getting steep.

"Now the market's so flooded that it's getting harder and harder to make a living," says Al Von Haupt. "Diversify, diversify, diversity!"

Whether it's making a website or opening an actual store, he stresses the need for a supplementary income source. He says people on online discussion boards all agree not to put all your eggs in one basket. He and Eileen are considering re-opening a real store.

And don't think being your own boss is easy. It takes a lot of time to make a living online.

"I've run up to 100 auctions in one day," says Eileen Von Haupt. "Prepare to be next to your computer 24/7."

Despite the long hours, she admits she enjoys the concept of selling online.

"Taking quality pictures, writing creative descriptions and the lottery aspect of selling antiques and collectibles in an auction -- you never know what you're going to get!" she says.

The Forecast for Online Auction Entrepreneurs

"With more families into multi-tasking and multi-scheduling, it is hard to find time to shop," says Bass. "The future is just going to get brighter for buyers as well as sales for online auctions.

"Shopping for birthday parties, holidays and school clothing are all time-consuming duties that can be done quickly by shopping online," Bass continues.

"More and more moms and dads are trying to find ways to stay home with their children and make money at the same time. Online auctions are an excellent income source."

Links

National Auctioneers Association
Information, news and resources for professional auction sellers

Online Auction Sellers
Information on the tax issues you may face when starting an online auction business

How eBay Works
Detailed overview on using eBay from How Stuff Works