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3 different eBay business models you should know about

Nahar Geva

01 Nov 2018


Millions of people have found their freedom from starting an eBay business.


These are people that have broken the shackles of a boring 9-5 job, gained the ability to work anywhere they want and created their dream online business.




We’ve even written articles about some of them too. Like Jose, who left his call centre job to start a £600k/year eBay business, or Shezzy who learned how to sell on eBay successfully and now employs lots of workers in his hometown of Karachi.


And with so many people now selling on eBay, it’s clear that there are many different approaches you could take to starting an eBay business.


In this article, I’ll run you through a few of the business models you could use to start an eBay store, along with the pro’s and con’s of each method. If you have any questions, make sure to leave a comment at the end and we’ll get back to you. By the end of it, you should have a good idea of how to start an ebay store and make money on eBay.


  1. Dropshipping / Retail Arbitrage


What is dropshipping / retail arbitrage?


Dropshipping is a business model where you sell items directly from a retailer or supplier to a customer. By doing this, you never hold any stock yourself, but instead  you become the middleman.


Let’s say you’re starting an eBay business, here would be an example of the dropshipping model in action:


  1. You find an item from a supplier like AliExpress


  1. You upload it to sell on your eBay store


  1. A customer buys the item from your eBay store


  1. You place the order from the supplier on AliExpress and the order is shipped directly to your customer - you never see it





Dropshipping and retail arbitrage use the same business model but the difference with retail arbitrage is that you buy your items from retailers.


Some popular retailers that dropshippers use are Walmart and Amazon. Retailers are stores that sell directly to consumers, whereas sites like AliExpress are suppliers as they sell directly from manufacturers.


How to start selling on eBay as a dropshipper:


Getting started as a dropshipper is usually a quick, easy and low cost way to start selling on eBay.


Usually the biggest challenge is knowing what to sell on eBay to make money

- which is where ZIK Analytics comes to the rescue! ZIK Analytics is a market research software tool that helps sellers find profitable in-demand items, categories and niches for you to sell on marketplaces such as eBay.





To make the process simple for you, we also advise that you find some dropshipping automation software to list your products for you and take care of manual tasks such as repricing and fulfilling the orders.


There are lots of software tools that can do this, many of which integrate directly with ZIK Analytics such as AutoDS, Salefreaks, DSM Tool, Yaballe (and more). Do some googling and research on Facebook groups for what other users advise before signing up - you’ll need one to start selling on eBay. Or visit here to see full list of resources. 


Also, be aware that there are different methods dropshippers use to start selling on eBay. We talk about our “similar items” method that thousands of ZIK Analytics members use in this article.


Pro’s of dropshipping / retail arbitrage:


  1. You don’t have to hold any stock yourself, which brings many big advantages. You have much lower risk if an item doesn’t sell because there’s little cost to you if it happens. You also don’t have to pay costly fulfilment and warehousing fees and no stock means low startup costs.


  1. The business model is easy to scale. Many of the tasks are automated by software or can be done by virtual assistants so growing your business becomes easier as you become more experienced.


  1. There’s a wide selection of products to choose from. Even if you stick to the biggest retailers like Amazon, there are millions of products so there’s always opportunities to profit. And when there are so many options, it helps you to find what to sell on eBay to make money.


  1. It’s one of the easiest ways to get started. You’ll have low operating and startup costs and lots of great software that makes selling super easy.


Cons of dropshipping / retail arbitrage:


  1. Profit margins are typically low, compared to other business models. With this business model, you may make very small margins but rely on selling a high volume of goods. This can mean just a few small things going wrong can wipe out your profits.


  1. Ease of dropshipping means higher competition from other sellers. And again, the more sellers there are the lower the prices become.


  1. Issues with suppliers. As you’ll be selling thousands of different items, chances are that you’ll end up selling or stocking some items that aren’t high quality which can lead to refunds and negative feedback.


2. Creating your own branded goods using suppliers/wholesalers


What is private label selling?


Private label selling is an easy way to create your own branded goods and start an eBay business without investing lots of money into product development.


To give you a real world example - in the world of cars you’ll often see that different brands such as Chevrolet, Ford and Nissan work together to produce one car chassis (and an identical looking car) but put their own badge on it, and market it with their own brand name as they cater to different customers.


For private label eBay sellers, the process is very similar. Let’s say you wanted to sell kettles on eBay, here might be the process you’d go through...



How to sell items on eBay as a private label seller:


  1. Find and contact a kettle manufacturer


  1. Provide them your logo, and branding information so they can apply small branding changes to one of their pre-designed kettles


  1. Place a wholesale order with them


  1. List them on eBay with your own unique branding, and likely use a fulfilment service to ship to customers when you receive orders.


How to start selling on eBay as a private label seller:


First off, you’ll need to use a market research tool such as ZIK Analytics to find ideas of what to sell on eBay to make money as a private label seller.


Once you’ve analyzed the market and think you’ve found a solid opportunity, you can start reaching out to manufacturers and suppliers. For this, we’d advise using AliExpress as it has one of the biggest and most well-known directory of suppliers (mostly from China).


Once you’ve been in contact and got them to produce your item with your branding and changes, you can place an order and get them shipped to a fulfilment centre. This is so that when orders come in for your product, you don’t have to store the items and send them yourself.


One fulfilment company we recommend is ShipBob, but there are plenty of others if you do some research on Google.


Pro’s of starting a private label selling business on eBay:


  1. Having your own brand differentiates you in the marketplace. If you’re stuck selling the exact same item as other sellers then you inevitably compete mostly on price. But if you bring your own unique item to the marketplace, buyers are often willing to pay a bit more for your branding.


  1. You’ll usually have higher profit margins. Getting your item directly from a manufacturer, placing a bulk order and having your own branding mean you can usually charge a premium as well as having a lower supply cost than other sellers. The result? Higher profit margins.





  1. Psychologically, it feels more like your own business. Don’t get us wrong, dropshipping is a great business to run, but you’re effectively acting as just a middleman. When you private label products, it feels like you’ve created something unique that you can show to your friends and family.


Cons of private label selling on eBay:


  1. There’s a higher risk from market changes or poor market research. If you don’t properly invest time in market research and understanding what to sell on eBay to make money, you could end up with lots of products that people don’t want to buy. Whereas with dropshipping there’s very little cost if this happens, most private label sellers buy their stock up front so this can be costly.


  1. You have to deal with the costs of having inventory (as long as you do a wholesale order of your items). This includes warehousing and fulfilment fees as well as the extra hassles associated with it.


  1. You’re more at risk from poor quality manufacturers. Private label sellers stock a much smaller selection of items than dropshippers that list thousands of unique products. As a result, if you choose a bad manufacturer you could be left with lots of poor quality stock and a high return rate.


  1. There’s a longer process to get from zero to sales. You can become a dropshipper in minutes, but private label selling takes more time. The reward of course is higher profit from your efforts. 


3. Garage Sales and Second Hand Goods


What are garage sales and supplying second hand goods?


Most people's first experience of selling an item on eBay is when they sell their old computer, old clothing or an unwanted gift.


But there are also people that go from selling second hand items to starting an eBay business. And not small businesses either, this article from Business Insider talks of someone that made millions from reselling bargains they found at garage sales.


If you’re not already aware, a garage sale is when someone sells unwanted items from their garage or in front of their house. It’s more common in the US than elsewhere but can happen anywhere.


It’s not the only way to find second hand items to resell though. Other places that sellers look for second hand items include Craigslist, Gumtree, Facebook groups and even police auctions! A good knowledge of what to sell on eBay to make money is vital to make this business a success.


eBay sellers that use this business model spend most of their time searching for undervalued goods and then reselling them on eBay for a higher price.


How to start selling on eBay via garage sales and second hand goods


You need to start by identifying which item categories are in demand so that you can keep a close eye out for them when sourcing items. If you’re not going to specialize in one particular item type, ZIK Analytics can help you with finding what’s hot and what’s not.


For example; one popular item type to resell are childrens toys which are very common in garage sales - with this knowledge you can buy items you know will sell well.


Another way to get started is if you’re an expert or have an interest in a particular item type. Whereas a lot of second hand sellers take a broad approach and buy many types of items, there are some that specialize in some categories like comic books, coins or certain antiques where they often find sellers undervaluing their goods.





Pro’s of garage sales and supplying second hand goods:


  1. The items are more likely to be unique.  This means you’ll face less competition when selling and will allow you to charge higher prices.


  1. The competition when sourcing items is much lower. Very few people go to a garage sale and even fewer go with the intention of reselling. This means you’re more likely to find items that are undervalued and can often haggle down prices.


  1. The profit margins can be high. If you know what you’re doing, you’ll be able to make a high markup on a lot of items you buy.


Cons of garage sales and supplying second hand goods:


  1. It’s very unpredictable what you’ll find. You could end up travelling to a garage sale with no quality goods or searching for hours with no success. There’s an element of patience required when selling second-hand goods.


  1. It takes a lot of effort to source items. There’s travelling and organizing delivery or collection of goods to take into account, whereas a model like dropshipping negates all these hassles. With garage sales it can also be hard to know what to sell on eBay to make money without lots of research beforehand.


  1. Can easily make a loss if you don’t know what you’re doing. You need a keen eye to spot what’s in demand and what’s good to resell. If you’re new to the business you may end up making a loss on some items before you figure this out.


  1. This model is much more intensive and less automated. You won’t have complex software to find the items for you, it’s down to you to manually search track and assess items. The more time you spend finding items the less time you spend making money from selling them.

When starting a business, it is important to make sure that your business is registered. The process is different in different countries and states. For example, if you are in Montana, you can form a Montana LLC 


Whichever business model you follow, you’ll need to know what to sell on eBay to make money. Try ZIK Analytics for 7 days and start growing your own eBay business today.