Starting an Online Business All-in-One For Dummies®, 3rd Edition

Understanding How eBay Works

Online sales usually involve four key elements: product, price, seller, and buyer. On eBay, buyers can pay a fixed price or compete with one another to win the item in a bidding system. If you've ever been to a live auction, you know that buyers raise their bid price until one bidder remains, and then that highest bidder pays the top price and receives the item. On eBay, members place a bid electronically rather than raise a paddle.

Here's the basic flow of how an eBay transaction works:

1. List an item for sale on eBay. See the “Setting Up an Item for Sale” section, later in this chapter.
2. If you listed your item with a fixed price, a buyer who is interested in your item at that price will click the Buy It Now button to purchase the item, and eBay sends an e-mail to you and the buyer.
3. If you listed your item as an auction, a buyer places a bid on eBay for your item, indicating the highest price he or she is willing to pay. The buyer with the highest bid at the end of the auction's time period wins the item, and eBay sends an e-mail to you and the highest bidder.
4. You send the buyer an invoice, indicating the total for the item sold, including shipping, handling, and sales tax (when applicable) and whether you accept PayPal or a credit card.

   If you need to set up your accepted forms of payment, see Book IV, Chapter 4.

5. The buyer sends you payment.
6. You mail the item to the buyer. See Book IV, Chapter 7 for more info on shipping products to your buyers.