What Is an eBay Business Model?

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An eBay business model can be one of several types of eBay businesses and the strategies used to run it. The one thing that all such business models have in common is that they use eBay as the main source of sales. The specific business model chosen defines how the eBay business operates, where its products come from and how it serves its customers. Some are designed for the business to stay small, while others are designed to grow large enough to include getting products from other countries.

Retail Stores Selling on eBay

  • Retail stores selling their overstocked, damaged and returned items on eBay are one type of eBay business model. The thousands of increased consumers looking for the products these retailers have to offer helps to liquidate the stock that was once harder to sell in a local setting. This is a win-win situation by ridding the retailer of overstocked or hard-to-move items, while providing consumers with lower prices on items that might not be available locally.

Consignment

  • An eBay consignment service lists items that belong to someone else on eBay and charge a fee for this service. The fee is usually in the form of a percentage of the final sale price. Because of this, consignment services only take items that will be profitable and will sell when listed. The consignment service takes care of the photography, payments, packaging, shipping and customer service. The customers may drop off items or may be provided with a local merchandise pickup service. Many times this eBay consignment business model is operated out of a home office.

Dropshipping

  • If an eBay business model depends on dropshipping, that seller is listing items that are provided at wholesale prices to the seller by a company that also provides shipping after the sale. The eBay seller keeps the amount that he has collected over the wholesale prices he has paid. The wholesale company supplies the entire inventory and the eBay seller handles all customer service and listing of items.

Wholesaling

  • The wholesaling business model on eBay consists of a seller listing a large quantity of items in the same auction, which is called a "lot." The items may be from small businesses that buy wholesale items, or from local estate sales and auctions. Sometimes these large lots contain merchandise that is less than perfect but still functional. These lots are usually sold to individual eBay sellers looking to get a discounted price, who then resell the items individually on eBay for a profit.

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