How to set up an eBay shop

Without a doubt, eBay is one of the most successful sites to ever grace the internet: on the auction website, a car sells every two minutes, a toy car sells every 25 seconds and a handbag sells every three seconds. With 178,000 people in the UK using the site as a form of income and an estimated 16 million people going to the website each year, an eBay store is one of the easiest ways to start a business. If you need help starting your business, take a look at our start up loans page to see how we may be able to help.

Getting started

Before you start your eBay business, you will need to select a product to sell. Whether it's antiques, garden accessories or classic cars, most eBay businesses specialise in a certain type of product. Choose something you are interested in and have a thorough knowledge of to avoid being caught out if a buyer has a question about it.

eBay users go to the website to find products they wouldn't usually be able to find in the shops - so look for unusual, one-off or hard-to-find items. To get repeat business, consider selling items your buyers will need to return for. If you're serious about selling on eBay, you'll want to buy your products on a wholesale basis. To find a supplier, attend trade shows or look online for wholesalers. If you've already had good sales on eBay or you have the figures to prove there's a niche for your product, use that as a negotiating point with the supplier.

Register your business

To do this, create an account on eBay and register for PayPal, the payment system used by eBay.

Once you've registered yourself, register as a business user. If you're using the site as a business, eBay's guidelines say you must register as a business user or you may be breaching the Unfair Commercial Practices Directive. Registering a business also qualifies you for certain discounts. When you're registering your business, eBay will ask you to verify your identity by asking you to provide your name, address, email address and phone number, as well as a credit card number and information about your bank account.

Selling on eBay is just like any other business, so don't forget to register as self-employed with HMRC and consider registering your business as a limited liability company to protect yourself if the business fails. If you think you're going to be making more than £68,000 a year, you'll also need to register for VAT.

If you have lots of auctions going at once, you may wish to create an eBay Shop. An eBay shop allows you to present all your auctions on one page, along with a customisable and branded 'storefront'. To open a shop, you must be verified by PayPal and have a minimum Feedback rating of 10. Depending on the type of shop you use, you will get additional benefits such as seeing your items will be further up search listings, making them more eye-catching to consumers.

More points to consider

• Once you've made some sales, you might want to consider diversifying your offering. Are there any accessories you could sell alongside your products? Is there any branded merchandise your customers might be interested in?

• One of the most influential factors which will determine whether a customer will buy from you is your feedback rating. Negative feedback is a huge deterrent for customers, so make sure you provide the best customer service possible: answer questions promptly, have a clear returns policy and never try to fleece buyers on the postage and packaging.

• eBay Education Specialists are experts who show sellers how to maximise their profits during a series of training events all over the country. You can find out if there's a session in your local area by searching eBay's Education Specialist directory.

How to set up an eBay shop checklist:

• Choose difficult-to-find or unusual products you have a good knowledge of to sell

• Find a supplier by visiting trade fairs or searching online

• Start by registering an account with eBay, then register as a seller

• Register as a business user

• Make sure you register as self-employed with HMRC

• Create an eBay shop to present all your auctions in one place

• Stave off negative feedback by offering great customer service

FAQ

The short answer is no. However, eBay does allow you the right to reply - you can justify why you received negative feedback or explain that you offered a refund. What puts buyers off auction listings? Background music, animated images, images which are slow to load and busy pages are all a deterrent - so keep your listing simple.

Resources

• Get tips and advice from eBay's business centre

• How to start selling - advice from eBay

• Tips from Entrepreneur magazine on finding suppliers for eBay businesses

• Success Stories from Transmit Start-Ups.