Economy: Making a Living on eBay

Certain numbers have an iconic status in America's business culture. One of them is the number of people who derive income selling goods on eBay: 1.3 million. The figure has been cited by eBay executives such as former CEO Meg Whitman, speaking on 60 Minutes in March; by companies that are part of the eBay economic ecosystem; and, in late April, by presidential candidate John McCain. "Today, for example, 1.3 million people in the world make a living off eBay," he proclaimed. "Most of those are in the United States of America."

Where does this number come from? And do more than 650,000 Americans really "make a living" selling costume jewelry, baseball cards, and cameras in the world's largest swap meet?

The number can be traced to a 2006 study conducted by ACNielsen on behalf of eBay. The company surveyed eBay sellers around the globe, including 2,000 in the United States. And it concluded that "approximately 1.3 million sellers around the world use eBay as their primary or secondary source of income," with an esti­mated 630,239 in the United States. Take careful note of the phrasing, however: primary or secondary. That could mean 50,000 use eBay as a primary source and 1.25 million as a secondary source. Or it could mean the split is closer to 650,000-650,000.

EBay doesn't break out the numbers, but it's a safe bet the reality is closer to the former. Even the minority of sellers who meet the company's "power seller" re­quirements aren't coming close to "mak­ing a living" selling on eBay. To reach the lowest level, bronze sellers must rack up $12,000 in sales (sales, not profits), or move 1,200 items over the course of a year. "A bronze-level power seller isn't making a full-time living on eBay," says Cindy Shebley, who began selling on eBay in 1999. "They have to really crank it up and get into higher tiers, like titanium." Levels rise from silver ($3,000 or 300 items per month) to Titanium ($150,000 or 1,500 items per month). Shebley is a silver-level seller (mostly photography and lighting equipment) but says most her income comes "from supporting sellers as a consultant and a teacher." Shebley teaches classes and is working on a new book, How To Market an eBay Business.

A part-time seller, Shebley is nonethe­less an integral part of the eBay economic ecosystem. The company itself (market capitalization of about $40 billion, 15,000 employees) is surrounded by businesses like the one run by Catherine Keener's character in The 40-Year-Old Virgin—a storefront that helped people sell things on eBay. In the real world, it seems there are almost as many businesses that will help you sell on eBay as there are items for sale on the site, from Mail­ Boxes Etc., to UPS, to bubble-wrap manufac­turers, to software developers who have created more than 12,000 eBay applications, to Paul Mladjenovic, author of Zero-Cost Marketing, teaching an online class at the Learning Annex.

EBay support has become a compelling in­dustry because it turns out there's a lot of friction in this supposedly frictionless model. A few years ago, Doug Graham, owner of Graham & Company, an advertising firm in Great Neck, N.Y., began reselling other people's goods on eBay. In exchange for a 30 percent commission, Graham handles all the hassles. "You have to take nice photos, conduct realistic auctions, re­spond to e-mails, and handle shipping and packing," he says. "Each auction can take a couple of hours." Graham's eBay sales are about $150,000 a year, but this power seller isn't making an eBay living. "It's a nice profit center for a larger business."

EBay continues to attract people who would like to make a portion of their living selling. "We think there are about 600,000 sellers that use selling tools on eBay who are trying to make a buck," says J.P. O'Brien, chief executive of­ficer of Sagefire, a Boulder, Colo., com­pany that makes software programs that automatically download data on bought and sold items.

Of course, there's a big difference be­tween making a buck and making a living, between a sometime-thing and a steady gig. The notion that 630,000 Ameri­cans—a number roughly equal to the population of North Dakota—are making something approaching a living wage selling on eBay is a little rich. I've been paid a few times to play the piano—it doesn't make me a professional musician.