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I am a professional Internet marketer. I deal with the issue of driving traffic to web sites and converting that traffic into customers. My wife runs an eBay-based business selling vintage clothes. She likes using eBay. It has a built-in user base of well over 100 million users and offers the tools to allow her to accept several different forms of payment, including credit cards and PayPal. eBay also allows her to operate a Web store, while also selling items via auction. eBay allows anyone with a computer and Internet access to go into business for themselves. A lot of people are making a lot of money on eBay.

However, a letter my wife recently received from eBay has bothered her to the point where she is seriously considering pulling out of eBay and running her business through her own standalone site. eBay claims that it is losing money on the stores that it hosts, because so much of eBay's inventory is now contained in the stores rather than in the auctions. To counter this, eBay is dramatically raising its fees for items listed in eBay stores.

The argument that eBay is losing money by hosting stores sounds like crap to me. Web hosting is dirt cheap. Web hosting for a small business can be purchased for $5 per month, with more hard drive space and bandwidth than a typical web site would ever need. eBay store hosting starts at about $16 per month for the basic store, which is heavy in mandatory eBay-branded top level content. eBay is raising the base fee to list an item in a store from 2 cents to 7-10 cents - up to a 500% increase.

So the question is: is it worth it to continue to do business on eBay when it is so much more cost effective to do business with a standalone web site?

I believe the answer is to use a combination. eBay delivers customers. It is a great way to build a customer base. If you are just establishing your online business, the following would be a strong formula for acquiring customers:

1. Set up an eBay store. Make it look as good as you can. Stock it with products.

2. Start running auctions. Use the auctions to drive eBay traffic to your stores. Do this consistently, placing some number of items up for auction every week. I suggest ending your auctions on Sunday night.

3. Maintain consistent inventory in your store. Try to get visitors to your store to leave their email address. What you want to do is get people returning to your store on a regular basis to check out what you have.

4. Build a standalone web site, outside of eBay. Populate your new store's inventory with the same products you sell on eBay.

5. Contact your eBay store customers and tell them about your new web site. If your ecommerce platform allows, give your existing eBay customers a coupon to use at your new site.

6. Use search engine optimization, pay-per-click marketing, articles, etc., to drive new traffic to your site. This step will be a lot of work and will require a lot of planning, but it is critical to your success.

7. Gradually phase out your eBay store. When you are confident that all of your old customers now know about your new site and the new site is picking up customers on its own, then shut your eBay store down. Give yourself a pat on the back.

OR

You may choose to continue to run your eBay store in addition to your own web site. If eBay continues to generate business for you and the fees still allow you to show a good profit on the items you sell, then you might as well continue to use it.

When all is said and done, you will have used eBay as a stepping stone to establish your online business. If you already have an eBay store and have been running auctions, then you may start at Step 4 above.

Now...this is probably not the way eBay wants its customers to operate. The company has built an incredible platform to allow anyone to conduct business online. But the fact is, with its recent hike in fees, it is becoming less and less economically feasible to use eBay as a way to conduct business. We believe that using this kind of strategy is a good way to take advantage of eBay to build your business, but then shift to a more economical ecommerce platform to maximize your profitability.

This article is a very high level sketch of a way to establish an ecommerce business. There are many details to fill in. You might want to seek the help of an experienced web site designer and Internet marketing professional.