For the most part, in just about any business you can undertake, marketing is the most important function that your business can perform. This is just as true for eBay based businesses as it is for any other type of business. There is however one exception for businesses who only sell through eBay.

That is if you can find an item to sell that is in great demand where you have exclusive rights to sell that product. In this rare case you will not have any competition and as such depending on what category you are in, and how much traffic you will get directly from eBay, you may be able to survive without any marketing efforts.

This could mean that you produce the product yourself and therefore no one else can get their hands on your item in order to sell it (assuming there is no way for them to imitate or copy your product), or it could mean that you have an exclusive deal with a distributor where you are that company’s only sales representative for a particular product.

Even if you find yourself in this special case, I am not saying that marketing will not help your cause. It will and it is a method for attracting even more customers and generating more sales. What I am saying is that in this rare case you may be able to survive without it. I am not exactly sure why someone would want to survive when they have to option to thrive, but regardless don’t get stressed out. Remember that a successful business is built on step at a time and that in business, perfect is often the worst enemy of good enough.

Drop Shipping is a business technique that is central to the business model of many successful eBay businesses. If you were to use a drop shipper then you would have an arrangement where you would act as a salesperson for a broker or preferably a wholesaler. You would be able to get “XYZ” product at a certain price. The idea would be to then turn around and sell “XYZ” on eBay or anywhere else at a price equal to your costs + a mark up for yourself.

Here is the great thing about drop shipping. You don’t need to have any inventory on hand. The theory is that the wholesaler / factory that you work with has an abundant supply that you could not exhaust, so you do not have to worry about running out. This is great because you don’t have to invest in or store any merchandise.

I know a lot of people who have tried to start businesses and been wiped out after they bough their initial inventory, and then were unable to move it. That is one of the great things about drop shippers; they allow you to test the waters of a particular niche without having to commit a large sum of money. The other great thing about drop shipping is that you don’t have do any SHIPPING! The wholesaler usually does it for you. You take in the payment from the customer and you take down his address, then you pay the wholesaler and give them the customers address and they ship it for you!!!

Here is one of the cons of drop shipping, usually factories want as many sales reps as possible so many times you will have competition. As we talked about in our last post perfect competition is bad for your business. This is where marketing comes in.

If you have your own customers and / or leads who you regularly communicate with then you can send them directly to your auctions. If your customers and leads trust you then chances are much higher that they will buy from you even if you are priced higher than your competition. This happens not only because they trust you but also because you can direct them strait to your auctions! This is much better for you than if they had searched eBay because had they done so there would be a much better chance of them seeing your competition in the search results page.

This is post just begins to touch on how marketing can help slay the perfect competition dragon. We will be continuing to analyze this topic in future posts.

What I am about to say may scare you! I would advise anyone who is serious about building an eBay business should seriously consider obtaining their own webpage. I am not saying that you should run out right this second and get yourself a domain name and some hosting, what I am saying is that you should begin to entertain the possibility.

Why in the world should you have your own web page? So that you can market! Why would you want to do any marketing? Because the most important function that any company can engage in is marketing! Think I am wrong? Well if you run a multi-million dollar company that does not engage in marketing efforts then you have ever right to disagree with me, but if not consider the possibility.

Let me ask you a question, for any given product, “whoze-wahts-its” for instance. If you and your neighbor Bob both buy “whoze-whats-its” from the same supplier and then list them on eBay for sale, then what will stop the two of you from having a price war and undercutting each other’s listing price until neither of you is making any profit at all? Not much I would say! This is what is called “perfect competition” and perfect cometition is bad for your business.

In my opinion perfect competition can be a huge problem for people trying to make money on eBay. What is worse some eBay sellers seem to be selling items continually at a loss on eBay. This is what some have termed “super perfect competition.” You might be asking yourself why anyone would sell anything at a loss? Good question, however I believe it happens more often than you might think.

One reason is “lead generation” the practice of selling auctions to gain marketing information to be used later. The topic of lead generation however is a topic for another time.

In our next post we will discuss how marketing can be used to slay the perfect competition dragon! If you are itching to get your hands on more eBay tips and tricks right this second, try our FREE Newsletter offered at the top of the page.

*If you are interested in the subject of perfect competition you will love “The eBay Myth“, especially Myth #2.