Top Risks eBay Sellers Face

Things that can go wrong for eBay sellers and what to do about them

Salesperson at clothes store.
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There's a lot of "do" and "don't" information out there for eBay buyers, but it's sometimes hard to get a concise list of just what the risks are that sellers are meant to be avoiding by observing best "do" and "don't" practices. Here are ten of the biggest risks that eBay sellers face—apart from everyday concerns like failing to make sales, seeing demand for their stock dry up, seeing high return/exchange rates, or other things universal to the retail business.

Problem Buyers

Yes, difficult customers exist everywhere, but on eBay things are a bit more complicated than they are for most retail venues. eBay customers can't inspect goods before purchasing, yet the range of goods to be found on eBay (new, used, top quality, discount import quality, recent, vintage, complete, parted out, etc.) means that customers don't know what to expect from eBay goods in the same way that they do from items at a big box retail store. At the same time, customers' certainty that they're about to get a fabulous deal, the distances that are often involved between buyer and seller, and the fact that buyers can publicly leave negative feedback or poor detailed seller ratings that can sink your business all make eBay retail particularly susceptible to the "problem buyers" problem. eBay sellers have to take extra care to use great photos and item descriptions, to provide clear condition information and disclaimers, to handle refund requests with their best customer service foot forward, to invest in and protect their feedback, to win the buyer protection battle if necessary, cope with chargebacks, and to block problem buyers from ever turning up in their backyard again.

Lockout Due to Feedback or Chargebacks

Of course, all the measures in the world won't completely eliminate problem buyers or the chargebacks and poor feedback that they can create. These are a particular problem for eBay sellers not just because they're inconvenient, embarrassing, or affect cash flow, but because they can actually lead to the effective inability to carry on day-to-day business. Both eBay and PayPal are known (regrettably known, if you're a seller; happily known, if your a buyer) for locking or suspending accounts that see poor feedback or repeated (or very large) chargebacks. Once this happens, your doors are closed—you items are delisted, you can't create new ones, sales grind to a halt and/or all of the funds in your PayPal account and linked bank accounts become unavailale to you pending resolution of all outstanding customer complaints. Sellers that reregister after getting suspended aren't doing themselves any favors, since they're likely to be locked out almost immediately once again thanks to eBay's deep database cross-referencing abilities while at the same time doubling eBay's determination to keep them out. This is why the best policy for eBay sellers is that "the customer is always right," even when a problem buyer is very, very wrong. The alternative is often just the end of an eBay business or the long, arduous, and uncertain process of account reinstatement.

Non-Transparent Ebay Sanctions

The arrival of best match search placement and detailed seller ratings in recent years has led to a shadowy set of rules and criteria by which eBay seems to make some sellers effectively disappear or suffer—by moving auctions to the absolute end of search results, preventing them from appearing on category pages for common items or even in search results, ending fee discounts and/or increasing fees, limiting access to customer service for sellers that previously had enhanced access, changing the buyer protection calculation based on past performance, and so on. At times it isn't enough to monitor your seller performance rating and dashboard; some sellers have been shocked and confused to find themselves "punished" in these ways, often losing a large percentage of their volume and revenue, even after years of determined attention to detail and customer satisfaction. On eBay, at least at times, it appears that the motto "Caveat venditor!" ("Let the seller beware!") is one that sellers need to take to heart, perhaps by ensuring that they have eBay alternatives amongst their selling partnerships to pick up the slack, should eBay decide to get fickle on them.

Poor Shipper Performance

As a "mail order" business in the most basic sense, eBay selling relies heavily on shipping carriers like USPS, UPS, FedEx, DHL, and others for the success of its sellers and the satisfaction of its buyers. Unfortunately, as we all know, shippers are a third party in this game, their performance often beyond the control of both buyers and sellers. Transacting and shipping promptly when a listing closes can help to mitigate things like weather delays, traffic delays, absentee deliverees, natural disasters, strikes, and other things over which shippers have no control, while packing carefully, using great packing materials, considering shipping insurance, and taking care to use a shipment method that provides package tracking can help to limit shipper damage and/or its effects on the seller-customer relationship.

Fulfillment Problems

Sellers that use a fulfillment partner or service or that work with a drop shipper have to work with an additional layer of uncertainty in their transactions, as their performance is closely tied to the performance of their fulfillment or drop shipping partner. While most of the time full-on fulfillment services like ShipWire perform fabulously, ad-hoc fulfillment "partners" that are actually other retailers (orders placed directly on,,, or other similar outlets and shipped directly to your customers, for example) are much more uneven, while drop shippers can be notoriously spotty and (if chosen poorly) can spell disaster for your fulfillment process. This is why it pays to carefully weigh the risks associated with various eBay business models, particularly the no overhead models, and to pay special attention to drop shippers and drop shipping best practices if this is the eBay business model you choose.

Already overwhelmed? Don't be. We're just halfway through. Read on for the other five risks that every eBay seller should monitor and manage.

  • Counterfeit goods. Buyers have trouble believing that sellers often don't realize that the goods they're selling are counterfeit until the buyer discovers that they are and returns to the seller in fury, but of course too many sellers know this to be all too often the case. When you're running a business, your goal is always to source as cheaply as possible, then to turn around and sell with the best markup you can manage. Sellers aren't necessarily experts in the goods that they sell or in verifying authenticity for many kinds of high-valuye items; if a supplier or partner tells you that the goods are real, more often than not you'll simply take their word for it. But it still pays to attend to many of the same tips for avoiding counterfeit goods as you source that apply to buyers as they shop, and to take some of the same measures if you suspect that you've been affected. Of course, when a buyer discovers that you've sold them something that isn't quite the real thing, it's also important to make them whole as quickly as possible so as not to negatively impact either your feedback or your ability to sell on eBay in the future.
  • Unwittingly illegal activity. eBay sellers sell a mind-boggling variety of goods sourced from a mind-boggling array of suppliers, and they ship these (or have them shipped) to a mind-bogglingly assorted, global population of buyers. With these as the parameters to work with, it can be an impossible task to keep track of what's allowed and what's forbidden for any particular locale from which a buyer plans to make a purchase. After all, no seller is an expert in the local regulations the world over. This is why it's important to use common sense about what not to sell on eBay and to check eBay's prohibited items policy on a regular basis. There are some kinds of illegal activity that sellers can prevent of their own accord, however—so be sure as a seller to register and/or license your business, pay your taxes, and avoid engaging in borderline fraud or software and media piracy, even if bending the rules about these things seems tempting. After all, the alternative may be the loss of your business and income.
  • Poor business choices. Because of the global-yet-single-market nature of eBay, sellers on eBay are particularly susceptible to losses that result from poor business choices that wouldn't harm most brick-and-mortar retailers, at least at the local level. eBay sellers need to be aware of supply and demand and the timing of their selling at all times and to avoid eBay-specific pitfalls like overusing eBay's listing promotions, competing against themselves or listing more to pay due fees in a marketplace of limited size, or letting their eBay fees get out of control and sink them.
  • Identity theft through phishes and spoofs. This is a venerable risk that isn't quite as serious as it once was since the public today is more educated about this risk and since many computer protection software packages now include tools to mitigate against this risk. Nonetheless, it deserves a mention because it continues to be an issue for eBay buyers and sellers alike. Phishes and spoofs are email messages that appear to come from eBay but actually don't. Their purpose is to get you to think that you've received an email from eBay and trick you into either attempting to "log into eBay" within the email message itself or click on a link in the email message that takes you to what looks like an eBay login page, and get you to try logging in there. In either case, you won't be supplying your login and password to eBay (for purposes of entering the eBay website) but in fact to a third party impersonating eBay, who simply wants your eBay login and password. They'll use these either to begin selling as you on eBay, from your eBay account (fraudulently selling, that is, in order to leverage your great feedback to scam buyers while directing the blame to you), or they'll use them to immediately try them out on every big bank and ecommerce site in the world to see if they can empty your bank accounts into theirs. Either way, the result isn't fun, so be sure that you understand everything that there is to know about phishes and spoofs before you take any action (even a simple one like clicking a link) on an email message that seems to come from eBay.
  • Unhappiness and depression. There are certain realities in the eBay retail business that aren't to be found in many other small businesses or forms of retail. As an eBay seller you're not just at the mercy of suppliers and carriers as is the case for most brick-and-mortar shops; you're also at the mercy of fulfillment partners, the eBay website and marketplace, and PayPal, eBay's payment processor. That's a lot of control not to have. In fact, when it comes right down to it, a lot of what an eBay business amounts to is clicking on website buttons and forms and hoping that they do what you want them to do and that it all works out as you expect it to in the end. But the result really isn't up to you; it's up to these other organizations, not just at the level of performance, but also at the level of their policies. When things do go wrong, eBay sellers can find themselves not only feeling as though that new rule or that non-transparent decision somewhere inside eBay is unfair, but also as if there's nobody to turn to for support, since life inside an eBay small business is often a matter of one person sitting at one computer, with no co-workers or regular face-to-face contacts to speak of. There are ways to try to chase away the blues that can come from this kind of business, but at the end of the day only certain temperaments and personalities are well-suited to the typical eBay business organization, so it pays to be aware of the unhappiness risk that can lurk inside one.

This list sounds like a pretty scary one and unhappily, in practice, most eBay sellers will cope with multiple items from this list at some point over their eBay business career. As an eBay seller, you'll have to be prepared to protect yourself in each instance, to the extent possible, with the little bit of knowledge and understanding linked above, and to be flexible, light on your feet, patient, and at times unduly generous in order to stay afloat and live to trade another day. For some, this makes eBay selling an ultimately unsuitable business for their personality and goals, while for others, all of these risks are just periodic bumps in a gold-paved road. The choice is always, at the end of the day, up to you.