How do people profit from Ebay?

I have been doing some research on starting an online business and have been concidering starting out on ebay and expanding to a website.
Ive been checking the prices of distributers and wholesalers and compairing them to how much people are currently getting on ebay
Somehow people sell things at or below the wholesale price.

as an example i found a proffessional wholesaler who required my business licence and everything they are willing to sell me an item for $40.00 and i see it sell regularly for $50 on ebay.

How are people doing this? am i missing somthing here?

thanks, steve

Probably all to do with bulk buying, buy more than one item and you'll get a discount. So your wholesaler will sell you a 50 dollar item for 40 dollars and he could have bought 10 items at, say, 30 dollars each. What you want to do is find out who he is being supplied by and go direct to them, easier said than done of course.

Many of them also have physical stores also. The ones selling memorabilia probably have pawn shops. The ones selling electronics probably have an electronics store. And they just make deals, being in business as they are, as usual. There's usually no such thing as a standard 'wholesale price' for anything.

Also, some people just have connections.

I know a woman (let's call her "Lisa") who sells name brand clothing on ebay - Nike, Adidas, etc. She knows a person (let's call him "Mike") that works in retail thousands of miles away. "Mike" gets clothing from the distributor and mails it to "Lisa". Because they are friends, "Mike" doesn't mark up those prices, although "Lisa" may or may not just give "Mike" extra money for doing this. "Mike" just acts as a middle-man for "Lisa" to interface with the distributor.

So, in the end "Lisa" gets clothing dirt cheap and sells it on ebay at somewhat-lower-than-retail prices and makes out pretty well.

In some cases (usually electronic) and some countries, there is also the matter of grey imports. Items which are imported as 'gifts', which dodge local taxes on the way into the country.

The government is clamping down on this in the UK, but it's still possible if you know the right supplier. A lot of this depends on how they mark the package. Something marked as a 'gift' is untaxable, but something marked as 'goods' can be taxed depending on where it comes from.

But I suspect in this instance, it's a bulk buying thing. And also, the vendor may have a deal with the supplier to sell a certain amount. He may even get the goods up-front.

Best way to do this if you're thinking about doing it yourself, is to find people to invest in your idea. Buy in bulk (something which won't devalue in a short time) and then sell it on. When you've made enough revenue from various sales you no longer need your investors.

Business on eBay profit the same way retail stores do. You buy something at wholesale, add on your initial expenses, and then a small amount of profit.

If you happen to own a Wal-Mart you may only make 50 cents to a dollar on each item, but still turn a million dollars in sales a day, it adds up.

eBay retailers rely on the same principal, though they have the advantage of being able to sell refurbished, used, and sometimes just broken things and still make a profit.

I would imagine without a small staff it would difficult to make any kind of living for yourself unless you live on a computer, inside a post office.