I spent nearly three months trying to sell products on eBay using a strategy called drop shipping. For those of you not familiar with the concept, here's how it works. You find a wholesaler who is willing to work with you on a drop shipping basis. (Note: there are several fine directories available of just such wholesalers.) You put some of this company's products on eBay, sell them, and then pay the wholesaler who packs and ships the products for you.

Sounds pretty cool, huh? You never have to take possession of any products so you don't need warehouse space.. There's no packing and shipping. You just market the products and count your profits.

As the punch line in one old joke would have it, "not so fast there, Abernathy."

First, the market niche

First, you have to find a profitable market niche and this just ain't easy. You might say that eBay has been too successful as it is now darn near impossible to find a market niche that isn't already very, very competitive. If you don't believe me, go to eBay and type in some uoffbeat search term such as "emperor penguins." I did this when writing this article and found two pages of stuff related to these birds, including penguin crossing signs (who would have guessed?), penguin art, and glass penguin figurines.

Second, you have to find a niche where you can expect a good mark-up. This is because your profit is the difference between what you will have to pay the wholesaler and what you can sell the item for on eBay.

And there's the catch. Since you know what you will have to pay the wholesaler, say $25 for a nice lambs wool sweater, you have to either start the auction at $25 to keep from losing money, or do a