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Dos and Don'ts for Selling Digital Goods on eBay

Navigating the confusing world of eBay digital information selling

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Dos and Don'ts for Selling Digital Goods on eBay

Selling digital on eBay generally means doing it the old fashioned way: by shipping something you can hold in your hand.

Image: stocksolutions / Fotolia

Most people today are living and working in the midst of an information economy, so selling digital goods—information, software, templates, recordings, art, and so on—seems like an obvious business opportunity.

Before you begin to sell digital goods on eBay, however, there are a few basics to be aware of. Failing to know the ins and outs of selling digital goods on eBay can lead to suspension on feedback manipulation grounds or on grounds of being in violation of eBay's digitally delivered goods policy.

Here's what you need to know.

The Big No-No

There's one big no-no when selling digital goods on eBay, and it's one that caused no small amount of heartache in 2008 when eBay implemented its current policy.

  • You may not sell digitally-delivered goods in most categories or using most listing formats. That's right—so long as eBay's current policy remains in place, you can not create an auction or fixed-price listing for an ebook, a song, a video, a PDF file, an original piece of art, a database, a sewing pattern, or anything else that will be delivered by email, download link, or any other online service. Period.

This no-no is so strange that many people have trouble believing it, and eBay continues to take flak for it, including flak from investors and industry analysts that see them as having missed out on the very big electronic books and music market.

The Exception

The first thing many would-be digital sellers do, of course, is visit eBay to see if they can find digitally downloaded goods for sale. And they can—which often mistakenly leads them to assume it's okay to do, and to create listings of their own, for which they're quickly suspended.

In fact, there is a big exception to the big no-no, and it is only for existing, sizable digital goods retailers that already have a thriving business outside of eBay. For sellers that meet this requirement, eBay may make an exception—but you must apply for this exception through eBay by emailing eBay-DDG@ebay.com with your request and complying with eBay's requests for information and documentation.

Unless you already do significant volume on your own webstore in digital goods, you have little hope of being granted an exception and allowed to sell digitally delivered goods through most eBay categories or listing formats.

Things that Small-Time Sellers Can and Should Do

For most small and medium-sized sellers, this puts a crimp in the prospects for selling digital goods on eBay. There are, however, ways to do it. Here they are.

  • List classified ads in the "Everything Else" category. There is one and only one way to legally list digitally-delivered goods on eBay as a small-time seller, and that's using the classified ad format (which is neither an auction nor fixed-price listing) in eBay's "Everything Else" category. This isn't palatable to many sellers because there's no way to handle "impulse buying" or to automate transactions.

  • Repackage your goods as a service. For some types of digital information, this works well. In these cases, you'll "reimagine" your product—no longer will you sell information or digital content that you already have. Instead, your listing will emphasize that you are selling a service and will work with your customers to create digital goods for them if they purchase or win your listing. If you go this route, be careful to emphasize that you are selling a service and your time, not an already created file or form of information, that the product you'll deliver depends on your customer's input, and leave out any details about how you'll "deliver" the goods in the end. To list services this way, you must also list in one of eBay's services categories; otherwise, your listings will be removed.

  • Sell something physical, without downloads or emails. You are also free to list digital goods so long as they are not digitally delivered. You can continue to sell your ebook, for example, if your listing is for a 2GB flash drive or CD-ROM disc containing your ebook. Choosing the right category in these cases is tricky, but common sense can help you out. Since there's no category for ebooks, for example, you'd need to list by topic—"Historical Memorabilia" for an ebook on history, "Sewing & Fabric" for an ebook containing sewing patterns and how-to information, and so on.

Things to Avoid or That Are Forbidden

Even if you adopt these strategies, there are certain big don'ts associated with digital products on eBay. Be sure to keep these in mind so that you don't end up frustrated by a suspension or listing removal.

  • Don't offer a download or an email. Unless you're listing a classified ad in the "Everything Else" category, do not offer or make any suggestion that you offer any way to get the product online. This means no download links, no email, and no other "digital delivery," even if you also send a physical thing. Your listing is for the thing—a flash drive, a CD, a hard drive—that contains the information. And you must send the thing itself, without offering any other way to get the information that's on it.

  • Don't offer anything you don't own. You must either have created the digital information in your listing yourself or have been granted an explicit, written license to resell it from someone with the rights to do so. In most cases, you should clearly state this to be the case in your item description.

  • Don't try to make a living on public domain or open source. eBay has proven over the years to not understand these concepts very well, or at least to not want to take risks on them. Right or not, eBay is likely to remove listings that you post for flash drives, discs, or other media containing material that you state to be public domain or open source/freely redistributable. Sure, there are exceptions and uneven enforcement, but eBay can and does routinely remove these, and that level of risk ought to be unacceptable for anyone serious about running a business.

  • Don't sell too cheaply. eBay also has a track record against very inexpensive "digital" goods, even when they're offered as physical items (CDs, for example). Be sure to list in the dollars range, and not the cents range if you're serious about making money this way without getting in trouble. In general, eBay disbelieves as a matter of policy that sellers are shipping out CDs for a few cents with free shipping, believing instead that such listings are blatant cases of feedback manipulation, whether this is true or not.

Think Outside the eBay Box

Whether you're an existing eBay seller thinking about moving into information products or a new-to-eBay seller that wants to make some money with them, broaden your focus to include eBay alternatives as well.

These days, other online retail platforms like Amazon.com are much more friendly to many kinds of digital goods (in particular, music and ebooks) than eBay is, and tend to be much more lucrative in these areas in many cases as well.

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