I sell on eBay. Quite a bit. I've had an account since 2001, and my husband has had an account since 1998, so we're relatively experienced at the ins and outs of eBay.
I received one negative rating out of 223 or so. The woman never emailed me to complain--I sent the wrong item accidentally, and had she simply emailed me and explained the problem, I'd have corrected the situation. Instead, she left me ripping-nasty feedback. She only had 5 transactions, ever, and within a few months her account had been deleted. And yet my negative feedback mars my otherwise-perfect record. 99.5% will have to suffice. :)
In any given month, lately, I sell about $600 worth of items. All of them are items I bought brand new for various reasons, and am now selling to declutter. I don't make a profit. I'm just getting rid of old items I no longer use.
Many eBayers sell for these reasons, and if you're one of them, you're not really "making" money. You're exchanging the money you once spent--a much higher amount--for money now--a much lower amount. So unless you declared those items for deductions on your taxes, any money you make off the sale of items you made no profit on is not taxable.
If, however, you sell items you declared on taxes as deductions, it gets complicated. Technically, any business deductions that are later sold MUST be reported on business tax forms. This is way out of my league tax-wise, but please consult with you tax adviser before the men in black appaear at your door with an audit notice.
Other people have entire retail businesses on eBay. They buy large amounts of items at wholesale, and then sell for retail prices on eBay. They invest thousands, tens of thousands, or more dollars for these businesses, and they treat the entire enterprise as a full business. Good for them.
The people who, in my opinion, don't really make money off eBay are the majority of people who claim to make money off eBay: resellers. You know the spiel: buy items at Goodwill or the Salvation Amry or yard sales, and sell them on eBay.
Before 8,123 people comment and complain that yes they DO make money this way, let me qualify my statement: while SOME people can make this work, most simply don't truly make a decent hourly wage doing this. Here's why.
1. If you're buying used items, you spend time going to stores and yard sales. Then you have the initial outlay of money. You have to take the item home, clean it, photograph it, upload the photos, list the item, play listing and selling fees, package the item, make sure the buyer pays, withdraw the money from PayPal, take the item to the post office, and mail it off. That is a LOT of time spent.
2. Unless your actual PROFIT is $30-$40 for an eBay transaction, you're not really making money. At a minimum, you spend 2 hours shopping, pricing, cleaning, listing, etc. If you're buying a selling baby clothes, or cloth diapers bought used, for instance, you're most likely not going to clear $30-$40 for 2-4 hours of work.
3. What happens when a seller is dissatisfied for that $12 item? How much time is spent answering silly questions from buyers? I can't count how many buyers have littered by eBay message system with questions that were answered in the description. (Yes, I'm ranting). And yet you don't want to lose a potential bidder, so you spend 3-5 minutes answering each question. The time adds up.
Again--selling your own items, in your home? Yes--worth it. Spending hours going to yard sales and used stores to sell for a profit? On average, not worth it, unless you genuinely enjoy the bargain hunting. Then you're just having fun, and that's cool.
Keep in mind: if you buy a cloth diaper for $.50 at a garage sale and it sells for $9, that profit needs to be declared. Of course, all the gas expenses, any meals out, listing fees, etc. can be deducted, but if you choose to buy low and sell high as a business, the IRS is really looking carefully at high-volume eBay sellers. So even if you "just" earn $300 a month profit, that $3,600 per year is money the taxman wants to tax.
Weigh it all out: time vs. money vs. hassle vs. taxes before assuming eBay is always worth it.