As of July 20th 2009, I’ve received over $8,500 so far from Ebay. But the beauty is I didn’t actually sell anything. That’s right, Ebay sent me the money for referring buyers to their site. Since several of my fellow bloggers have asked me how to go about making money from ebay, I’ve put together this short how-to article that I hope will help you.

How Does the Ebay Affiliate Program (EPN) Work?

Back in April I built several niche sites to that specifically targeted to specific niches like gold coins, iphones and ipod batteries. Several weeks ago, I also added an “investment store” on this site that sells cheap timeshares, real estate and income-producing websites.

Ebay pays a commission based on the final sales price of the item. It usually varies between 5-10%. For items like cars and real estate, there is a flat fee which is over $100! I just received $175 from the sale of a $4,000 rental property in Ohio and another $135 from the sale of a used car. And it wasn’t any old used car, someone sold a rolls royce on ebay!

Additionally, if someone signs up as a new user, Ebay pays up to $35 (although its typically only $25). It also gives up to 75% (although 50% is more usual) of it commissions to affiliates who refer buyers. You can get more affiliate information here.

How Do You Create A Niche Site?

The toughest part of creating a niche site is identifying the niche. Ideally, you want a well-searched for niche that doesn’t have a lot of competition. For example, “discount designer doo-dahs” is a niche. But is it a good one? Good luck figuring that out on your own. However, there are a lot of tools to help you do this. Some people recommend Keyword Elite and I have it and use it. But there are several other tools, some of which require a one-time fee and others that charge a monthly subscription to use. If you already have one and are seeing good results with it, then it should be sufficient.

The niche sites aggregate the RSS feeds from Ebay for related products and display them. Luckily, I didn’t have to do the programming. In fact, creating the site is the easiest part of the whole process. I just bought the BANS (Build-A-Niche-Site) software that does everything for me. It did cost $97 but considering that I’ve made over $8,000 from ebay so far (as of July 2009), I’d say it was a pretty good investment.

Several people have told me that they were rejected or they had accounts and got banned. While its not widely understood why a lot of people have been rejected, its not too difficult to understand. If you submit thin-sites to the EPN there is a higher likelyhood of getting rejected. (A thin site is a site with no content, just affiliate links).  Always submit your flagship blog to EPN. If you’re using BANS on another store (as this blog does) make sure you’re selling related products. Note that this blogs’ store doesn’t anything that I don’t have at least 10 posts on. (Of course, I have 800 posts so finding a related product is pretty easy!). But if you’re blogging about cooking and trying to sell bicycle parts, it just doesn’t make sense. Effectively, you’ve conveyed to the EPN team your complete lack of experience in online marketing and understanding of how online traffic conversion works. Once you’ve been approved, then you can start multiple sites on different products. But make sure each site is targeted towards a specific product and make sure you understand the marketing part (which I’ve discussed below).

So make sure you have relevant content. How do you create relevant content? Either you write it, you pay someone to write it, or you use a tool to aggregate other people’s tweets or posts. Make sure you don’t just outright steal content – that will not only result in bad karma, you will also get flagged by the search engines for duplicate content!  One tool I’ve seen been used on sites that Google has not banned (de-indexed) is WPanswers.  It’s only $29.99 and comes with a 30 day no questions asked money back guarantee. I just bought it and I’ll let you know if I see any adverse effects from it.

Buying A Cheap Domain With Cheap Hosting

I also had to pay for domain names, but Godaddy had a 99 cent sale on domains so that wasn’t much of a cost. I also use 1 & 1 for domain name registration because they sometimes have specials. I usually go with whichever is cheaper, although 1&1 does offer free domain privacy for which Godaddy charges an extra $9.99 a year. However, Godaddy’s interface is significantly easier to use and their customer service is pretty stellar, so there’s some definite value in that, especially if you’re new to the online world. ( Also,  .org sites are usually much cheaper at 1&1 than Godaddy and may have better street cred than .info sites. )

I also use my own hosting. I like Dreamhost a lot and highly recommend it. It’s incredibly easy to install and update the sites. I’ve been using them for 4 years and they also have an affiliate program which pays out 100% of the first years hosting (sometimes 175%!) for new referrals. (Use code “PassiveIncome” for a decent discount). For $120/year you get 1 free domain registration and unlimited hosting. HostGator is another well-respected hosting company and many people with BANS sites use them too. Their affiliate program is also supposed to be excellent, but I wouldn’t know!

Marketing Your Niche Site

The most important part about making money online is the online marketing of your newly created sites. If you’re like most newbies and you build several sites thinking that you’ll automatically get traffic, you’ll be very disappointed. You need to understand how to create content that attracts search engine traffic (also called organic traffic). Again, Keyword Elite will help you with this. Its a pretty good tool and the videos on the landing page are worth a watch if you don’t know anything about harnessing the power of internet traffic. Another key factor that is often overlooked is building back-links to your site. I have personally gone to hundreds of blogs and left real, relevant comments on them with links back to my site. Some of them are nofollow links, but I don’t think it really matters. I believe all links matter, its just that nofollow and links from low-quality sites matter less than than links from a top quality site.  However, a cool way to get a lot of social media love is through a Social Bookmarking Automation Tool.  I highly, highly recommend this tool and it is in fact the one I use the most often. Most of my sites rank very well on various search engines for certain keywords and I get excellent organic traffic. As you can see from the Ebay affiliate sales figures, the conversion rates are pretty high.

Here’s another tool I highly recommend. I tells you what keywords you rank for and what your position is in the search engines. Its incredibly useful, especially when you see someone new bump you from your spot on Google. You can use this (along with some other tools) to see if its a fluke or they’re actually planning to take over your position!

If you’re still floundering, you need a guide with step by step instructions. The 9 Step Make Money Online Guide is an excellent resource written by the creators of BANS software. You should definitely read it if you’re new or if you have sites that aren’t generating much income.

Here are my earnings below:

As you can see from the image, the traffic (in blue) and the earnings (in yellow) have been increasing over the past year. As I’ve becoming more focused in my selection of keywords and as my search engine rankings have improved, the conversion of the traffic has gotten a lot better too.

While it took some initial effort to set up the stores and market them online, I haven’t done anything for at over 6 weeks. Making nearly $1,000/month from several sites that don’t require much effort is really cool. Finally some residual income that’s really passive! So don’t give up! It might take a few months to see any fruits of your labor but it will be well worth it!

I’ll post my monthly passive income update sometime this week.