Buying and selling with online marketplaces

Whether you want to grab a bargain or make some extra income from selling unused belongings, online marketplaces can be a simple, cost-effective way of buying and selling.

Sites like Facebook Marketplace and Shpock are gaining users, while more established platforms like eBay and Gumtree remain as popular as ever.

Whether you’re a buyer or a seller, here are some tips to help you stay protected while making the most out of these online platforms.

Staying safe while using online marketplaces

As with any online space, there are risks that scammers will use these platforms to scam you out of your cash.

Here are some general tips to help you stay safe when using these online auction and community selling platforms:

Sellers

• It’s always a good idea to communicate with potential buyers using only the messaging and chat services provided by each platform.

• Avoid placing your contact details in your profile or product description

• No matter how nice a buyer seems, you should never dispatch an item without receiving payment first.

• Be very wary about requests from a potential buyer to end an auction early.

Buyers

• Make sure you understand what the site you’re using can actually do in the event that something goes wrong (e.g. you pay for something that never arrives)

• Do some quick research on the seller – Check their profile, rating and transaction history

• Check the seller’s returns policy before you commit to buying anything

• Only provide the minimum necessary personal details to your seller (e.g. your address for shipping and postage)

Tips for buyers

Here are some tips specific to using some of the main online marketplace platforms:

Gumtree and Shpock

Gumtree and Shpock are seen as being more vulnerable to scammers as these platforms leave it to buyers and sellers to negotiate a price and organise payment and postage themselves.

In recent years there have been reports that both Gumtree and Shpock have been used to scam buyers into paying for non-existent items.

The Money Advice Service, a government-run organisation that provides information, advice and online tools to help you manage your personal finances, has a detailed guide on how to avoid Gumtree scams.

eBay

This site has a long history and is generally considered one of the safer auction and marketplace sites.

When using eBay, you should always try and use PayPal when buying or selling items. PayPal is easy to set up and allows you to link your bank account to your PayPal wallet to enable purchases. 

PayPal makes money by charging small fees on certain types of transactions.

While eBay is not the only site that allows you to pay and receive money with PayPal, the vast majority of transitions on eBay use PayPal. 

Using PayPal will enable you to take advantage of eBay’s money back guarantee in the event that something goes wrong with your transaction. Ignore any buyers or sellers who want to do a separate bank transfer or use another payment method. 

You should also be very wary of sellers who ask you to make a PayPal ‘Friends and Family’ payment through eBay. While their primary reason for this may be to avoid PayPal’s charges, you will not be eligible for any payment protection that PayPal may otherwise provide.

There are a few things you can do to strengthen your hand as a buyer when using eBay.

For example, you can get alerts on certain hard-to-find items, by searching for them on eBay and then ‘saving’ the search. This way you will get an email alert every time an item that matches the search criteria is listed.

Sometimes, sellers will accidentally misspell the name of an item. This might make the listing harder to spot, and therefore you might be able to pick it up for less than you might otherwise pay.

Online tools like BargainChecker and Fatfingers are sites that search eBay for listings that contain spelling mistakes.

Finally, it may sound simple but always, always read the listing carefully to make sure you know exactly what you’re bidding on. You may marvel at how you’ve managed to track down a cheap bottle of perfume, only to discover that all you’ve actually bought is the empty bottle. 

Your consumer rights when buying products using these websites

The protections you can expect when shopping on auction sites and online marketplaces will depend on the seller.

If you’re buying from a professional trader (an individual or business that makes and/or sells products for a living) then you have the same legal rights as you would if you bought a product from a shop or a retailer’s website.

If you bought items from a retailer that you wanted to return because they are faulty or you’ve changed your mind, there are a number of things you can do:

• If you spent more than £100 on your credit card, then you’re automatically protected under Section 75 of the Consumer Credit Act and can speak to your credit card company about getting a refund

• If you paid for your purchases using a debit card you can make a chargeback claim with your current account provider

These rules will apply whether the item you’re buying is brand new or second-hand.

You will be entitled to return the item within 14 days of delivery if you bought from a business seller. You can typically tell if a seller is a professional trader as their profile will include phrases like ‘registered business seller’.

If you’re buying a second hand item from a private seller then you will have fewer protections. Your only legal rights are to be entitled to expect that an item is described accurately, and that the seller has the right to sell it.

Read our consumer retail rights guide for more details.

Tips for sellers

Selling through auction sites and online platforms

Using an online auction site or community website to sell items you no longer need can be a great way to earn some extra cash. Given the difficult circumstances many people are facing right now, that’s no bad thing.

However, there are some basic things you should be aware of in order to make sure you can sell safely, and with the lowest costs.

The basics

To sell your item on one of these sites you typically need to set up a profile, so you can oversee your transactions. Selling an item on an auction site like eBay will usually require making a listing for your item.

This can involve giving it a title, writing a detailed description of your item, adding a photograph, placing it in a category which includes similar items and deciding on the starting bid.

You will also have to enter the location of your item, decide how much to charge for delivery (or whether you will allow the buyer to collect it themselves) and your preferred method of payment.

If your item sells then it is down to you to organise payment and delivery with the successful buyer. Some platforms offer more security around the process of overseeing how items are paid for and sent to the buyer than others.

Seller fees

Online marketplace and auction sites make their money in different ways. While eBay levies fees on each item you sell, other sites like Shpock do not charge you a fee for listing an item for sale. 

Instead, Shpock charges for extra features that help to promote an item on sale. 

When using eBay, do not worry if your item fails to sell, you will not be charged a valuation fee and you can always list it for free a second time, as long as it sells the second time around.

Auction sites do’s and don’ts

Here are a few do's and don'ts when it comes to selling on auction sites.

We cannot guarantee they will help you make your fortune, but they could be the difference between your item selling and suffering the ignominy of re-listing for the third time.

Do's

• Do be honest when describing your item and include details of any damage.

• Do use Paypal for a safe and convenient way to receive payment.

• Do make sure you list your item in the right category. 

Don'ts

• Don't be tempted to overcharge for postage as it will put off buyers.

• Don't use an out of focus, low-resolution photograph for your item.

• Don't bother paying a reserve fee for your item - it puts buyers off.

For more seller tips, read our guide on making money using auction sites.

Do sellers have to pay tax on the income from their sales?

If you occasionally sell a few items that have been at the back of a cupboard at home for a few years, it’s very unlikely that you will need to declare any income you receive to the taxman.

However, if you regularly make or buy products to resell with a view to making a profit then this counts as ‘trading’. You will have to register with HM Revenue and Customs (HMRC) and declare your income.

How you sell your products does not matter. Whether it’s through an online auction site, a high street market stall, or at car boot sales, you will need to declare your income for tax purposes.

You’ll have to file tax returns, with any profits potentially subject to tax. If the money coming from your sales exceeds £81,000 a year, then you’ll also have to register for VAT.

For detail read our guide on what small businesses need to know to survive during the COVID-19 outbreak.

If you’re a professional seller, it may also be a good idea to conduct all your business using a business bank account. This will help you when it comes to bookkeeping, filing a self-assessment form, and paying any corporation tax that may be due.

The best business bank account will differ depending on your banking needs. Different business accounts come with varying features, and you need to see which are available to your business.

Compare top business bank accounts.

If you are looking to sell old items through an app, then having the right mobile for your circumstance is key.