Striking It Rich on eBay

How easy is it to make a living on eBay?

The problem, he notes, is the "volume trap." The only way for a seller to increase income is to list more items, but that means finding more wholesalers, amping up an inventory system, and spending more time packing and shipping.

"If you are selling new items, the competition ends up raising the prices you must pay for your stock," Gibbs says. "Also, once you establish yourself, others will undercut your prices in order to take your sales, driving your profits per auction down."

People selling used items also get slammed by the same market forces, he adds. If you are selling an antique or collectible, you can look up pricing information on eBay first, and then sell the items yourself for slightly less, rather than go through a PowerSeller.

There are sellers who can hack it, Gibbs says, but he believes they're few and far between.

"The majority of the larger eBay sellers sacrifice lifestyle for volume," he says. "The smaller sellers chase this volume because they think it's the only way and ignore the consequences."