Buying jewelry on eBay is not for the faint-hearted. Not everyone would buy a ring they’ve never seen, from someone they’ve never met, with only testimony from past buyers for reassurance. And even that testimony isn’t always available, nor is it always a reliable predictor of dependability.

But whether buying jewelry on eBay is smart, stupid, or some combination of the two, more and more people are doing it, lured by prices that are often well below retail and sometimes even wholesale. Tia Miller, who oversees the jewelry and watch department for the cyberspace flea market, estimates jewelry sales at $380 million to $390 million annually. While that number includes thousands of sellers, it also means that eBay is one of the top sales channels in the industry. In fact, a piece of jewelry is sold on eBay every four seconds, on average.

Much of eBay’s appeal lies in the fact that virtually everything can be sold by virtually everyone. Some 360,000 jewelry items are listed on the site every day, at price points ranging from under a dollar to millions of dollars. There is also a healthy assortment of oddball items, including a bag of rough diamonds, a vintage De Beers ad, and a copy of JCK magazine from 1949. Sellers have included wholesalers, big names like Zale and Ashford.com, someone “going through a divorce” who’s hocking a ring, and, in at least one instance, jewelry thieves looking to fence their stolen goods. (They were later arrested.)

But eBay is more than just another online competitor for retail jewelers: It’s a potential business partner—or so it hopes. The site has launched a campaign to attract more retail jewelers by advertising in trade magazines and sending representatives to speak at trade shows. Miller’s first lecture, at last year’s JCK Show ~ Las Vegas, drew a standing-room-only crowd. eBay also is adding features to make diamond buying easier, including a way to search for diamonds by the four Cs.

Online benefits. Jewelers use eBay mostly to liquidate inventory or sell items they don’t know what to do with. “A lot of times you get a parcel of sapphires for a bracelet and you buy a few extra in case one chips, but then you don’t chip any and you have two extra,” says Atlanta retailer Jay Mednikow. “So if I can sell something like that, it’s like found money to me because it’s something I wouldn’t sell in my store otherwise.” It’s also made him increase his take-ins. “I know I have an outlet where I can have a piece sold and paid for in a week,” he says.

Jeff Hess of Hess Fine Jewelry in Tampa sells close to $1 million annually on the site. He’s found it’s had the unexpected benefit of making him better known in his local community. “There are people in Tampa who are on eBay who didn’t know my store existed,” he says.

Success on eBay depends on many of the same factors as does success in the real world—clever marketing, friendly customer service, and location, location, location. Yet, eBay is also its own universe, with customs and rules that take some getting used to. Longtime users offer the following tips:

Spend time on the site. Before you sell something, monitor eBay and note what comparable items are selling for. “It’s important to start slow,” says eBay’s Miller. “Give yourself three to six weeks. Get a sense of what’s selling, which pictures look better, and what people with high feedback are doing.”

One way to learn: Buy. Think about what attracted you to certain sellers, and what you liked—and didn’t like—about the experience.

Reputation counts. Feedback is important for both buyers and sellers. Like a diamond bourse, eBay doesn’t conduct any sales—it provides a space for them to occur. This marketplace is regulated partly through “feedback.” After every sale, buyers and sellers grade each other by noting whether the experience was “positive,” “negative,” or “neutral.” Positive feedback gets a point, negatives knock off a point, and the overall feedback rating follows the user everywhere on eBay.

Feedback is particularly important with jewelry, since it’s a high-priced item about which buyers are already nervous. Most prefer to buy from someone established, so sellers suggest not offering expensive items until you have a solid rating. And beware negative notices—they frighten buyers and can literally cost you money. “Bad feedback is the enemy,” Hess says. “We’ll do anything not to get bad feedback.”

Looking good. Presentation is important, particularly with a visual product like jewelry. Photography and descriptions should be professional, informative, and 100% accurate. If a piece has a flaw, be sure to note that, and show it in pictures. Sometimes it’s better to soft-sell; buyers hate unpleasant surprises.

“We try to underpromise and overdeliver,” says Hess. “We frequently get feedback that says the piece was better than expected.”

Thorough descriptions also save time. “My goal is to describe a piece so completely we don’t get inquiries,” says Mednikow. “Inquiries take a lot of effort.”

Develop a presence on the site. As with a regular retail outlet, it’s important to get your name out. eBay offers a number of options, such as opening a cyber-store, boldface listings, and placement in the “featured items” gallery, all at extra cost. Mednikow takes the unusual step of including his name in every auction listing, to build an eBay brand. Others deliberately offer more pieces than they will sell.

“In retail, it takes 10 pieces to sell one,” says Richard Eyerman, a New Yorker who sells under the name “catchoftheday.” “That’s true on eBay as well. People ask me, ‘Why sell a 15k piece of jewelry on eBay?’ It doesn’t matter. It’s window dressing.”

Get their attention. One way to attract attention: A low opening bid. Urged on by eBay, many sellers kick off sales with the eyebrow-raising “$1, No Reserve” price. “It’s a very powerful marketing message,” says Miller. “Most of our top jewelry sellers use it. It says: I’m going to let the market determine the price.”

Fans of the $1 start-price say it comes down to psychology. Getting outbid on eBay makes buyers feel like a child whose favorite toy has been snatched away. So, the theory goes, attracting more buyers early on leads to higher prices later. “That’s what an auction is all about,” says Eyerman. “You attract 20 different people and after a week of looking at it they fall in love with it and are ready to pay more for it.”

Mednikow agrees but warns that sometimes auctions that start low end up that way. He uses the $1 starting bid only for items he’s sure will sell. So far, he’s had to sell only one piece for $1—and told the buyer he could have it for free, with his compliments.

“There are some things that it’s hurt me to sell at the prices [at which] I sold them,” he says. “But overall, things tend to go for a good market price on eBay.”

“How can I help you?” Customer service is important. Devote time to it. “eBay is a job,” says Eyerman. “If you want to do it right, you have to make it a commitment.”

Hess, a high-volume “power seller,” has employees that do nothing but eBay business. “It’s not just putting something on the site,” says Hess. “It’s the aftercare. It’s keeping track of payments and shipping things fast. We now have a shipping department and three full-time bookkeepers just to keep track of it all.”

Particularly important, he says, is answering e-mail. “Answering e-mail is the most tedious thing you do, but it’s also the most important,” he says. “The e-mail load is incredible. We get 200 to 400 a day, and they have to be answered quickly, because if you don’t, you get a bad feedback.”

What’s in a name? Brands matter on eBay, particularly with expensive items. “If it’s a high-end piece, people really want assurance,” says Mednikow. If the brand is well-known, include the brand name in your subject header.

Getting paid. Electronic payment services like Paypal (recently swallowed by eBay) shrink profits but boost sales. “Some people don’t want to bother with other methods,” says Eyerman. “You definitely get more sales by accepting more payment methods. You have to build the cost of these things into your price.”

Info overload. To attract attention from the site’s search engine, include as much hard information in auction listings as possible. And remember, spelling counts: Listing tanzanite as “tanzenite” may not seem like a big deal until you consider that users searching for “tanzanite” may miss your item.

Introduce yourself. Include information about yourself on the “About Me” page, particularly your phone number and address. Some customers feel more confident when they can speak to a human being. Others are reassured just by seeing evidence of a physical location.

Mind your manners. If disputes with customers arise, give them the benefit of the doubt. Even if their tone is angry, don’t respond in kind.

Keep it simple. Avoid music, “wallpaper,” too many pictures, or similar Internet pyrotechnics on your listings. Slow-loading pages turn buyers off.

Take it back. A return policy gives the buyer extra reassurance.

Words of wisdom. Veteran eBay sellers have opinions on just about everything, particularly the best time to offer an item. Summer is a slow season, they say, so sell big items in the fall. Don’t schedule sales during big events, like the Super Bowl or a presidential election. And since prices rise quickly in a sale’s final minutes, list items on weekends when more people are at their computers. However, there’s been some debate on this last point.

“I’ve found the best time is Tuesday or Wednesday afternoons because of people buying at work using high-speed access,” says Eyerman. “It’s the middle of the week, and they hit the doldrums and turn to their computers.”

The point is that eBay requires constant fine-tuning and experimentation. Even if you’ve established yourself and have lots of experience on the site, don’t assume the learning process is over.

“I’m constantly perusing other auctions, seeing how people do things, how they describe things, going to the discussion forums,” says Mednikow. “It’s like any business. You need to keep thinking of new competitive advantages.”