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Ann Wood was thrilled last January when her eBay store, Willow-Wear, had its best month ever, grossing around $33,000. In February, however, Wood experienced a sharp drop-off in sales. Since 2004, Wood has run the home-based business, listing and selling high-end jewelry, clothing, shoes, bags, and antiques for more than 40 clients around the country. She works four to six hours a day, and had sales of about $250,000 in 2007, she says.

"I've still got steady sales and I'm making money for my clients," Wood says, "but I've been seeing more caution from buyers on the items priced for $1,000 and over. People are being smart. They're acting like my husband and I are trying to act, which is to be more careful about purchases and not buying everything we want."

Yet Wood's inventory is growing as her clients scour their closets, hoping to make some extra money selling unused items, and telling their friends Wood can do the same for them. The other bright spot for the former appellate attorney, who became a home-based entrepreneur after her three children were born, is international sales. "A great portion of my stuff is shipped overseas. With the dollar so weak, I've got great deals for people in places like Germany and Italy. I even sold something to Tahiti recently," Wood says.

"Pay to Play"

But overall, it's a tough time for entrepreneurs who sell products through online retailers like eBay, Craigslist, Etsy, and myriad other sites. It's also tough to get solid financial data on these individuals, many of them hobbyists conducting virtual yard sales in their spare time, rather than serious business owners. "What we know is that probably half of all online retail happens through companies that are smaller than the top 100 e-commerce retailers," says Sucharita Mulpuru, a principal analyst in...