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Variations are available only in specific categories. When you start a listing, if the category supports variations, you should see the option below the category selector. Below is where you would see the option on the Business Lister. The Unified Lister will have a similar variation option. the Quick Lister and Mobile lister don't support the feature.
Variations must be started from scratch and can not be assigned to existing listings.
eBay's help page on the topic:
This next link provides a detailed tutorial that is based on using the Business Lister (the new Unified Lister is very similar). Variations are rather complex to create the first time around, and you may want to create and abandon a couple of times, so work on the variations before putting any effort into the remainder of the listing.
http://shipscript.com/ebayhelp/lister_hub/creating_ebay_variations.htm
When creating the groups that will become drop-lists, avoid using group labels that are also the names of Item Specifics. eBay has begun reserving Item Specific labels in some categories and has required those sellers to rename their variation groups. Some reserved examples are "Color" and "Size", where the seller can use an alternate, like "Colors" and "Sizes" as variation group labels (Attributes).
