Competition on eBay is really (very) steep these days with more and more wholesalers selling directly through the site. I would say a good chunk of them are China-based suppliers and you can actually bank on that. You can always build up your customer service level and satisfaction since most of the low priced sellers are only after the turnover of items sometimes sacrificing service and/or product quality.
What Mark suggested is a (the) good way to help you stay competitive against low priced competitors on eBay. Bundling is tried and tested and it works out for both you and your buyer. Another idea you can incorporate is Freebies. Anything with the word FREE on it naturally attracts buyers. You can offer free shipping. To do this, you can buy your items in bulk (for your items) to get a cheaper deal so you can pass on the savings to your buyer. You can then include the shipping fee on the item's fee.
Perhaps, you can give out free items as gifts. This is similar to bundling but you would be offering small gift items to your buyer. You may source out fairly cheap free gift items from wholesalers or liquidators, if any. There are wholesale lots that would turn out costing you only a dollar or less per item which you can use as the gift item, then mark-up the price for .50 cents more - that way, you were able to give out a freebie to your customer. Remember, anything free makes people happy.
And of course, nothing beats excellent customer service. Aim to get a good feedback score so prospect buyers would prefer you among others. You can focus on a hassle-free return policy and also try to respond to queries and messages as prompt as you can to encourage repeat buyers and a positive feedback afterwards.
Happy Selling! :)