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Posted at March 14, 2005, 7:58 pm: BUSINESS ADVICE For those of you cheerleading Meg and her pirates at ebay please move on to the next post. This one is not for you. This post is designed to help my fellow dealers who are SUFFERING under the heavy burden ebay has been putting on us. This burden has only grown each and every year while at the same time lining managements pockets with our blood, sweat, tears and money. We the ebay sellers built ebay from scratch. The customers came because we listed. We gave ebay life, ebay OWES us a living. To preface this article let me state for the record that the year 2004 fee increase DEVESTATED my business. Past increases were bad but last years was so much the worse. It was simply too much and my business almost failed because of it. I managed to recover but not without an increadable amount of pain and suffering along with a lot of lost sleep and countless hours in front of a computer that I would much rather have spent with my family. In the year 2003 my average ebay fees were $1,500 to $1,800 per month. The 2004 fee increase ended my massive spending spree on ebay fees and COST ebay in excess of $12,000 in lost revenue last year. It was a real joy for me watching ebay fail to meet it's fourth quarter projections and it was ENTIRELY because of dealers like me who listed far less this past year than we had in the past. I get the satisfaction of knowing Meg's massive benefits package was not quite as fat this last quarter. This years latest fee increase is all the worse. It will cost ebay another several thousand dollars in fees from me all because they are pricing themselves out of the market. Anyway, back to the subject at hand of how to deal with all this mess. As dealers we have to adapt to the changing marketplace but unlike ebay management who live in la la land we cannot just raise our prices across the board without watching our already low sell through rate drop some more. My personal sell through rate at auction is between 6 - 8% which means for every 100 items I list at auction only 6 to 8 will sell. This is a rather poor performance and you have to make a big profit on the few items that do sell in order to cover the expenses of listing the other 92% + that did not sell. Let us start by asking a few questions. Why are you in business? Most dealers do this part time for extra income but a few dealers like me are full time which means if I don't sell, my family does not eat and my mortgage and utitlities do not get paid. My hope is that smaller dealers will learn from me and will grow their business. Ebay's constant fee increases have cost them a lot more than just the listing and final value fees that they did not get from me over the last 12 months. Because it stunted my growth (for every dollar I pay out in fees, that is a dollar I cannot use to buy new inventory or pay off debt). If your long range plan is to leave your present job to do this full time it will take a lot of effort but it can be done. Make sure you have a lot of inventory and are limited in debt. This will give your business all the more chance of success as a full time venture. The more inventory you carry and the less debt you have the better your chances of growth and success. In a nutshell ebay is an overpriced shopping search engine and nothing more. It's user base (both buyers and sellers) are an intangible asset and as we all know the sellers are not very happy now which means they will be looking at other venues (heaven knows I am) to sell their wares. The average ebay buyer is a bargain hunter so you need to be aware of this. You must decide whether or not you are going to target the bargain hunting "average buyer" or if you are going to target a smaller audience, the group where money is not the object. Personally I BUY from the sellers who market their wares to the bargain hunters but then turn around and SELL my new inventory to a different and much smaller group. This group represent the people who are willing to pay a fair price from a seller who shows himself to be honest and upstanding in the community. Your feedback is EXTREMELY important if you are targeting this group as you want them to have COMPLETE AND TOTAL CONFIDENCE in you and your product. To do this you must have an ironclad money back guarantee. That is not to say you don't have a restocking fee or not pay for shipping if the buyer has buyers remorse BUT if you as the seller are at fault it means YOU take the hit to your pocketbook and not your customer. Customer service is CRITICAL! If you can make your customers come back to you again and again you are all the better for it. When competition is fierce (and on the internet it is cut throat for sure) then you must show yourself to be DIFFERENT then all of the other sellers and one of those ways to do that is to go above and beyond for your customers. One of the ways I do that when it comes to selling silver (my specialty) is to shine my items. In the 6+ years I have been buying silver on ebay I can count on 1 hand the amount of times my silver has arrived nicely polished. Hundreds and hundreds of purchases and less than 5 clean silver packages. Needless to say my shined silver is one of my Unique Selling Positions (USP). What can you do in your business and in what you sell to set yourself apart from everyone else selling the same thing as you? I am one of the most expensive dealers on ebay in my catagory. What that means is a much lower sell through rate. Any idiot can give away their product. I cannot tell you how often I have purchased something on ebay only to turn around and sell it on ebay for a significant profit. If it was not for the regular mistakes made by other sellers I could not stay in business. KNOWLEDGE IS POWER. The more you know, the better you will do. I say this again and again in the hopes that dealers will understand the basics. YOUR PROFIT IS MADE AT THE BUY, NOT AT THE SALE. I am not telling you to cheat people but I am telling you to keep your inventory costs to the bare minimum. The greater your gross profit margin, the more abuse you can handle from ebay management when they raise your fees again next year. Cheap items LOSE money. For every item I list online it represents a half hour of my life. I BETTER be compensated for my time. What that means is that you will not find very many items in my store priced at less than $10.00 because it is a WASTE of time unless it is a fast seller and you can relist them because you have a few hundred available. For those of us who sell unique items if they have little value you have lost time that should have been better spent with your friends and family. Ebay's listing fees for items priced at under $10.00 are too expensive so avoid them entirely. Big ticket items are fine but they represent a lot of money tied up in inventory and will take much longer to sell so that means extra expenses. Therefore items over $200.00 need to have good margins as well, especially since ebay charges so much in listing fees for that price catagory. Over $1,000 really starts to hurt because if you have $500.00 into an item and it takes you a year or two to sell it and a couple hundred in listing and final value fees you really have not done that well. The more expensive an item is, the longer it will take to sell. Even worse if you get hurt with a credit card chargeback your problems are only intensified. Don't get me wrong, I have expensive items but I do limit it to high quality goods I do not mind owning and my opinion is that the customer can either pay my asking price or else I will keep it and enjoy it myself. BUY WHAT YOU LIKE AND WHAT YOU KNOW. That way you don't feel bad when that item you thought would sell instantly still sits in your inventory 5 years later. Ebay's fee increases are short sighted. They will continue to lose far more than they will gain with these higher fees. In a nutshell we dealers are paying ebay a fee to use their search engine and get eyeballs on our items. Ebay management is not interested in a mutually beneficial growth strategy. They are instead concerned only about their share prices. Meg and the rest of her management group have been dumping ebay stock as fast as the securities and exchange commission will let them. Ebay stockholders beware, you are going to take a bigger bath in the years ahead. Any stock with the quantity of blue sky ebay has is begging to jump off of the price cliff. Ebay will have to start expensing stock options this year which means ebay's earnings will take a heavy hit in the 3rd and 4th quarter this year. Consider yourself warned. The whole economy is suffering. People and governments are in debt like never before. We are in a BIG financial house of cards and if the wind shows up a lot of people are going to experience an economic nightmare that makes the great depression look like a minor recession. Interest rates are rising and inflation is running rampant. The government inflation numbers conveniently leave out food, fuel and housing costs as otherwise we would see a much higher inflation rate. Additionally the U.S. dollar is falling on the international markets which means foreign imports are going to be much more expensive in the years ahead AND a lot of foreign nations like China and Japan are busy getting OUT of the U.S. credit markets (they have lost BILLIONS) and diversifying into other currencies which means they will not be nice and continue buying our debt from us which is how we have managed to have low interest rates for so long. Therefore the fed will continue to print new paper money further debasing our fiat currency and only fueling the fires of this evil thing we call inflation. Inflation I might add is NOT caused by business raising prices but is instead caused by governments DEBASING their currency by printing a lot more of it. I can hear all of you now saying "This is all good and well but please get back to telling us how to deal with the ebay fee increase!" Kindly pardon my rantings but these facts are all relevant if you are going to survive the economic downturn we are only just starting to see. Everyone of us will suffer from it. The question is how badly will you suffer? That depends entirely on you. I know a lot of you folks have closed your ebay stores when they raised the basic store fee and final value fees. For those of you who have less than 200 items to sell this is a wise strategy. If you are a growing business though and are sitting on more than 200 items you may wish to reopen your store. Let me explain why. An ebay store allows you to have a search engine on your listings and also gives you a place to point your customers. I get a lot of business from add on sales by pointing people who have bought an item from me on ebay to other similar items I have listed in my ebay store. For every item I sell out of my store, it is an item I don't have to list at auction. Additionally Ebay stores are ranked well on search engines like google. What get's the most attention are your 5 most expensive items in each of your 19 catagories although you can change that to different keywords if you choose to. The default is the 5 most expensive items and their titles though. In addition to that you have access to statistics when you have a store and these statistics can be VERY enlightening. Ebay stores now even have the ability to have a mailing list and I have made use of my mailing list and made sales because of it. This list will continue to grow as time goes on. By using it WISELY (write great headlines and interesting tidbits so people will read them) you can increase your sales without having to spend more money. Also be sure to have links to your websites IN EVERY SINGLE EMAIL YOU SEND. Those links are money in the bank and WILL generate a sale or two on occasion with NO effort from you. I have had an ebay store since it's inception and have seen some improvements to include having items show up on ebay auction searches if less than 20 "hits" are found at the ebay auction site and you have a "match" in the store. If you have really rare items that people search for by name this will make a HUGE difference and will save you listing fee costs. Additionally they finally got around to making it easy to convert store listings to auction listings (only took them 2 years to do this thing that should have been a priority). Just recently they changed things so you can bulk list with just a few clicks of a mouse 25 store listings to auction at a time. Takes me about 4 minutes per 25 listings. I use my ebay store to "hold" a lot of my slower selling items and then when a low priced listing day comes along and then list it on ebay the auction site. The bigger your store is, the more money you will save by listing on the cheap days. In December the formerly "free" day cost me .10 cents per listing plus "add ons". Prior to the 2005 fee increases I still used things like gallery, buy it now and 10 day auctions. Therefore when I listed my 2400 items on the December 10 cent day it cost me .60 per listing or about $1,440 not including final value fees and paypal fees. I sold about 8% of these items and once I paid all the fees it simply was not worth it on sales of about $5,5000. On 14 February ebay had a 5 cent listing day in an effort to damage the boycott (which was partly successful). Instead of paying for all the extra fees I listed 2100 items with only the buy it now (still 5 cents at the time) which meant my 2100 listings cost me only $250.00. I DID NOT use gallery or BUY IT NOW or 10 day listings EXCEPT on about 100 of my most expensive items. I sold about 6% of my listings but since my fees were significantly lower because I did not use the "add ons" it really did pay for itself. From now on this is how I will do it. Treat ebay not as a "wholesale" selling venue but as a RETAIL one. Price your items near full price and accept the fact that most everyone else will be selling the same items for less than you are. Compensate for your higher prices by having better customers service and quality photographs, descriptions and a sterling reputation for excellence. Customers WILL pay your price as long as they feel you are "worth it". Make sure you have an ABOUT ME page telling them all about yourself, your business practices and of course your listings and sell yourself as the dealer they WANT to do business with. Keywords are another thing to consider BUT it can get very expensive very quickly so use them sparingly and keep their cost to a bare minimum. Don't bother paying for ebay keywords (at .10 cents they are too expensive with not enough benefit) but instead pay outside search engines like yahoo and google to drive traffic either to your ebay store or to your own personal website. In an ideal world ebay and us dealers would have a win/win situation. Ebay is not interested in this. They care only about their bottom line to prop up the stock price. Therefore from ebay's perspective it is win/lose with us being on the losing end. I for one do not like being a slave. I am more than happy to "share the wealth" but when they take a lions share of the wealth off of my sweat it burns me up. Let other dealers pay the high ebay fees. Do your best to limit yours. I know full and well it takes sales to grow your business and that might mean a slower growth for your business goals. The methods I have discussed are NOT how you will grow fast and furious but they will allow you to grow. It is also the "safer" method because if you spend thousands of dollars to list items that do not sell and watch your profits evaporate to pay for ebay management to live a life of ease and luxury Meg will thank you for helping her get her bonus (so she can then turn around and raise your fees again) but you will instead have lost this revenue forever AND the time it took to list those items. Be VERY selective in what you list on ebay so you have the highest chance of making a sale. The sharks at ebay are out to eat each and every one of us dealers. Contrary to popular opinion fee increase DO NOT help larger dealers any more than they do smaller ones. Fee increases make it that much harder for the larger dealers to do business and hire new people and grow their business and the economy as well. After only a short time a big percentage of the ebay drop off stores are failing even though they don't have inventory costs. Granted some of them fail because they cannot get enough inventory but for the most part it is simply because they have discovered that the high fees they must pay to ebay require a big profit margin and even limiting what they agree to sell (usually items valued at more than $50.00) their take at 30% is only $15.00 assuming they get the $50.00. They must then pay ebay and paypal fees, rent, utilities, webhosting fees and other expenses as well. That is a LOT of effort for a small profit (assuming they made a profit after paying all of the expenses). Learn from their mistakes and let me again remind you, YOUR PROFIT IS MADE AT THE BUY, NOT AT THE SALE! Some folks say that our complaining about the latest fee increase fell on deaf ears and that the boycott was a failure. I beg to differ. Ebay gave us a 5 cent day (and a few other special priced listing days). Next month will be a free month for ebay stores, they increased the percentage off they give us for traffic we drive to our stores and a few other things I cannot recall right now. In short we complainers DID have an effect. I suspect we are going to see a lot more sales days in the quarters ahead. Why you ask? I have seen a BIG drop in listings in the auction section I frequent (sterling). There are less listings AND there are a lot more gaps between auctions (sometimes several minutes). This is NOT typical. Ebay management assumes that we sellers will continue to "take it". This has proven NOT to be the case. Instead we are diversifying, reducing our listings and turning our backs on ebay. As long as ebay management chooses to mistreat us sellers, we MUST keep up the pressure by doing everything we can to help grow other websites. Fees WILL go up again next year although I suspect not as much as they did this year (some fees went up as much as 400%). As sellers we MUST have a business plan and must do our best to follow it through. We cannot control everything but we MUST control as much as we possible can. Building a business is no easy task, especially for those of us who have families and do this full time. If it get's to be too much there are some of us who will go back into the workforce and when that happens ebay has really lost out because these types of folks will never be back. Carpel tunnel will get me eventually but as long as I can continue to grow my business and feed and house my family I will do this for a living because it is what I love. My goal is to make ebay almost irrelevant to my business but as long as I have to use it to sell I will look at ways to keep my costs to a bare minimum while selling as many items as I can for as much as I can. Additionally I will continue to use ebay as a source of new inventory. With the higher fees more dealers are looking at "saving" money thus they are starting their listings for lower prices in order to save on listing fees. The end result is often not what the seller would like to see ie. furious last minute bidding. Instead they watch in horror as their quality item get's purchased by a dealer or consumer who is smiling from ear to ear because they "stole" something. DON'T be one of the dealers selling your quality items for pennies on the dollar. Instead be one of the dealers who bought it cheap and sold it high! You will last a lot longer as a business and may even make a few dollars after paying ebay's outrageous fees. I hope I have given you a few pointers and that you can take something away from this conversation. Remember, we ALL started small and only through HARD WORK AND PERSISTANCE IN THE FACE OF IMPOSSIBLE ODDS do a few of us break away from the rest of the pack and grow our business to the next level. It is not an easy life but it can be a satisfying one. I don't drive to work which saves me a fortune in gas and wear and tear on a vehicle. If I need to take some time off I just walk away from my computer. I wish each and every one of you the very best with your online business. May your ebay fees be low, your profit margin high and your customer base ever growing. Sincerely, John Leckrone John@hopkinsvilleantiques.comhttp://www.hopkinsvilleantiques.com/ http://www.stores.ebay.com/buriedtreasuressterlingsilver?refid=store http://www.tias.com/stores/buriedtreasures/ http://www.auctionbytes.com/forum/phpBB/viewforum.php?f=32 Original of the message was taken from http://www.auctionbytes.com/forum/phpBB/ Replies:Give me a break.How ya doing, Sam? martha Baerreis Art Craft and Collectibl... Hi John: I know exactly what you are trying to tell most of us, b... I think you both make some good points. I feel for the sellers who rely on eBay as their main source of inco... I think the obvious thing to do is to put this money into driving traf... Why? eBay is JUST a venue. Sorry, but describing eBay as "Just a venue" is silly. Giving ebay or any "venue" thousands per year when you could have a do... John, I appreciate your post. Some good points here but keep in mind that we are only a few of the m... Low priced competition is just a prevelent in the "real" world as onli... The reason for my post was not to again fight the battle over fee incr... I think this is a great thread for eBayers that are considering hoppin... What an excellent thread. beckem wrote: Would you, for the benefit of us ignorant indivi... Ranger wrote: [quote}Many people have tried and many have failed and... Would you, for the benefit of us ignorant individuals, please tell us ... Sears and WalMart do that to small (and larger) suppliers all the time... I would add to the discussion for the self proclaimed "ignorant indivi... So to say eBay is no longer a venue is a truism. > In a nutshell ebay is an overpriced shopping > search engin... I couldn't agree more. In the paranoid world of spies and such, it would be more likely that ... Now, that's a good one, Martha. I would ask you both Martha and Kim: Why not participate in the actual... II guess I'm just too ignorant to understand your point. I am the one who started this thread and this is MY first paragraph in... Sorry John, It was not my intention to thwart your great an intuiti... First off, there is rarely in today's chatboard world a board that doe... I agree about the factors of the feebay market you cited. ranger wrote: That is exactly my thought when it comes to peop... KJP55: You said: Most of what you said is what my sent... I suppose my comparison of eBay and USPS may not have been the best ch... I havn't sold on eBay in well over 5 years (maybe 6 yrs. I agree with you their Kim. hey guyz Well hey to you imnoangel. We use to sell on ebay and when the rate increase went into effect we ... We have sold off and on ebay since '98. Pesa chimes in on the issues. Good read and very factual. This is Exactly the Point! The Future "Success" of All Sellers Across ... I agree completely. 3/28 Comments from Derek Brown of Pacific Growth Equities Based o... I would have to agree and would add the unscrupulous activities perpet... The assumption appears to be that the majority of small businesses eit... No doubt. just heard about the boycott, that is funny. Well, gee, who knew? I sell retail on both, as well as my web sit... So Very True! eBay is Dying, and the Newbies that have come On Board d... Well, I am no newbie, nor am I stupid. Different Strokes for Different Folks. Give us a break!!! . :lol: :lol: :lol: Give us a break!!! :lol: :lol: :lol: I to... Hey Sundance, heads up! Congress is talking about cutting SSI. When I started this thread I had hoped it would stay on point and I as... I see what you are saying, but respectfully would suggest that you loo... I have read all of these related threads and I can say with great cert... IMO listing less on ebay is an imperative and important strategy for s... I concur and that was a part of my post. Found this article when doing a search for google. Sundance wrote: Dude, I've been working online auctions and on... To get back on topic: I list less (never listed more than a handf... Sundance: I see that you are Relatively New to Online Selling! It's to... Wow, what a fabulous quote. My comment on FeeBay is simple they have everyone over a barrel, and a... Why are there So Many in the Dark. You should take a page out of your own book. IMO feebay is pricing themselves right out of the market. Great thread! Thanks for starting it, I really enjoy reading your post... Hi Karen and welcome to Auctionbytes! We continued this thread on a d... Karen PM me. I've been lurking here for quite some time and enjoy reading all the p... Yes the fess will keep rising, the eyeballs "actually buying" will con... Ebay is charging way too much. That's an interesting idea, because what I've seen is a SHARP increase... Simply put and sorry if it is NOT politically correct. This would be a good way to deal with them. Right on the money, Tradeguy. Hello thentavius, fancy meeting you here. What ColdFire says makes perfect sense to me. This is exactly what I have been doing as well. I think you have all missed the boat. Hi Gary, The author of those tips was on these boards and we discuss... While we are on the subject of ebay Meg has managed to get above her 2... No one has been on here for a while so actually I have just joined auc... You may try other cheaper auction sites. Hi, I must have heard about 100 possible competitors to ebay over... Sorry to hear about you closing neat_stuff. I think its just a matter of people really banding together I start... It is a good concept but to get the snowball rolling might have been p... > Ebay themselves do not add significant "value added" and > ... I agree. You missed my point. > 2005 eliminated much of the profit from ebay selling, I'd ha... This thread probably has the most interesting, educative and eloquentl... Ebay definitely has its pluses. Congrats on that, however, I would not credit ebay for a "record year"... ebay is just trying to avoid small seller like me **********Fees Calc... > Ebay store listing fees doubled also, many sellers closing their ... Bottom line is it's going to take a MONSTER like GOOGLE to break the b... As they say absolute power corrupts, you have made the system able to ... I think the problems with Amazon and Yahoo are the fact that almost 99... |