ethan 250,000 stores around the world. (For more information, see http://www.hoovers.com/ebay/—ID__56307—/free-co-factsheet.xhtml.)
When you try to figure out what to sell on eBay, you run into competition. Youfind, typically, that there are already a dozen people who are selling what you areselling. Often, the competitors are far larger than you. Because they have the re-sources and experience to put lots of sales online, they can sell for less. The bottomline is that eBay is set up to attract sellers, not buyers.
Rising Seller’s Fees on eBayIn early 2005, eBay’s sellers were in an uproar when the auction site increased itsmonthly fee for running an eBay Store. The increase of $9.95 to $15.95 per month
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might not seem like a lot at first. And for well-established PowerSellers who completedozens or even hundreds of transactions per month, the increase is barely noticeable.However, if you sell only one or two things through your eBay Store and make aprofit of only $10 to $50 per month, the increase is significant.
Success on eBay depends on the simple, age-old principle of ‘‘buy low, sell high.’’Because sellers often spend many hours each week in finding merchandise, photo-graphing it, listing it, and packing and shipping it, they need to make some money tomake all this work worthwhile. Let’s say that, like me, you try to make at least $9 or$10 on a typical auction sale. You find a nice pair of Nike Air Jordan shoes for $3.You list them for $12.99 (which sounds nicer and more inviting than $13), and onebidder buys them for that price. Does that mean you make $10 on the sale? Notnecessarily. Here is an example of how eBay’s current fees work:
•Insertion fee: $.35• Gallery photo fee: $.35•
Four photos (if hosting through eBay’s Picture Services, which charges $.15per image after first one): $.45Final value fee: $.68
•
There may be other fees as well. If you list your item through an eBay Store, youhave to pay a $15.95 hosting fee to eBay. If you underestimate the shipping cost—forinstance, if you charge $9 for shipping and the cost actually turns out to be $9.30 (ablunder that has happened to me), you lose 30 more cents on the deal. Then, if yourbuyer uses the popular payment service owned by eBay, PayPal, you incur the feePayPal charges you to receive the payment from a seller—add another 50 cents or so.Your $9.99 profit turns out to be $7.36. Suppose you spent an hour or more on allthe tasks associated with completing this transaction: You’re essentially working forless than $8 per hour. Is that a good rate? The point is that you want to minimize thefees that your seller subtracts from you, which over time, and over many sales, addup.
Lack of SecurityWith every group of sales you make, there always seem to be one or two people whodon’t respond right away. You have to wonder whether or not they are going to turnfrom slow responders to nonpaying bidders (NPBs). NPBs are the bane of every eBayseller. Pursuing them is time consuming and not always fruitful, plus eBay’s UnpaidItem Process works agonizingly slowly. It’s up to you to close the dispute once it’sopen so that you can relist your item—and during that period, the item isn’t selling.
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Other auction sites, such as uBid (http://www.ubid.com), prequalify everyonewho registers to bid on the site. Shoppers must submit a credit card number at regis-tration, which uBid uses to verify the member’s identity.
At the same time, eBay continually encounters problems with security. Membersreceive e-mails encouraging them to give out their personal information for fraudulentreasons. Accounts are hijacked; fraudulent bids are placed; stolen credit card num-bers are used to make purchases. Sellers who are depending on eBay for all or partof their income deserve to feel more secure when they put their hard-earned merchan-dise, time, and money on the line.
Lost in the ShuffleIn addition, eBay boasts that when you put an item up for sale, you make it availableto tens of millions of potential customers. That’s not necessarily a good thing. If therearen’t any people in those tens of millions who actually want what you have to offer,you don’t have any real advantage.
Not only that, but it’s easy to get lost amid the millions. Selling on the Web is allabout being found. You want your sales listing to be found out of the billions of otherWeb pages by people who are looking for exactly the item you have to offer. Youincrease the odds of this type of success by choosing an auction site, mall, or othervenue that is frequented by as many shoppers as possible. You also dramaticallyincrease the odds by making sure your sales descriptions are indexed by search en-gines like Google.
When you open a store on eBay, you are only one of millions. Although eBayindexes your eBay Store listings on search services like Google, sellers who havesigned up with sites like iOffer find that they get higher placement in search resultsfaster.
Note: Getting a good placement on search results on Google and otherservices is a complex and hotly debated subject. Because Google’s exactformula for determining which websites get listed at the top of a set ofresults is a secret, it’s impossible for me to provide you with scientificreasons on how to get the best placement. However, it is widely knownthat the more links you make to a particular Web page, the greater thatpage’s chances are of being listed near the top. It is to your advantage tomake as many links as you can between different Web pages to improveyour visibility on the search services.
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Personal Help Is in Short SupplyOne of the longest-running complaints about eBay is the lack of personal help—thatis, the difficulty of finding people at eBay who will personally answer questions andwalk you through procedures of one sort or another. This problem isn’t as pro-nounced as it was in the past. You can click on LIVE HELP and type messages to eBaystaff. But the system is plagued by the usual delays inherent in any live chat system.You have to wait several minutes for the help staff person to appear; you might getshuttled from one staff person to another; and you find that the process of typingand receiving messages is time consuming. This is what happened to me when I hada question about my own eBay Store (see Figure 2-1). My question was eventuallyanswered, but it took about a half hour to do so. Members of other auction sitesreport that they have no problem getting in touch with their site’s help staff.
Figure 2-1. It’s easy to open an eBay Store, but hard to get quick personal help when you need it.
(cid:2) Greg Holden.
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Find the Right Auction Site for Your Sales Niche
When you are considering moving beyond eBay, you don’t necessarily want to bethinking about what to sell or finding merchandise to sell. You should already have asupply of merchandise to sell, and know what your sales niche is. Why? When youhave a clear knowledge of what you want to sell, you can make an informed decisionabout where to sell it. Many of the alternatives to eBay are specialty sites that appealto a niche audience of collectors and enthusiasts. If you have already connected withthat audience on eBay, you can move on and find higher bids for your merchandiseby reaching exactly the people who want them. Table 2-1 presents some examples ofthe specialty auction sites you can check out.
Table 2-1. Niche auction sites.
SiteWineBid.com http://www.winebid.com
URL
Sales NicheWine
PenBid.com
http://www.penbid.com
LabX
http://www.labx.com
Just Beads!
http://www.justbeads.com
Antique pens,pencils, andbooks aboutthemLab equipment,medical equip-ment, analyticalinstrumentsBeads, jewelry,stones, beadedbags
PotteryAuction
Sedo
http://www.potteryauction.com Pottery
http://www.sedo.com/main.php3?language(cid:4)us
Domain names
IronPlanet
http://www.ironplanet.com
Heavy machin-ery, asphalt,trucks
AdvantagesYou consign wine tothe site, which han-dles appraisals andshippingFree listings; commu-nity discussion boards
Attracts medicalequipment buyers
No charge for relistingunsold items; freephoto hosting; freee-mail accountLive chat utility fordiscussing potterywith others; listingand relisting are freeListing is free; sellerscan negotiate withbuyersCommissions of 6 to 8percent are charged,but IronPlanet helpsmarket merchandiseand provides inspec-tions for them
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Get a Solid Business Foundation with eBay
It is true that eBay is a terrific place to start a new business. If you’ve never boughtor sold before except at the occasional garage sale, you can use the site not only toget your feet wet in the business world but also to start off your business on a solidfooting. Use eBay to your advantage by starting a store and creating a brand name,developing a list of customers whom you can contact for repeat sales, developing asolid feedback rating, creating an About Me page that you can use to promote yourwebsite, and opening an eBay Store that you can use in tandem with your otherauction sales outlets.
Opening an eBay StoreYou don’t need to have an eBay Store open to move off of eBay. But a store is anotherpart of having a firm foundation on eBay from which you can branch out. An eBayStore gives you a way to list a large quantity of merchandise in different categories.It also gives you another way to meet customers so you can drive them to yourwebsite or other auction venues where you sell items. Each time you list an item inyour store, you can have ten similar items to which you can direct buyers. I knowsome sellers who list only a tenth of their merchandise in their eBay Stores to savemoney on eBay fees, while they list the rest of their merchandise on their websites.They are prohibited by eBay from making a direct link from one of their sales descrip-tions to an external website. However, if someone asks a question about an item ormakes a purchase, that person is encouraged to visit the website for many moreoptions. In other words, once you have assembled a list of steady customers on eBay,you do everything you can to drive them to your website.
Developing a Clientele
Although eBay doesn’t have a built-in mechanism for encouraging buyers to returnto the same seller over and over, it does encourage sellers to provide shipping dis-counts on multiple purchases. The site also encourages cross-selling—the practice ofrecommending other items to someone who is shopping for a single item. The ‘‘seemore items from this seller’’ feature accomplishes this practice for many eBay mer-chants. However, many third-party vendors provide a more sophisticated version ofthis cross-selling feature. For example, Vendio (http://www.vendio.com) gives its cli-ents the ability to present an animated slide show of their other items for sale in thebody of each sales description.
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If you don’t want to subscribe to Vendio or another auction provider, you canstill market yourself to existing eBay customers by using the techniques described inthe following sections.
UpsellingIf you have ever made a purchase on Amazon.com, the well-known online bookseller,or with another prominent online merchant, you’ve probably experienced upselling.When you make a purchase, you are encouraged to buy another, similar item. Thisprocess is upselling—as the virtual customer heads to the online checkout area, he orshe is given a chance to buy something else.
Upselling that occurs as a shopper prepares to check out by making a purchasefrom an online catalog is a complex affair that may require special programming. Butyou can perform upselling yourself as an eBay seller. When you receive the standardend-of-auction message from eBay stating that a purchase has been made, you sendout an invoice to your buyer. The invoice has a space at the bottom for a short e-mailmessage. You can add a message like the one shown in Figure 2-2. In case you can’tread the message at the bottom of the image, here it is:
Before you send payment, take a look at my Allen Edmonds size 10Mwingtip shoes in my eBay Store. I’ll be happy to combine shipping onmultiple purchases.
By upselling, you develop a one-to-one relationship with your customers. You getthem used to hearing from you with special sales offers. You can maintain that rela-tionship by sending them periodic e-mail announcements.
Using E-Mail MarketingOnce you have a list of satisfied customers, don’t let them simply fall by the waysideand move on to other eBay sellers. Keep in touch with them and let them know thatyou still exist. Entice them with special promotions that you present only to them.Online shoppers love to feel that they are getting inside information or special dealsthat aren’t available to other consumers. You can use such promotions to cultivateongoing relationships with your customers and to build loyalty—loyalty that you cantake with you when you move beyond eBay to a website or new auction marketplace.Suburban Paper Products, a printer located near Indianapolis, Indiana, has accu-
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Figure 2-2. Do your own upselling to develop repeat business with your eBay customers.
(cid:2) Greg Holden.
mulated a database of twenty thousand online customers since the company beganselling paper scraps and kits in 2001. Every month or so, company president JeffMcCullough sends out what he describes as an ‘‘e-mail blast’’ to those customers.The e-mail message contains colorful graphics and images that tell recipients in aninstant what’s being offered. An example is shown in Figure 2-3.
Create a Sales System
Nobody ever said selling on eBay or other websites was easy. When you are self-employed, you really learn what it means to work hard. You need to keep track of adizzying array of activities such as finding merchandise, preparing items for sale,photographing merchandise, keeping up with your e-mail, processing payments, pack-ing and shipping—and the list goes on.
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Figure 2-3. Use e-mail to build loyalty among your existing eBay customer base.
(cid:2) Jeff McCullough of Suburban Paper Products.
The way to thrive amid this apparent chaos is to come up with a system. Createa standard listing template that you can use for all your eBay sales as well as yoursales on other auction sites. The template should contain standard boilerplate infor-mation about your preferred methods of payment and shipping, your returns policy,and your company. Prepare a regular schedule of activities that you can perform soyou don’t overlook anything. Table 2-2 shows an example.
It’s difficult to limit your activities so that you have one or two days off, especially
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Table 2-2. Sample sales schedule.
Day of Week
Activity
Sunday
Prepare items for auction; answerquestions.
Monday
Pack; send invoices.
Tuesday
Prepare sales descriptions; packand ship.
Wednesday
Pack and ship; answer e-mail; ob-tain merchandise.
Thursday
Obtain merchandise; preparesales descriptions.
Friday
Obtain merchandise; preparesales listings; answer e-mail.
Saturday
Prepare sales listings for Sunday.
Comments
You can also schedule sales tostart in advance if you don’t wantto work on Sunday.
If many of your sales end on Sun-day, most of this day can be spenton packing and shipping.
This could be a day of rest, pro-vided you don’t have any packingto do.
Packing and shipping can occurany day of the week, dependingon when purchases are made.
If you have a large number ofsales that you want to start andend on the weekend, begin pho-tographing and writing descrip-tions now.
Thursday and Friday are gooddays to shop at garage sales orother venues.
If you attend garage sales andflea markets, most of your daymay be taken up with shopping.
when you’re just starting out on new auction sites. However, it’s also important tobalance your home life and your work activities so that you don’t experience burnout.Being burned out doesn’t just affect your personal life; it can also drain the enthusi-asm you need for dealing with customers and suppliers in a positive, friendly way.
Build Up Your Feedback
Every new business needs credibility. One of the best ways to develop trust is toassemble a set oftestimonials, or recommendations from satisfied customers.Through its feedback system, eBay gives you an easy way to gather testimonials. Thefeedback you accumulate on eBay can be cited on your website as evidence of howtrustworthy you are. You can make statements such as the following:
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••
•
‘‘eBay PowerSeller’’‘‘eBay Titanium PowerSeller’’ (obviously, this is much better, if it applies toyou)‘‘eBay seller for 8 years; feedback rating over 5,000’’
You can even make a link to your feedback profile on eBay so that people caninvestigate the comments that have been left for you. Of course, before you referprospective customers, you have to accumulate a good feedback rating by shippingquickly, being responsive to questions, and accepting returns. David T. Alexanderprominently mentions his eBay sales and his thirty years of experience on his DavidT. Alexander Collectibles website (http://www.dtacollectibles.com, shown in Figure2-4). He sells comics and magazines through two eBay Stores and his own website,and at trade shows around the United States.
Create an About Me Page
Credibility also results from the way you present yourself, whether online or in per-son. By giving you the space to create an About Me page, eBay gives you a helping
Figure 2-4. Your eBay feedback can help build trust in other sales venues such as a website.
(cid:2) David Alexander.
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hand with presenting yourself personally. This page gives you a place to talk aboutyour qualifications as a seller. Be sure to mention any trade associations you belongto, any certifications you have, or anything that indicates your level of knowledge andexperience in your chosen sales area. My own About Me page is shown in Figure 2-5. Here, I call attention to my experience as a collector and the fact that I’ve writtena few books about eBay, which should make me a knowledgeable seller. Perhaps thebest thing about an About Me page is the fact that eBay allows you to make links toother websites, such as your own e-commerce online store.
Figure 2-5. Create a free About Me page to build credibility and link to your website.
(cid:2) Greg Holden.
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Note: Books like eBay the Smart Way by Joseph T. Sinclair give youdetailed instructions on how to create your own eBay About Me page—notsimply to type a sentence or two about who you are and what you sell,but to provide detailed reasons why buyers should trust you, as well aslinks to your website and other sales venues.
Don’t Abandon eBay
The message I’m trying to convey in this chapter is simple: Don’t abandon eBay. Thesite gives you one of the best ways to get your business’s name and your productsbefore the eyes of millions of potential customers. A business presence on eBayserves as a firm foundation. However, don’t depend on it for all of your online salesincome, either.
Pitfalls of Selling Beyond eBayBecause eBay is the predominant auction marketplace, taking the lion’s share ofbuyers and sellers, and because it has such a well-established system of sales andpayments, you are bound to run into some challenges when choosing other salesvenues. Being aware of the following challenges will make you a better seller:
•
Lack of Exposure. eBay’s big advantage is the sheer number of members whoshop on it. The moment you move off eBay, your visibility goes down dramatically.You just don’t find as many potential buyers, and bids, for what you have to sell.
•
Lack of Stability. Many smaller auction sites come and go, and there is a
danger that they can fold up completely and with little warning.
•
Lack of Frills and Perks. Other auction sites don’t have the bells and whistlesto which eBay users might be accustomed. You might not get the opportunity tocreate a Web page that specifically describes you or your business, or a storefront, ordiscussion forums where you can get tips and share opinions with other members.
•
Lack of Integration with Payment Services. Because eBay owns PayPal, it’seasy to process payments and print shipping labels using that service. When you gooutside eBay, you can still use PayPal but you have to find another service providerfor printing shipping labels, printing postage, and so forth.
You can offset these problems, in part, by choosing specialty sites—sites whosemembers are passionate about what you have to offer because they are knowledgeable
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collectors, or simply because they love what you have. If you have fountain pens forsale, by all means sell on PenBid.com, for instance. Another thing you can do is toavoid putting all your eggs in one basket.
The Multichannel ApproachIt’s called multichannel selling—the use of multiple sites on the Internet from whichyou can sell your merchandise. This approach allows small retailers to benefit fromthe exposure that massive sites like Amazon and eBay offer, while also giving themthe opportunity to do business more profitably on their own sites or on alternativeauction sites.
The website Startup Journal reported an interesting story on Bolinger Antiques,which had been selling on eBay until the late 1990s. After eBay’s fee increases, theowner moved to a site called Bidville (http://www.bidville.com), which he said has‘‘a lot of potential.’’ He estimates that he makes about 60 percent of his online salesthrough eBay, compared with about 40 percent through Bidville. Another very activeeBay PowerSeller (who wished to remain anonymous) told me that having developeda strong customer base on eBay helped his company move to other marketplaces. Hestated: ‘‘Because of the huge clientele base (multimillion customers) that we earnedover the years on eBay, it was a lot easier for us to gain a foothold in the overstockmarketplace.’’
Whether you are a small-time or big-time seller, you don’t need to abandon eBaycompletely. As described in Chapter 7, you can expand your operations to sites whereyou can sell things you would never sell on eBay. The bottom line is that you shouldcome up with a plan and know what you need to do to survive. You’ll learn moreabout planning your own survival process in Chapter 3.
Note
1.
‘‘New Study Reveals 724,000 Americans Rely on eBay Sales for Income,’’ July21, 2005 (http://investor.ebay.com/ReleaseDetail.cfm?ReleaseID(cid:4)170073&FYear(cid:4)).
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Searching for Life Beyond eBay
When one creature dominates an environment, it can be difficult for others to sur-vive, let alone thrive. A friend of mine has a small parrot called a conure that lookscolorful and quite harmless. But after bringing the bird home, other pets starteddisappearing or turning up deceased. Now that the finches and parakeets are gone,the conure rules the roost alone.
Luckily for you and me, eBay doesn’t look like it’s about to rule the roost com-pletely like our friend the parrot. Although it’s without doubt the big dog in the field,plenty of others survive in the pack and are even thriving in their own virtual dog-houses. You owe it to yourself to investigate these sites, many of which are describedin subsequent chapters. An article on InternetRetailer.com reported that Rockbottomgolf.com, which has racked up annual sales of $14 million and once used eBayas its exclusive sales outlet, is moving to other sales venues because of dwindlingprofit margins on eBay. The need to explore new options applies even if you’re stillmaking sales on eBay because it never hurts to look around for new opportunities,and you’re likely to make a better decision if you’re not in crisis mode and have timeto think about the move that’s best for you.
The same factors that drove you to sell on eBay in the first place can give you theimpetus to look for more sales success beyond it. The key is to take a systematicapproach. If you suddenly say, ‘‘I’ve had it with eBay!’’ and immediately close yourstore and end your sales, you’re only going to hurt yourself. How are you going tomake up the income you’ve lost while you open a new store? Expanding your businessand taking it to new locations requires the same sort of planning that is required tostart up a new business. Take the time to follow the planning steps described in thischapter and you’ll make a reasoned decision that will be good for business.
Analyze Your Current eBay Sales
It doesn’t take rocket science to figure out that sellers are beginning to considermoving away from eBay because their profit margins are dwindling. Their primary
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goal is to gain more profit for each item they sell. In general, they don’t move awayfrom eBay to find more potential customers: eBay’s market pull is unmatched in theonline auction industry, and its marketplace is one of the best-traveled on the WorldWide Web. Sellers who move away from eBay will find fewer shoppers at other sites.However, by choosing the right sites, they might find more paying customers, andcustomers who will pay more for what they purchase.
Determine Your Minimum Profit MarginHow much profit can you expect from eBay? At what point does it make sense tomove elsewhere? There isn’t any single formula guaranteed to fit every conceivableWeb store. You know from your own selling that some one-of-a-kind collectibles mightsell for a 200 or 300 percent profit, or even higher. But for sustained sales, you needa smaller and more predictable profit. The key is to take the average profit you’vebeen making on your merchandise, which has been enough to keep your businessafloat, and make that your baseline profit. If you go below that for a month or two,it’s probably time to start looking for other options.
Here’s an example: Suppose you have ten laptop computers to sell on eBay. Youobtained the machines for $500 each. You want to sell them for a 50 percentprofit—at least $750, or a profit of $2,500 total. You put them up for sale with astarting price of $750. You find that only six of the laptops sell, and the final purchaseprices range between $750 and $800. What’s your profit margin? Add up the fol-lowing:
•Purchase price: $5,000•Total revenue from six sales: $4,800Listing fees: $4.80 x 10 (cid:4) $48•• Gallery fees: $.35 x 10 (cid:4) $3.50•Final Value Fees: $165 total•PayPal fees: $12
The discouraging thing is that you have lost $428.50 on this deal. Naturally, youhave to relist the two computers that didn’t sell. You might sell them eventually, butyou have to pay the listing and gallery fees each time you do so. So your total profitis not going to be terribly high.
The truth is that profit margins have to be quite high on eBay (or on any onlineauction site) to compens