ate for the fact that sell-through is seldom, if ever, 100 per-cent. A more reasonable profit margin for the ten laptops listed in the previous exam-
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ple would be 100 percent, or $1,000. If six of the laptops sell for $1,000 to $1,100and your exact total purchase price is, say, $6,180, then you are able to absorb theapproximately $300 worth of fees you would incur (higher sales prices result inhigher Final Value Fees) and you would end up with a profit of $880. You might beable to sell the four other laptops later on at a lower price or at another sales venuesuch as Overstock.com or uBid.
Even with a profit margin of $880 on this one sale, you would have to determinewhether the profit margin is enough to cover your eBay Store fees, the fees you payto any employees who help you with packing or shipping, and so on. That is why Ican’t tell you what your minimum profit margin should be; you need to determinehow much you need to make each month in order to make selling on eBay worthyour while. If you calculate that you need a minimum of $1,000 to cover your costsand give you a sufficient income, and your profit drops to $880 or less, for instance,it’s time to look for other sales options.
(cid:3)
Seller Leaves eBay, Boosts Proﬁt Margin
Sell-through rates and proﬁt margins are critical to success, and they played a keyrole in the movement of one wholesale computer supplier away from eBay. Exel-i, Inc.,a company based in Gaithersburg, Maryland, once used eBay as its exclusive saleschannel. When eBay increased its fees, Exel-i’s sales and procurement manager JohnWieber explained that it became clear to his company that some new approaches wereneeded that didn’t depend so much on eBay. In addition to ceasing the use of Buy ItNow sales and Gallery photos to save as much as $55,000 per month, Exel-i did thefollowing:
• Upgraded its LaptopBroker website (http://www.laptopbroker.com), shown inFigure 3-1, a storefront set up and managed through ChannelAdvisor (http://www.channeladvisor.com)
• Experimented with putting 115 items up for sale on Amazon.com as a selected
merchant
• Moved to putting more merchandise on other online sales channels
According to Wieber, ‘‘eBay sales are growing overall, but as a percentage of ourbusiness it is becoming less signiﬁcant. Currently, eBay is about 30 percent of ourbusiness. We get about 10 percent of sales from our website, 8 percent from Amazon,and 10 percent from other online channels. Our main focus is on our wholesale busi-ness to corporate end users, other online sellers, and computer service companies.’’
Currently Exel-i has approximately seven hundred items for sale on Amazon.com.Wieber says he doesn’t tailor merchandise to particular venues (selling prime items oneBay and excess inventory on other sites, for instance). ‘‘We sell similar items across
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all channels.’’ As far as sell-through rates on eBay, he comments: ‘‘The days of 50 to75 percent sell-through rates are long over. If we get to 50 percent we are thrilled.The average PowerSeller is probably at 33 percent.’’
Figure 3-1. The owner of this website upgraded it and made it more of an e-commerce venue tobecome less dependent on eBay.
(cid:2) Ina and David Steiner of AuctionBytes.
Plan Your Business ExpansionWhen is it the right time to expand your eBay business to other locations? Whenyour profit margin needs a boost—that’s one answer. However, you’ll increase yourchances of success if the following conditions apply:
• Make sure you can sustain your existing business. Don’t move to another loca-tion if you’re already struggling to make sales or achieve any kind of profit. It’s bestto expand or move when you have had steady sales—if not increasing profits—for the
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past several months. You’ll be better able to absorb the costs and slow startup associ-ated with a startup site if you are already making a profit on eBay.
• Do some research on your new venue. Before you choose a place to sell, readsome recent news articles about it—as well as more specific information presentedlater in this book. If you were doing research at the time this is being written, forinstance, you would learn that Overstock.com has been in business only a year, butthat its auction clientele has been growing slowly—even though it’s still only a fractionof eBay’s customer base. You’d also learn that Amazon.com Auctions is dwindling inpopularity and Amazon.com itself is playing it down in favor of its Marketplacelistings.•
Look at the market your new venue attracts. Determine what kind of buyer youwant to attract, and find a marketplace that attracts those shoppers. If you’re lookingfor buyers for your heavy equipment, for example, you’ll be better off selling onIronPlanet.com than on iOffer, for instance.
• Get your financing lined up. Will you need new computer equipment to sell inyour new location? Will you need additional storage space? Determine where andhow you’ll obtain the financing to pay for it.
• Make sure you have the help you need. You will need a competent and efficient
management team to help you get a new location up and running.
Tip: This book’s Appendix A, Online Auction Marketplaces, lists avariety of online sales venues to consider when you’re expandingbeyond eBay.
Get to Know the BasicsYou don’t have to be a business expert to expand to a new online business venue.You just need to know the basics. Many of them are things that sound like cliche´sbut that still ring true: the customer is king; learn which of your products are profit-able and which are not; keep your products moving; understand your customers’needs and wants. Most of this is common sense, but some of it is just learning thebasics and putting them into practice. See Table 3-1.
Diversify Your Product LineOne effective way to expand your business is to expand your product line. Try to findproducts or services that are like the ones you sell already. Import or export products
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Table 3-1. Retail terms.
Term
Sell-Through
Compound AnnualGrowth Rate (CAGR)
Lead Time
Loss Leader
Repeats
What It Means
The number of items you sell compared with the number of itemsyou put up for sale. As you probably know from your eBay sales,your sell-through rate can vary widely depending on the time ofthe year and the desirability of what you have to offer.
This is a term usually used to describe the return on an investmentcompounded over time. In the case of auction sales, it can be usefulto get the ‘‘big picture’’ about your business and track how muchyour sales income has gone up over the past year—if it has goneup at all. If CAGR is going up, you’re in a better position to movebeyond eBay than if it is stagnant or going down.
The time needed to complete one task before another can begin.Before you can put items up for sale, you need to photograph themand write descriptions, for instance. You need to allow yourselfsome lead time if you want your sales to begin on a specific day.
A strategy that works for many businesses in which goods or ser-vices are sold at a price that will generate little or no profit in orderto attract customers to other products the business is selling. Yousee this on eBay and other auction sites that sell ‘‘one-cent CDs’’and other cut-rate items.
A term I am making up to describe the number of times you haveto list something before it sells. Often, you have to list an item twoor three times before it attracts a successful bid.
Return on Investment(ROI)
The income a business generates as a result of its purchases and itssales of products and/or services.
that are like yours or that match your existing selection in some way. If you sellshoes, expand to shoe polish, shoelaces, and other shoe care accessories, for instance.
Keep Track of Fees, Costs, and Losses
I’m no accounting expert. I’m great at telling people to use slick home accountingtools like QuickBooks, Quicken, and Microsoft Money. But do I use such programsmyself ? You win the door prize if your answer is a resounding no. That doesn’tmean I don’t take meticulous care when it comes to tracking inventory and recordingexpenses and income. In fact, I take great satisfaction at writing down items, modelnumbers, and purchase prices when merchandise arrives. I take even greater pleasureat recording total sales income when a group of sales ends. I should use a database
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program like Access, but the truth is I mark it in a long, long Microsoft Word table Ihave set up for myself. See Table 3-2.
Table 3-2. Greg’s sales record.
Itemnumber
Arrived
Brand
Description
16-7
7/23
EarthShoe
16-8
7/24
Various
17-5
7/30
Coach
18-2
8/1
18-3
8/2
HudsonBayCompany
KennethCole
MountainLoaferMocs
ThreeCalculusTextbooks
Women’sStationBag, BrownLeather
OversizeBlanket
Women’sPumpsSize 5
Purchase SalesPricePrice
ListingFees(Est.)
Profit/Loss
$2.00
$12.99
$2.00
$8.99
N/A
$9.99
$1.75
$8.24
$10.00
$19.99
$3.50
$6.49
$10.00
$57.00
$5.48
$41.52
$2.00
No Sale
$1.00 (cid:5)$1.00
I also maintain a second record that tracks each group of auction sales as they
end. See Table 3-3.
Table 3-3. Overall sales figures.
ItemsOffered
ItemsSold
12
20
28
6
9
14
Date
7/23(Sat)
7/24(Sun)
7/31(Sun)
Gross SalesRevenue
$96.23
OriginalPurchasePrice
$13.75
Total eBayFees
$9.96
Profit
$72.00
$218.00
$50.00
$27.00
$141.00
$330.48
$74.00
$25.00
$221.48
Whether you use a database, an accounting program, a word processing book, oran old-fashioned ledger book, the important thing is to keep the records somewhere.The value of such figures isn’t always apparent until you’ve been compiling them for
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a while. Over time, you can look at your figures and see whether or not income isincreasing, or whether your sales are flat. Being flat isn’t necessarily a bad thing—unless your expenses are going up because you’re hiring employees, taking out newadvertisements, and so forth. If that’s the case, you need to see some upward move-ment in your sales figures to simply break even.
Caution: Don’t grow your business too quickly. It is more importantto manage the rate of growth in a way that can be controlled so thatyou can get a complete picture of the state of the market for yourgoods or services. You’ll also have a good idea of whether there is amarket that can sustain you for months or years to come.
Identify New Markets
Although eBay is the perfect venue for individuals who want to sell to other individu-als, it leaves out a huge market—other businesses. If you want to conduct business-to-business (B2B) e-commerce, eBay may not be the best place. Business purchasers areaccustomed to buying in high quantity. Rather than finding twelve buyers for yourtwelve laptop computers, for instance, you might be able to find a business buyer forall twelve items on uBid (described in Chapter 6) or Overstock.com (described inChapter 13).
There is also the question of the type of buyer you are trying to reach. Typically,eBay buyers are looking for bargains. They want the lowest price they can possiblyget for an item. Many of them go to eBay specifically to avoid having to pay full retailprice for consumer goods. On sites like Amazon.com, you are more likely to reach a‘‘retail buyer’’—a customer who is used to paying full price (or almost full price) formerchandise, and who will give you more of a profit for what you have to sell.
Try placing a few free sales listings in venues like the popular Craigslist (http://www.craigslist.org), for instance, or in the online version of your local newspaper. Ifnothing else, it will let you know that you are able to sell your items on venues otherthan eBay.
Look Around, Test the WaterWhen John Wieber of Exel-i, Inc., which operates such eBay-based businesses asLaptopBroker.com, became disenchanted with eBay’s increasing fees and decreasing
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profit margins, he began to upgrade his company’s website. He also experimented byputting 115 computer-related items up for sale on Amazon.com as one of its electedmerchants. When those items sold well, he gradually increased his inventory on Am-azon.
Just as you probably tried out eBay by putting a selected number of items up forsale in the beginning, you can do the same with other outlets like uBids, iOffer, orAmazon. LaptopBroker.com operates a storefront through ChannelAdvisor.com. Italso sells on Amazon. Even though its eBay feedback showed more than twenty-fourthousand items sold in the past at the auction site, the company is currently offeringonly fourteen items for sale in its eBay Store.
Get the Scoop with NewsgroupsI know how difficult it is to actually stop and talk to people when you have manydifferent types of work-related tasks to complete. It can be difficult to take the timeto scan newsgroups that cover the auction scene, but the key word is time. Look onit as a business activity, much like gathering inventory to sell, taking photos, or payingthe bills. The more time you spend talking to others who are in the same situation asyou, the bigger your payoff will be.
Although eBay has a lively set of discussion boards, you never know whether ornot the ‘‘pinks’’ (the eBay employees, whose messages are always highlighted in pink)are listening. To get an unbiased opinion about eBay from people who don’t feelconstrained to talk about it, check out the message boards that cover the auctionindustry as a whole.
One of the best discussion areas is run by a friend of mine, Ina Steiner. Inaoperates AuctionBytes (http://www.auctionbytes.com), a website that observes eBayand all other auction sites. AuctionBytes has a well-moderated discussion area(http://www.auctionbytes.com/forum/phpBB/index.php, shown in Figure 3-2) whereyou can ask questions or ‘‘lurk’’ as you listen in on discussions by sellers who areexploring sites other than eBay.
InkFrog is a site run by a company that provides software tools for managingauctions on eBay. It has a set of forums, including a thread devoted to eBay andonline auctions (http://community.inkfrog.com/index.php).
Plan Your Advertising CampaignBeing on eBay, you have a built-in level of exposure to millions of potential buyers.When you move away from eBay, you need to be proactive about advertising, whetheryou want to get the word out about a new storefront on a bigger marketplace or about
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Figure 3-2. AuctionBytes provides forums for discussion eBay and other auction venues.
(cid:2) John Wieber of Exel-I, Inc.
your website. Does your site work with Google AdWords to list your sales the wayeBay Stores do? Does the site market itself well?
Advertising is just one of several things you can mention in a brief business andmarketing plan you can draw up when you’re shopping for new marketplaces. Evenif you have a general idea of how you plan to operate, it can be helpful to write downthe facts and figures on paper to keep everything straight. Be sure to record thefollowing:
General Information
Description of Your Business:Products and Services:
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Market Analysis
Industry:Major Trends:Major Competitors in This Field:
Description of Your Customers
Age:Sex:Profession:
Financial Information
Resources
Cash Available for Expansion:Investor/Partner Contribution:Bank Loan:Total:
Expenses
Monthly Fee Paid to Marketplace:Other Listing Fees per Month (Est.):Extra Purchasing Expenses:
Goals
Number of Transactions/Month:
In this chapter, you learned the importance of doing some planning and ensuringthat you have a firm foundation on eBay before you move your sales operations tonew venues. Although some successful sellers are able to abandon eBay entirely andset up shop in other, more affordable marketplaces, most sellers will be better offkeeping eBay in the mix—that is, selling a limited number of items on eBay whiledirecting as many customers as possible to their other sales. It’s not just a matter ofcreating new websites and listing more items on other sites, either. Ideally, you’ll beable to carry your reputation and your professionalism to those sites as well. Chapter4 examines strategies for maintaining your business identity even as you take on newuser IDs and open new storefronts.
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P A R T (cid:3)II
Branching Out toNew Auction Venues
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C H A P T E R (cid:3)4
Carrying Your Experience andReputation to New Venues
You’ve spent months—perhaps years—developing a good reputation on eBay. You’veaccumulated a good feedback rating; you may have qualified for PowerSeller status;you have glowing commendations from satisfied customers. You’re ready to take yourbusiness to new venues. You want to open a zShop on Amazon; you’re working on aYahoo! Store; you’re going to be upgrading your own website. The question is whetheryou will need to start from scratch with each of these new ventures. Do you have tobuild a new reputation on your new marketplace of choice?
Ideally, you should make every effort to leverage your reputation as a competentand trustworthy seller on eBay to expand your online sales. You don’t have to startfrom ground zero when you are opening up a shop on Overstock.com, Amazon.com,Yahoo!, Bidville, or any of the other auction and sales marketplaces mentioned laterin this book. In fact, you cannot attain prominent exposure on any of these market-places without having a good reputation to begin with. It’s up to you to be a sales-person—in this case, a salesperson for yourself.
In this chapter, you’ll learn some techniques for making a smooth transition fromeBay to another auction venue. You’ll learn how to play on your good reputation oneBay to build the same kind of reputation elsewhere. One good thing leads to anotherin the world of e-commerce as well as in the ‘‘real’’ world. You’ll discover that yourefforts to reach out and build a good reputation not only increase your level of cus-tomer satisfaction but also boost your bottom line.
Lose Your User ID, Maintain Your Identity
MC Electronics (http://www.mcelectronic.com, shown in Figure 4-1) is a seller ofsports memorabilia and electronics located in Gillespie, Illinois. An eBay member
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since October 2000, owner Mark Carpani became a silver PowerSeller and eventuallybuilt up a feedback rating of 1,600 on eBay. (A feedback rating is a total based onthe number of positive, neutral, and negative comments an eBay member receivesfrom the people with whom he or she does business.) However, he now says he’s‘‘pretty much through’’ with eBay and doesn’t plan to sell there any more. He’sopened a storefront with the help of auction service provider Andale (http://www.andale.com; see Chapter 14 for more). He also has a business presence onOverstock.com, Bidville, and Yahoo! Mark says that having a good feedback ratingand an About Me page gives you a base from which you can make a smooth andeffective transition to other marketplaces.
Figure 4-1. This electronics seller abandoned eBay and is thriving on other websites, including his own.
(cid:2) Mark Carpani, owner, MC Electronics.
Tip: Look closely at Figure 4-1. You’ll notice that Mark has displayeda logo from Square Trade (http://www.squaretrade.com), an organi-zation that certiﬁes online businesses that provide a high level of
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customer service. He also provides his eBay user ID (mcelectronics1)and a statement about his money-back guarantee. Taken together,these items are bound to inspire trust in prospective buyers.
Mark offers new sellers the following advice:
We started on eBay selling collectibles and sports cards. These were small valueitems that helped us build our feedback on eBay. The best advice I could giveanyone is to build your feedback to at least fifty to seventy-five positive commentsfrom other eBay members on purchases by selling small value items that will nothurt you financially if they don’t sell well before you go out and try to run withthe big players. An eBay seller with one positive feedback can list the same itemas another seller with a hundred positives and the seller with one positive willlose money on the sale every time. The feedback system is what makes eBay sopopular; everyone who buys and sells on eBay will say the same thing. You haveto take some time to build your business up; you can’t just walk out of your houseand start selling on eBay and turn a profit. It takes time.
Mark says he began building a good reputation with an About Me page on eBay.He took care to craft the kinds of statements about honesty and the importance ofcustomer satisfaction that are guaranteed to build trust.
‘‘We created an About Me page on eBay and tweaked and fiddled with it over theyears to ensure our customers know up front that we are a legitimate business. Wepost our return policy so our customers can refer back to it if necessary and so theyknow up front what the terms are.’’
Once he developed a solid business on eBay, Mark was able to wind down hiseBay business in reaction to eBay fees that seemed to rise dramatically every year.According to Mark, ‘‘The fees were taking up about 19 percent of our profit, and anybusinessperson will tell you that’s too big of a chunk. This is when I started to postthings on Overstock.com and Yahoo! as well as other auction sites. We then startedour own storefront and pretty much left eBay in the dust. We are pretty much com-pletely done with eBay, I think.’’ The MC Electronics home page on Overstock.comand shown in Figure 4-2 includes the detailed statements about shipping, returns, andcustomer service that are quoted later in this chapter.
Blow Your Own HornYou know all about your business, and so do your eBay shoppers, but don’t dependon your new customers at Overstock.com or Yahoo! Auctions to know that or to find
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Figure 4-2. Spread the word about your professionalism by creating home pages on multiplemarketplaces.
(cid:2) Mark Carpani, owner, MC Electronics.
out all the good things about you. Be sure you tell people about yourself, why youlike what you do, and not only that but why you’re good at what you do, too. Youmight say something like:
I’ve been selling electronics components for years. I started sellingwhile I had a repair business in suburban Chicago. I used to end upwith leftover components and started selling them at ﬂea markets andthrough classiﬁed ads. To my surprise, I liked meeting other radio en-thusiasts who turned out to be my customers. I try to carry the samesort of enthusiasm over to my auction business. If you ever have aquestion about one of my components or a problem, feel free to contactme. My goal is 100 percent customer satisfaction.
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Remember that prospective customers are visiting your profile page precisely be-cause they want to find out about you. You don’t have to identify yourself by name ifyou don’t want to. On the other hand, if you want to use your name, it will boostyour page’s personal appeal. Any personal background that relates to what you buyor sell will help to build interest. If you sell baby clothes, for instance, photos of yourown children wearing the clothes will help portray you as an authority on the subject.
Cite Your Feedback RatingYour feedback from eBay may not carry over to your auctions on another market-place, but there’s nothing wrong with citing exactly what your feedback is on eBay.Here is what MC Electronics says:
Since October 2000, our company has a 99.1 percent feedback rating,with over 1,600 satisﬁed customers on eBay! We value our customersand would like to thank them for their business. . . . We are veriﬁedthrough eBay, PayPal, Overstock.com, and SquareTrade. We are proudeBay Silver PowerSellers, so buy with conﬁdence. . . . Our company usesmodern technology but still practices old-fashioned business sense. Wesimply don’t believe in the ‘‘make the sale and forget the customer’’attitude that has taken over the industry.
Most sites will also allow you to make a hyperlink from your profile page to yourfeedback profile page on eBay. If you use iOffer’s tool Mr. Grabber, as describedlater in this chapter, you can import your feedback comments from eBay to yourhome page on that site.
Inspire TrustSimply creating a profile page on a marketplace site will boost trust among prospec-tive customers. You can also boost trust by telling them how long you have beenselling online, how many transactions you have completed, how many positive com-ments you have received, and so forth. Tell shoppers why they should trust you, andwhy you are better than the competition (presumably, you are, after all). Mark Car-pani says this on his Overstock.com profile page:
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Our products are 100 percent new or factory reconditioned. If there isan (R) behind the model, the item is factory reconditioned. All of ouritems have a full manufacturer’s warranty and we stand behind ourproducts 100 percent. Our customers will not get stuck with a useditem that doesn’t work. Check out our website to see what our custom-ers have said about their experience with MC Electronics. All of ourSports Memorabilia is 100 percent authentic and comes with a COAwhen applicable. These items are manufactured by Steiner Sports, aleader in the sports memorabilia industry!
Testimonials from satisfied customers are another guaranteed way to build trust.Adding quotes from them will tell people that your customers have taken the time tothank you for your level of service.
Build Your Reputation on BizRateYou know about building a feedback rating on eBay. Wouldn’t it be nice if there wasa feedback system you could apply to your e-commerce website or to your storefrontson other sales venues? That’s the idea behind BizRate, a shopping search engine thataggregates sales listings from a variety of websites. It enables shoppers to do compari-son shopping, so when a search is conducted, the site returns a variety of sales listingswith different prices.
BizRate also provides ratings for merchants based on the shopping experiencesof more than 1.3 million active shoppers who have volunteered to provide reviews,and from stores that are designated customer certified because they allow shopp