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Holiday Cheer

The holidays mean big profit potential on eBay. Plan ahead to make your gift offerings stand out, and your sales are sure to shine.
September 1, 2007
URL: http://www.entrepreneur.com/article/183914

Paula Deane Traynham (eBay User ID: pauladeane) didn't have as happy a Christmas in 2006 as she had hoped. The problem wasn't disappointment in the gifts under her own tree. Instead, it was the way she handled the holiday rush for her business on eBay, where she sells cake stands, plate hangers and related items in auction-style listings and an eBay Store. "Last year, I let [the holidays] sneak up on me," says Traynham, 52, founder of PromisedLandTexas in Fort Worth, Texas. "That's why I'm revamping my Store and reorganizing. I want to have everything set up and ready to go for people to find it. Last year, I was still trying to list things even through the rush. This year, I want to have my stuff listed [earlier]."

Traynham has the right idea about getting set for the holidays, according to Dennis L. Prince, author of 101 Ways to Boost Your Fortune on eBay. Prince, who spends several pages of his book on holiday selling, says, "It's really important. You have to anticipate the seasons."

eBay sellers who focus on executing during Christmastime and other year-end holidays aren't just expressing seasonal warm fuzzies. The holidays represent an outsize share of the revenue--and profit potential--for the entire year. It's not unusual for brick-and-mortar retailers to report doing 30 percent to 40 percent of their business in the final quarter--and that share may be even higher for eBay sellers. "I do 50 percent of my business from late September to early December," says Traynham, who projects $12,000 in sales this year. "That's the Christmas window."

The holidays are so big, in fact, that they represent more than just an opportunity. You almost have to make the most of them. "Christmas is crucial," says Traynham. "If you don't have a good Christmas, you're in trouble. Christmas is what pays for all the stuff you have to order the rest of the year."

Holiday High Jumps
You don't get holiday goodies without being a good boy or girl all year, however. Year-end selling on eBay can be demanding, and the fact that the stakes are higher can raise the pressure to a sometimes uncomfortable level. When you're trying to cram half a years' worth of business into a few months or weeks, time is in short supply--and that goes for buyers as well as sellers.

"One thing I find different over the holidays is the urgency," says Shelley Mitchell (eBay User ID: shelley-faye), 31, who sells dresses, other clothing and accessories from her Hollywood, Florida-based eBay Store, Addicted to Rockabilly and Punk. "People don't want to wait a long time for items to arrive anyway, but during the holidays I get a whole lot of e-mails from people asking me if [their order] is going to go out [that] day. There is an urgency with the time factor--[they want to know] when they are going to get it."

In addition to the urgency of shipping, other workday challenges intensify during the holidays. Selecting the right products becomes crucial when you know you may have more trouble moving unsold inventory if business slows down after New Year's Day. You must source reliably in spite of bad weather, traffic jams and other obstacles.

Competition often multiplies, too, as other eBay Sellers are also determined to make the most of the seasonal opportunity. You have to be better at pricing effectively when some sellers are holding sales and others are raising prices to take advantage of gift-givers' anxiety and sense of urgency. And despite all these distractions, service has to stay competitive.

As Traynham indicated by her springtime resolution to be ready for the far-off holidays, preparation is the key to a happy eBay holiday. Prince recommends that sellers start no later than three months ahead of time, researching products to sell, lining up sources, preparing listings, refining systems and policies, and if necessary, hiring help.

Actually, Traynham expects to start recording some holiday-related sales as early as late September. "When kids go back to school, people have time to sit down and start looking on the internet," she says. An early start is a good thing, in her view. "Sometimes you're unlucky and [the rush] doesn't start until mid-October or even around Halloween," she says. "That's when it gets really hectic because you're doing the same amount of volume [in less time]."

Well before you expect to make your first holiday sale, start boning up on products and customers in the categories you plan to serve. "The biggest thing is to understand your market," Prince says. During the holidays, categories can become crowded with opportunistic seasonal sellers.

One way to make yourself stand out is to demonstrate through listings that you know what you're selling and who you're selling to. As Prince says, "Especially during the holidays, you want to differentiate yourself." He suggests putting extra information into holiday listings. "Otherwise," he warns, "you're going to look like somebody who found something in a box [to sell]."

Gearing Up for the Holidays

In addition to product details, be sure to give shoppers plenty of information about policies such as shipping--always a delicate point at that time of year. During last Christmas season, for example, Mitchell put up a schedule stating that if a customer paid for an order by December 22, the item would be delivered before December 25. Not only did the information help her customers feel comfortable about ordering, but it also made her job easier. "Once I put up that banner, I got a lot fewer e-mails," she says.

If you're going to have a blockbuster year-end, you must have products to sell. And sourcing is at the forefront of the challenges that eBay sellers face during this vital business period. Because of the short time span in which everything happens, any supply disruption can be come a major issue. There can definitely be surprises, as Traynham found out during December 2006. "My main suppliers had one of their ships from China get quarantined," she recalls. "So I had a heck of a time with my inventory, including some of my most popular items. I really sweated it until it came through at the last minute."

Other than lining up alternate suppliers for your most popular items, one way to handle unexpected disruptions is to be ready to change directions quickly and start selling products you can reliably source. Fortunately, flexibility is one of the benefits of selling on eBay. "If you are savvy in how to utilize the platform, you can shift gears and apply what you know about good selling tactics and timing and make the most of an opportunity that suddenly presents itself," Prince says. "You can alter your inventory and modify your offerings really quickly without printing signage or anything. And the nice thing is, if you do it well enough, you look like you were planning it the whole time."

Bear in mind, too, that the month of December may not be the high point for some items. Mitchell sells many of her fancy party dresses before serious gift-giving starts, as celebrants gear up for the holiday season. "It's a little before Christmas--Novemberish," she says, "because they are wearing them to parties."

The length of your listings should reflect the time crunch as well. Prince recommends five- and seven-day listings during the rest of the year. But at the holidays, he suggests three-day listings as a way to let some bidding take place without keeping gift-givers on the hook any longer than necessary. "When it comes to holiday stuff, folks want to get this thing checked off quickly and be confident it's going to be under the tree," he says.

Another factor to consider as you load up listings to present to harried shoppers is whether you are going to be too harried to actually box and ship their purchases before they are needed. Don't forget that you may have extra personal business of your own to attend to at that time of year. Avoid overcommitting with too many listings. "Don't sell more than you can ship," Prince warns, "or your feedback rating will definitely go down."

For many people, the holidays are a time for open-handed generosity, but that doesn't mean they are willing to pay sky-high prices. Many retailers compete for shoppers by saving their biggest sales for this time of year. The combination of lots of traffic, a mix of bargain-conscious and spendthrift shoppers, and sometimes feverish competition from discounters sends mixed messages to eBay sellers trying to set Reserve Prices and Buy It Now prices, and otherwise deal with pricing.

Prince says you must avoid being perceived as a price-gouger. If you've been able to source hard-to-find, in-demand items such as the latest video game console, it's tempting to set stratospheric prices and be confident that distressed parents will pay them. But Prince feels gouging is counterproductive because shoppers have become sensitized by abuses in the past. "Strike a midlevel price somewhere around the market level," he says. "Come down below the highest point and set a Buy It Now [price]. Let somebody buy it quickly rather than go through [a long listing]."

Setting prices too high also increases the risk that you'll be stuck with unsold inventory, cautions Prince. And as hot as the holidays can be for some items, the market for the same products can get positively frigid after the gifts have all been opened. As Prince says, "Come December 26, who cares?"

Day After Christmas

In addition to being a day of mourning for sellers with overpriced goods they couldn't sell, the day after Christmas also marks the official beginning of the return season. Not all eBay sellers have to deal with this. Mitchell, for instance, reports no requests for returns last Christmas. "I was expecting [some]," she says. "I advertise that I always take returns for any reason as long as it comes back to me in the same condition. I probably get one return a month, but over Christmas I didn't have any."

Just in case, however, Prince suggests considering tighter return policies during the holidays. "A lot of people say during the rest of the year that they'll refund everything, no questions asked," he says. "But during the holidays, there are other stressors out there."

One risk is that a shopper could order something from an eBay seller and then, on one of his or her many trips to the mall searching for more gifts, run across that same item for less, prompting a request for a refund on the eBay purchase. Other shoppers may order more gifts than they really need, planning to evaluate the items after they arrive and take advantage of loose refund policies to send the least desirable gifts back.

Prince advises taking some steps to mitigate the risk of too many refund requests during the holidays. "Throw in a couple of extra boundaries," he says. "I'd say [you should] ship insured, all sales final, unless [the] package is received damaged or not as described." Otherwise, all your inventory may come flying back."

Service First
You can devote the extra time you might have spent handling returns to paying more attention to other elements of customer service. Now is the time to give a little extra service to customers. "Have a sound policy that you would use all year long--here are forms of payment I take; if you pay immediately, here's how I ship; here's how often I ship," Prince says. "During the holiday season, you want to adhere to it and maybe even extend yourself a bit to make sure [every] customer is satisfied."

During the holidays, you'll likely be selling to a lot of customers you haven't dealt with before. This is an opportunity to give them a good experience that will turn them into repeat buyers. One way to go the extra mile is to suggest faster shipping to customers who opt for cheaper delivery but may be playing it a little too close to the gift-opening date. Even better, Prince says, you can take it upon yourself to upgrade shipping to keep customers from making a mistake. "There were a couple of times when I pitched in for the regular delivery just to make sure it got there on time," he says. "They were ecstatic."

With all the activity and challenges, the holidays can be a time of pleasant surprises. Mitchell, for instance, was pleased to find that customers outside the United States were noticeably less stressed than domestic buyers. "A third of my business is international," she says, "and I thought it was going to be an issue with the holidays. But it was easier. My international buyers seemed more lenient."

Whether you fear the worst or optimistically anticipate the best from the holidays, it's vital that you know what to expect and think through how to react. "The biggest risk would be to not be prepared," says Prince. "If you're going to go into this, do it knowing what your policies are, what you're going to expect for payment and how you can manage the activity."

Done right, there's every reason to expect the holidays to be a season of joy for eBay entrepreneurs as well as the givers and recipients of the gifts they sell. "My plan is to triple my business by the end of the year," says Mitchell, who has 2007 projected sales of $50,000. "That was my goal, and I'm trying my best to stick with that."

Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.

What's on the Wish List?

Selecting gifts to give can be tough, but so can picking products to sell at the holidays. "Isn't that the issue?" asks Dennis L. Prince, author of 101 Ways to Boost Your Fortune on eBay. His advice: To learn about the future, study the past. Pay attention to what was hot in your categories last year. Check out what the competition is selling. "Look at the holiday listings and see what's going places and whether there's something you want to get into next year," he says.

Often, you'll find the same items that did well the rest of the year also do well at Christmas. "My top-selling dresses were the ones that are a little dressier, that someone would wear to an event," says clothing seller Shelley Mitchell (eBay User ID: shelley-faye). "But those are my bestsellers all year anyway."

Check out eBay Pulse, which is updated daily, to get a list of the most popular searches on eBay. Drill down by category to get the most popular searches within that category. In general, the best holiday items are unique and possess special appeal, says Prince. "I'm starting to see a resurgence of collectibles," he says. "People are seeking hard-to-find items. That's where I'd tell people to focus [during the] holidays."

Holiday Helpers
It's hard to say which eBay tools are the most popular among sellers during the holidays, but PayPal is a contender. Sellers enjoy getting the quick and reliable payments, of course. But buyers like the extra service sellers can provide when they know payment will be delivered through PayPal, notes business expert and author Dennis L. Prince. "Always stress PayPal," he says, "and tell them if they pay immediately, you'll ship the same day."

Turbo Lister is another eBay tool that comes into its own at the holidays. "If you're going to be listing [many similar items during] the holidays, it's so easy to kick those things off," says Prince. "As soon as the listings start to wrap up, rather than going into each listing and doing a relist, you do a batch. At the holiday period, time is of the essence. I'd rather spend the day shipping things I've sold to make sure they get to the buyers than spend that day reposting and relisting."

eBay's Toolbar is a favorite holiday helper for clothing seller Shelley Mitchell (eBay User ID: shelley-faye). She especially likes the way the free tool alerts her when a buyer has asked a question. "My computer is nearby, and I can respond right away," she says.

Skype gets a nod from Paula Deane Traynham (eBay User ID: pauladeane) for its ability to help around the holidays. One of her tricks is to call the Skype number for eBay Stores customer service when she needs to ask a question. "You can [usually] get straight through and get your problem solved," she says. Other sellers have added a Skype button to their listings, which lets them answer customer questions in real time. For details, check out ebay.com/buyandsell/skype-viewitem/index.html.

Get it There on Time
Shipping takes center stage when the year is about to end and customers want their items by a certain date. Not surprisingly, many sellers offer free shipping during the holiday season, says Kristina Klausen, senior director of eBay's global shipping team. Free shipping helps eBay sellers stay competitive with other e-commerce vendors. But that's not all. When listing your item, if you check the "free shipping" box, Klausen says eBay will then promote you as a seller who offers free shipping, which will help you gain additional traffic. Buyers can also search specifically for items that include free shipping.

"Another thing sellers do to help make their shipping prices attractive is offer combined shipping discounts," Klausen says. eBay's new Combined Shipping Discounts tool allows sellers to offer buyers shipping discounts on items over $25, multiple items or even specific multiple items. "Sellers have the ability to set up flexible rules depending on the size and weight of the item."

Expedited shipping also helps at holiday time--and eBay promotes sellers who offer this on a "Get It Fast" landing page. Susan Geis, marketing program manager for shipping, notes that sellers who commit to one-day handling and an overnight service qualify for Get It Fast treatment. But eBay has tightened rules for sellers with Get It Fast or other listings: "Make sure your product is in hand and ready to ship at the time the listing closes," she says.

New eBay tools for shippers include PayPal tracking info that lets buyers easily find out where their purchases are en route. Since last year, PayPal has also added a multi-order shipping tool that allows sellers to print shipping labels for up to 50 items at a time.

With added capabilities and tools, sellers can improve their performance and give buyers appealing shipping options this holiday. And they should, Klausen says: "We stress that the level of shipping service the seller provides is a key part of the buyer's satisfaction with the transaction."