Reworking Your eBay Stores Strategy
Nobody's happy about the new eBay Stores fee increases, but it's still possible to run a profitable shop.
Ever since the announcement of the increase in eBay Stores fees, many sellers have jumped on a nonstop, "Let's bag on eBay" tirade. A group of sellers has even planned an eBay boycott. Boycotts are not new to eBay--a Google search of "eBay boycott" proffers more than a million results--but chances are, they won't have any affect. It's easy to get angry at eBay, but it's doubtful that the anger will net you anything more than a stomachache.
The new fees announced by eBay affect people who sell their merchandise in eBay stores. The increases are as follows:
|Starting Price||New Listing Fee||Old Fee|
|$0.01-24.99||5 cents||2 cents|
|$25.00 and higher||10 cents||2 cents|
New Final Value Fee
|$0.01-25.00||10 percent||8 percent|
|$25.01-100.00||7 percent||5 percent|
|$100.01-1,000.00||5 percent (no change)||5 percent|
|$1,000.01 and higher||3 percent (no change)||3 percent|
That's a huge hit for a lot of sellers--including me. I hate the rate increase; a good deal of my eBay sales come from my store. To level my temper, I spent a couple of days reading the posts on the eBay boards. Some had more credibility than others, but the bottom line is nobody's really happy about the increases.
Keep in mind, though, that the purpose of eBay is to sell merchandise to buyers. This seems pretty basic, but let's not lose track of the fact that if eBay loses a percent of its sellers due to the rate increase, it'll survive--but if it loses an equal amount of buyers, the repercussions might shake the marketplace.
And eBay wants to take a proactive stance in keeping buyers on the site. If you buy an item on most e-commerce sites, you receive an e-mail confirmation immediately and your item often ships within 48 hours. This is the way an e-business should run. And buyers new to the site become discouraged by sellers that don't measure up to these common marketplace standards. With this stores fee increase, eBay is trying to fix two major problems it has with its sellers:
- There are too many items in store inventory format on eBay, and they've unbalanced the site. Auctions account for 91 percent of the gross merchandise value sold, yet store listings account for 83 percent of active listings. I call this "selling by the linguini method"--sellers throw as many items up on the site as possible in the hopes that enough products will sell to justify their business model financially. Many of the items are real losers that would be better served as landfill, but still, they clutter the eBay site to confuse buyers and strain the system.
- A good many store vendors are "catalog" sellers. These sellers don't own the items they sell and don't make that clear to buyers. When they put items up for sale, they don't let buyers know that their items may not arrive for two to three weeks. Worse, at the time a sale is made, the seller may not know whether their supplier will even be able to deliver the merchandise in a timely manner. I don't know about you, but when I buy something, I want to know when it'll arrive. Most shoppers do.
In a traditional retail setting, a store owner is constantly making changes to keep business vibrant and profitable. They buy stock based on previous periods' sales, and their job is to move the merchandise so they can make a profit and purchase more merchandise to sell. They have to deal with items that don't sell--which generally have to be marked down to rescue the investment--then buy more merchandise that'll turn over quickly. As an eBay seller, when was the last time you evaluated your items' marketplace viability?
With the fee increase, there's no better time to reevaluate than now. You need to reevaluate your merchandise and become choosy about what you sell. Then use these tips to counter the increase:
- Run the numbers. Get out your calculator and figure in the new eBay Stores fees for each of your items to work out the profitability (don't forget the PayPal or credit card processing fees). Rework your pricing if necessary. You may find (as I did) that in some cases, selling in your store is still more profitable than selling on the main eBay site.
- Use eBay's Store Referral Credit. Start marketing your store via e-mail and non-eBay websites to gain a 75 percent credit on your Final Value Fee when your efforts result in a sale. Brush up on the requirements for this program here.
- Install eBay's Merchant Kit on your free website. If you have a free home page available from your ISP, make it pay off. The eBay merchant kit will install an updating version of your eBay listings on any website. When people go to your eBay Store and purchase through these links, you also get the Store Referral Credit on your Final Value Fees. Get the simple code at http://pages.ebay.com/api/merchantkit.html.
- Take advantage of all the eBay Store marketing possibilities. Go to your "My eBay" page, and click the "Manage Your Store" link. Take a look at all the promotional features available to store sellers. In lieu of the Merchant Kit, you can set up an RSS feed for your store so your customers always have your latest products at their fingertips. You can also work on your cross-promotions, send out an eBay newsletter to people who've put you on their favorite sellers list, check your traffic and sales reports, try a keyword campaign and set up a breadcrumb path. You're paying for these services, so use them to increase your store's bottom line.
- Broaden your selling territories. If you don't have an e-commerce site, you should! Consider selling merchandise on Half.com, Amazon.com and Overstock.com. This way, your revenue will come from several sources, and you won't be putting all your eggs in one basket.
Any business has to plan for the unexpected. An increase in operating expenses can occur at any time, so be prepared--and take action immediately.