Power Sellers Unite

elgato · Joined: 24 Feb 2005 Posts: 17241 Location: Texas

eBay Store owners posting on discussion boards last week reacted strongly to eBay's announced fee increases. Sellers are considering various options, from "clearing out deadwood" inventory, to taking the drastic action of closing their Stores.

eBay is increasing both listing and commission (Final Value) fees for Store inventory effective August 22. Listing fees will rise 150 percent for items under $25 and will rise 400 percent for items priced at $25 and over. Commission fees will rise 25 percent for items $25. For items priced over $25, the percentage increase in rates is variable depending on the selling price (http://pages.ebay.com/sell/announcement200607/overview/fees.html).

The way the fee increase is structured, some items and categories are affected more than others. For low-margin sellers whose strategy is to make money through a high volume of sales, the news was devastating. For instance, a $15 Store item, assuming it sells in the first 30 days of being listed, nets eBay $1.22 in base fees currently, and this jumps 27 percent (33 cents) to $1.55 under the new fee structure. Sellers in the media category (DVDs, CDs) are bound to be particularly hard-hit.

So what should eBay Store sellers do in light of last week's announced fee increases? I decided to ask some experts for advice on how they thought eBay Store owners could cope in an even more challenging and costly environment.

more.. link to news article

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personally I'd say run for the freakin hills, but I just post the news here

2BOYSandTOYS · Joined: 14 Mar 2005 Posts: 10095 Location: Kansas

Elgato - your suggestion is easier to act on - ya know? :wink: :wink: :D

HonestJoesAuctions · Joined: 28 Nov 2005 Posts: 387

EBay, ya gotta love em or leave em. I left them awhile ago... :D

Pipphoe

McGrath said sellers need to focus on profit margins. "I don't think selling $3 anywhere on eBay makes sense. My personal minimum is $20. The real issue is margins. In my opinion, you need a minimum 30% margin to make money on eBay with any item that sells for less than $50, and 22-25% on items $50 to $500. Over that you can accept a smaller margin, but even then, only if you have a high STR (Sell Through Rate)." McGrath recommended QuickBooks to track expenses and help sellers determine if they are really making adequate profits in their businesses.

I thought this was interesting considering the amount of low prices on eBay. I agree with this guy, but unfortunately you still have to deal with the low-ballers. I personally could not compete with low-balling crafters when I was on eBay and I know I'm having a problem with this on Etsy -- lots of compliments, no sales.

The gist of the advice from the "ebay experts" seems to be that unless you have the bucks to back up your business -- which in a perfect world we all would have -- and buy new stock continuously and make sure that everything has a 30% margin. Heck, I would venture to say that most sellers selling on alternates don't have a 30% margin, much less on eBay where that is painfully obvious from all the .99 and .01 listings, etc. And I've also browsed plenty of stores on eBay where the stock is far from second-rate or junk, as suggested here. The artists that I've bought from and that have stores generally place pieces that haven't sold at auction in their stores because the constant relisting without a sale is erroding what neglible profit they earn in the first place.

The main point is that just about every single seller has to raise the basic price on their items in a big way on eBay just to be able hang in there and try to achieve a good STR rate at the same time. I think one would call this eBay Nirvana? Even if all the sellers on eBay did everything from A-Z in these suggestions there's still the problem of the economy and reduction in sales all over. So the question would be: Can the average or even above-average seller realistically make any kind of living on eBay in these increasingly-tough economic times? It seems like a daunting task.

If I were an eBay store owner I would agree with The Cat, run for the hills. Take whatever advice you did learn from this article and apply it elsewhere at a much lower cost, take advantage of all the free advertising you can and then use the bucks you save on eBay for some well-thought-out paid advertising.