Monday, June 6, 2011

The Trasition On Ebay from Selling Platform to Advertising Platform

by Nathan Stout (of AccordingToWhim.com)

As you know by now I have had a comic book shop that was supported by Ebay sales. After the collapse of that business I continued to do business with Ebay here and there with some success. Ebay is after all: The World's Marketplace (tm). Here is my breakdown for my use as Ebay as a seller over the years:

Late 90's - I started selling various junk from my own collection (usually Robotech stuff).
Early 00's - I sold stuff from my first business: Game Vault (an import game business).
Early Mid 00's - I sold a lot of stuff (mainly Magic The Gathering cards) through the comic book shop.
Mid 00's - Sold the rest of the comic shop's stock (more cards and anime models).
Late 00's to now - Selling more anime models (the ones I figured out sold best from previous businesses).

All in all I have have sold a crap load of stuff on Ebay over the years. I have just recently hit the 'Power Seller' status (showing that I have a lot of satisfaction, a lot of sales, and good feedback). I have 2,100+ feedbacks from people... which is a count of people who actually left feedback, not necessarily the total amount bought from me.

Needless to say Ebay has gone through many price changes for all the fees they charge sellers over the years. They also purchased PayPal a few years back so they are getting those fees as well. This coming June Ebay is sticking it to the sellers once again by increasing the fee they charge sellers for the final vale of the auctions a seller sells. Currently they charge the seller a percent of the final sales price of the actual item. They don't include the cost of the shipping in their calculation. As of June in order to: "encourage lower shipping prices" Ebay will include the shipping charge into the final vale of the auction (thus increasing the final value fee). Now we all know that is total bull shit. They need to increase profits and what better way to do this (and look like they are really only looking out for the buyer) than to add shipping to the total of the 'final value'. This is a more sneaky way than just increasing the percent of the final value fee.

Just as note of interest (and not to bitch about the new fees I was talking about above), below is a general example of what I make on an auction...

The most popular item I sell (currently) are the StarBlazers mini model kits. They auction for $9.99 with free shipping. With the new fee system these auctions will not be affected so it's no biggie but it just shows you that maybe it's not worth it to put so much effort into Ebay. Here is the breakdown of what I pay, make, and profit with these models:

$1.71 - Cost of Model from Japan
$1.26 - Cost of Shipping/PayPal Fees from Japan
$0.50 - Cost of Ebay Insertion Fee
$1.20 - Ebay Final Value Fee
$0.59 - PayPal Payment Fee
$2.68 - Shipping Cost
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$7.40 - In total cost

So if I sell these for $9.99 (with free shipping for the customer) I am making $2.59 profit for all my troubles. Ebay (and their PayPal) is making $2.69 off each of these models I sell. When Ebay is making more money than I am it's time to change things up. Yes I am absorbing the shipping cost but that is what you have to do to get business. It's a cost that is the 'cost of doing business'.

So what's the solution? Well, once I started selling these models again I also built a PayPal store on my website. PayPal lets anyone make 'buy now' buttons with their website so you can make basic stores utilizing PayPal. I set up one at RenegadeAnime.com and when someone buys directly from it I am only paying the PayPal fee for the payment transaction. This is much more profitable than Ebay but it means less exposure. This means I need to do the advertising legwork. I have started this by the basic Search Engine type submission of my site but I have also done this with my Ebay auctions. I let everyone know on my auctions that the product is coming from RenegadeAnime.com.

My shift now will be to limit the number of Ebay auctions and try to do business (for the most part) from my PayPal store. I will be listing Ebay auctions from time to time in limited manner. This isn't to make money but to make people aware of the site and that you can get some great deals there etc... Ebay then becomes a marketing tool as opposed to a selling tool.

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