Musings

You may have been surprised to hear my voice when you opened this page. I know many of you have been readers for several years and have no idea what I sound like. Well I am trying out a new technology that puts your voice message onto any web page or right into your auction description on eBay. Other companies have tried this with little success because the technology was clugey and difficult to use. This system, called Seller s Voice is:

• Very cool
• Easy to use
• Cost effective
• Gets results

How effective is it? The first thing I tried it on was a voice invitation on the signup page for this newsletter. I average about 21 new subscribers a day. Since putting Seller's Voice on my subscription page, my signups have jumped to over 30 a day. I also ran two identical Dutch auctions on eBay for one week. The auction without the audio sold 4 items out of 10 offered. The one with the audio sold 7 items out of 10. I suggest you give it a try.

By the way, since I last mentioned it, many of you signed up for Chris Malta’s Drop Ship Wholesale Directory or his Light Bulk Wholesale Directory published by WorldWide Brands, Inc. These are great products. I have been using the Drop Ship directory for just a few weeks and have already found some excellent suppliers. Unlike other drop ship directories, Chris’ system connects you with actual manufacturers instead of the various drop shipping middlemen. When you deal with the manufacturer you are dealing with the actual source of the product –and this is where the best pricing is. Best of all, WorldWide Brands is the only Directory Publisher of Drop Ship and Wholesale Product Sourcing information on the Internet that is certified by eBay.

I received an email from Joel Peterson who sells ProfitCalc, a tool for calculating and controlling your eBay fees. Joel has come up with a new release of ProfitCalc updated with the new eBay fees.

Finally before we get to the articles for this month, are you as bothered and frosted by unwanted Adware, (called Mal-ware for malevolent) browser takeovers and all the nonsense out there designed to wreck your day if you click on the wrong web site? The nature of my job, and the research I do, requires a lot of surfing and I am constantly besieged by these takeover programs. I have both MacAfee Spyware and Lavasoft’s AdAware on my computer and stuff still gets through.

1. INCREASE SALES AND PROFITS WITH THE SECOND CHANCE OFFER

Last year eBay introduced a new feature called the Second Chance Offer (SCO). Originally the SCO was designed to offer the second highest bidder the chance to buy at their losing bid price in the event the winning bidder did not pay and became what eBay calls a Non-Paying Bidder (NPB). The feature was very successful, and in late 2004 eBay modified and expanded the feature so that you could offer an under bidder on an auction a second chance bid in the event you had more than one identical items to sell.

Here is an example: You have an auction for a teddy bear and get the following bids:

OK. Betty wins the teddy bear at $43.50. Let’s assume you were happy with any bid above $39.00 and you have several identical teddy bears in stock. You can offer both David and Charlie a second chance offer to buy a bear at the price they bid. David would get a bear for $39.25 and Charlie would get a bear for $42.50. Here is the best part: You would pay eBay the final value fee on all three sales, but you only pay the listing fee on the bear that Betty, the highest bidder, won. Best of all, you have sold three items for a total value of $125.25 for the effort of placing only one auction.

The second chance offer is very simple to use. When an auction ends, you simply click on Second Chance Offer on your item sold page. A new page will come up with the auction number populated. Click “continue” and you will go to a page with the usernames of the under bidders. Put a check mark next to the ones you want to receive an offer and eBay sends them a link to a special page where they click on the “Accept” link if they want to buy. When they do this, a PayPal window opens up and they just have to click to buy if they want to pay via PayPal.

There are several advantages to the SCO. First is the fee savings. Next is that you do not have to tip your hand that you have more than one item –so the perception of scarcity is preserved in the auction format. Also is the fact that you get to make three sales from one auction listing. If your acceptable margin had allowed you to accept any bids over $36.00, then you could have even had a fourth sale to Albert who bid $36.50.

2. NEW BUY-IT-NOW PRICING STRATEGIES

The Buy-it-now price (BIN) is a price you determine that you are willing to take for an item you are selling at any time during the auction. However, the BIN price disappears once the first bid is placed. Because eBay lists the auctions in the order of their ending time, most auctions on eBay do not attract bids until they have been up a few days. Therefore you BIN price will usually be available for a few days until you get closer to the end of an auction.

Some bidders, who see your item and are interested in it, will often place a low bid just to get rid of the BIN price so they will not lose out to another buyer who may not want to wait for the end of an auction. (When I am buying antiques and collectibles on eBay I do this all the time.)

BIN pricing tends to work best when you are listing your items with a cost-based pricing model. If you list your products at a low starting bid such as 99 cents, you will attract bids quickly thereby killing the BIN price.

BIN pricing has a lot of advantages and really no disadvantages that I can tell. Running a successful eBay business requires you to turn your inventory over quickly --and as many times as possible. Every time you turn your inventory over, you have more money to invest in more inventory and this is how you grow your business. If you list all of your items for 7 days and they all sell –that’s great. But let’s face it, not every item sells. According to eBay only 46% of all auctions result in a conversion (completed sale).

If you are listing your merchandise for seven days and a percentage of it sells within one, two or three days using the BIN feature, then you are increasing your conversion ratio and turning your inventory over more often.

How to set your BIN price: This is easiest when you are selling merchandise you are knowledgeable about and used to selling. You have a good feel for the price/value relationship. In general if you remember the advantage of BIN is faster inventory turn, then you don’t want to set the BIN price at the high end of the range. If I had an item that cost $10 and my selling prices ranged between $18 and $24 with $19.90 being the average, then I would set my BIN price at the average price point. That would attract the highest number of impulse buyers and result in more instant sales.

Another way to encourage bidders to use BIN is to offer them an incentive to do so. Around the holidays I usually offer free shipping with BIN orders. People who are shopping for Christmas gifts are both in a hurry and yet still looking for bargains.

3. SHOPPING THE COMPETITION ON EBAY

I like to shop my competition. Virtually anything you will sell on eBay has been, or is being, sold by someone else. If you see one seller listing a lot of items similar to yours, take the time to look at his or her auctions. Ask yourself these questions:

• What are they doing well?<
• What are they doing poorly?
• How many of their auctions close successfully?
• Are they selling the same item in different type auctions?
  (eBay Store, BIN, Dutch, etc.)
• Are they listing their items at a high or low starting price?

The two greatest challenges eBay sellers face are: Selecting the right product to sell, and determining the correct pricing strategy for a given product. Shopping your competitors is one of the best ways to develop the “feel” you need to become an expert at product selection and listing price strategy.

The other advantage of shopping your competitors is to determine the supply on eBay. eBay bidders can recognize a bargain and they can tell if a specific product is in large supply. When this happens everyone knows that prices (final values) will fall rapidly. Before I purchase a product to sell on eBay, I always check the supply. I don’t want to buy a product that others are liquidating. That is how you get stuck with non-performing merchandise.

You also want to be careful of competing with yourself. If your research shows there is a good supply of something on eBay and you buy another 500 pieces of the same item, the increased supply you provide will tend to drive all the prices down –both yours and those of your competitors. One of your competitors may panic when they see the prices declining and decide to dump all of his or her supply in a large Dutch auction thereby precipitating the price drop.

For more on the subject of supply and demand, I have just written an article that appeared in AuctionBytes.

Manufacturers of almost every type of expensive electronic and mechanical merchandise offer “re-manufactured” or “refurbished” goods. These can include computers, digital cameras, Stereo and Television equipment, and both small and large appliances.

Some large manufacturers such as Sony and Coleman actually have outlet stores where they sell this merchandise directly to the public. For example, I once bought a Sony digital camera at their outlet store in Dallas for less than half of what they were going for in stores. The camera had been “refurbished” and came with the full manufacturer’s warranty. I used it for almost a year and then sold it on eBay for exactly what I paid for it new.

Remanufactured equipment and merchandise are typically goods that were either returned by customers and although not used, they could not be sold as new because the package was opened or some of the items assembled. In some cases refurbished items are warranty returns. Typically the manufacturers run these items through their normal quality control process then repair and repackage them. These goods are almost always offered with a full warranty. In the case of warranty returns, the items are repaired and once again run through the quality control process.

These can be great items to sell on eBay. How do you find them? The best way is to visit the manufacturer’s website and see if there is a link to an outlet for these goods. If not, then email the manufacturer and ask how and where they sell their refurbished items. This task is normally given to the company’s purchasing department. Another good method is to telephone the company and ask for the purchasing department and they will usually tell you how you can access these products. Sometimes they will offer to sell them to you directly. Another source of re-manufactured products are the online outlet dealers such as . Liquidity Services almost every week I see re-manufactured goods offered by the pallet load. Often these pallets sell for under $1,000. Finally, the wholesale web search engine here on the auction sellers site, has a link to listings for remanufactured products.

Remanufactured products have been around long enough that savvy consumers looking for a bargain do not hesitate to buy them. They are big sellers on eBay. If you can find a good supply of remanufactured items, you will realize a steady source of profits on eBay.

5. HOW TO AVOID COSTLY PRODUCT MISTAKES

Everyone has made the mistake of buying something they just “know” will sell on eBay, only to find that they have made a costly mistake. Despite all my experience I still do this every once in a while. When I was a newbie on eBay, I used to do it all the time.

Over the years I have developed a set of “rules” that I use to analyze a new product or product category before deciding to purchase inventory to sell on eBay. It’s really more of a checklist than a set of rules, but if you follow them you will avoid costly mistakes.

1. First, always, always research any product you are about to buy to make sure there is a market for it on eBay. Use the eBay search engine and a third party research service. I like HammerTap Deep Analysis however World Wide Brands has just come out with a new research tool called the Market Research Wizard which is actually easier to use, and provides information not only about eBay, but how a product sells on the web as well.

2. There are four levels of wholesale distribution: Manufacturer, importer, distributor and middleman. The closer you can get to the manufacturer, the better you will be able to buy your product. Never buy from the last level, the middleman. It is virtually impossible to make money.

3. Never buy a fad or short-lived product unless you are buying from the manufacturer or importer and are very early in the product life cycle.

4. Do not buy new or pre-introduction products unless you are positive they will sell based on the past history of highly similar products.

5. All products have a life cycle. Eventually all products are liquidated. Never buy a product during the early liquidation phase of a product’s live cycle. The prices are just beginning to fall. Wait a little while and you can usually buy it much cheaper.

6. Never buy a product if the quantity you are buying represents more than 20% of the available quantity in your marketplace (I.E. EBay). You will cause an oversupply and end up competing with yourself. There are exceptions to this rule, but you should always be care of causing an oversupply situation.

7. Never buy a liquidation product unless it has a recognizable brand name. “No-name” products are often being liquidated for that reason –no one wanted to buy them.

These rules are very general and of course there are exceptions. But if you use them as a guideline you will reduce the number of buying mistakes. Having said that, what should you do when you do buy something that you can’t make money on? Get rid of it even if you have to sell at a loss. When you buy something that simply will not sell at a profit, that is called “Non-performing Inventory” (NPI). Any cash you have tied up in NPI is a drain on your business. If I paid $1,000 for a box-lot of widgets that won’t sell, and I turn around and sell them for $500 to get rid of them, at least I have the $500 to buy new product that will sell. If the thousand dollars worth of widgets are sitting in my garage, there is no way to make money from them at all. Furthermore every time I go into the garage and see them I get depressed. It’s far better to get rid of your mistakes and move on. When ever I make a mistake, my motto is: “Get over it and get on with it.”

eBay has very strict rules about using eBay as a sales or advertising platform for off-eBay sales. As a stockholder of eBay (a very happy one at that), I understand their point of view. After all, eBay makes a little money from their listing fees, but they make the most money when something sells on eBay. On the other hand, I also have to make money as an eBay seller and that is becoming harder and harder (but not impossible) for the little guy to do. The increased competition and massive supply of goods on eBay has driven down prices and margins. This has driven many of the small sellers out of business or they now sell elsewhere.

Most professional eBay sellers today, myself included, use eBay as one of many selling channels. Besides eBay there are eBay Stores, Yahoo Stores, Vendio or Andale stores, sellers own web sites, and other auction companies. The most common model is probably an eBay seller who sells at auctions and also has an e-commerce web site. Some of these sellers also have an eBay store –although many people closed them with the recent fee increase.

So how do you use eBay as a way to capture permanent customers that you can market to directly (off-eBay) without violating eBay’s regulations and getting your auctions cancelled?

Last year I told you about Jim Cockrum’s wonderful book The Silent Selling Machine Hiding on eBay. This book lays out a simple method of making extra money from every eBay auction. Jim has recently written a new book, Turn Auction Traffic Into Cash. If you remember last month I told you about eBay’s new email marketing system. This is a really neat feature that will help you capture and market to not only customers, but almost everyone who visits your auctions. Jim’s book takes this one step further and using his methods you can easily eclipse the numbers you would realize using eBay’s system –and you can even use both. I have personally tried these methods and they work. When Jim’s first book came out two years ago I implemented his techniques and saw an immediate 20% or more increase in my sales. With his new book I am able to build my customer mailing list very quickly.

7. NEW WHOLESALE SOURCES FOR MARCH

Dhanish, Inc is a manufacturer of sterling silver jewelry in Thailand. They sell direct is reasonable quantities and have hundreds of styles to choose from. They also sell precious and semi-precious stones.

Repo Jewelry is a large jewelry wholesaler to eBay sellers.

Jewelry Dealz is another popular eBay jewelry source.

Its almost spring and gardeners are looking for products. Here are a few wholesale companies that sell garden supplies, tools and decorative items. Note: A couple of these are retail websites. If there is not a link to wholesale info on the site, you will have to email them to get access to their wholesale pricing.

Green Tree at: www.greentreediscounts.com

GSI Home & Garden www.home-styles.net

Thomas Baker Teak www.thosbaker.com/about/index.php

Bloomington Wholesale Garden Supply www.bwgs.com

Lakeland Brands www.lakelandcreations.co.uk

Woodworking patters are great sellers to do-it-yourselfers. The Design Group is a good source of these to sell on eBay.

Die cast 1:18 and 1:24 cars are highly collectible and perennial best-sellers on eBay. Evergreen Imports sells a large variety of cars and has a one-case minimum order.

MegaGoods is a new wholesale drop ship company that specializes in name brand electronics. I don’t know much about them and I am always concerned recommending new companies, but their site and their product link looks pretty complete, so you may want to give them a try.

Sales Stores sell Appliances, Computer Hardware, Software & Supplies, Consumer Electronics, Phones and Communications Equipment, Extended Warranties, Furniture, Luggage & Cases, Office Equipment & Supplies, Projectors & Cases, Security Systems, Tools, Watches & Jewelry. The web site is a retail outlet, but contact them for wholesale pricing.

That’s is for this month

Skip McGrath