eBay Seller's News, February 2006, Vol. 7, Issue #2

Motivation is what gets you started.
Habit is what keeps you going..........Jim Ryun

Musings////

Karen and I have just returned from our annual vacation in the Caribbean. About four years ago we were visiting the Bahamas and fell for one of those time share presentations that every vacation spot seems to have. I have been a salesman all my life and I guess there is truth to the old slogan: "The easiest person to sell to is a salesman."

But in our case this worked out well. Atlantis is a beautiful place and they have continued to expand the resort. It is already one of the top three or four resorts in the world and they are adding new towers, a water park, a Venetian type canal around the resort and other features. Best of all the unit we bought 4 years ago is now selling for more than double what we paid ...and we always have a really great time each year we go. So if you are wondering why this newsletter is a week late --that's my excuse. (Oh, and if you are interested in looking at timeshares at Atlantis, let me know as I can score some free Starwood hotel points. Just contact me through the Hosted Support link at the bottom of the page.)

The beautiful thing about eBay and the web is running our business while we were laying in the sun. I pulled down all of our auctions for product I had to personally ship, and just left the auctions up for those items we could drop ship. During the 9 days we were away, we sold over $4,000 worth of products. Each morning, Karen would get up about 7 AM, make a cup of coffee and sit out on the balcony overlooking the marina with her laptop. She would log into the wireless at the resort, and spend about an hour answering emails and sending off orders. The rest of the day was free.

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I put out a special issue just before we left with an update on the eBay fee changes. As usual a lot of people are stressing out over the increase, but actually this was the lowest annual increase in years, just .25%. The $25 + band went from 2.75% up to 3.0%. Some other fees decreased so all in all it wasn't too bad this year.

If anything, this proves that eBay may finally be running out of pricing power. New competitors such as Overstock.com Auction, Amazon E-shops, Yahoo Stores and other shopping venues are finally having a competitive impact on eBay. Everything always goes up and I am sure eBay will have future fee increases, but it is starting to look like competitive pressure will hold them in check in the future.

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My friend and JV partner James Jones is the master of niche marketing (see the first story below) He has just created a FREE eBook called "12 Little-Known, Niche eBay Markets You Can Profit from Now!" This is an awesome book. It is free and frankly better than a lot of eBooks I have paid for. You can download a copy HERE.

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Ripoff Alert

Zibus.com is a total scam. This company claims to have access to drop ship products from famous name brands. There is no product pricing on the site. You fill out an application and then pay $19.95 to submit the application. After a week they call you back and try to sell you a $5,000 program.

One poor seller who bit, got access to a drop ship company with product prices that were 20% higher than the items were selling for on eBay. Another problematic site is netdropshipper.com. This is a site I had recommended in the past. Although not a total scam, they have very poor communication, shipping takes forever, they rarely answer emails and in general almost everyone who has dealt with them has been unhappy. I have removed them from my source lists.

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I missed the last eBay Town Hall with Bill Cobb, president of eBay North America (and the heir apparent to Meg) but finally had a chance to listen to a recording.

The town hall talks are always valuable and you can submit questions in advance. You can get the schedule for the next town hall here. If you want to listen to the last meeting (which I recommend you do) it is in the archives.

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In This Issue

1. What Should I sell on eBay ?
2. My New eBay Consignment Book is Published by McGraw-Hill
3. Skip McGrath named Contributing Editor to eBay Radio
4. Should I Open an eBay Store ?
5. Are You Ready To Have Your Auctions Cancelled by eBay ?
6. New eBay Coaching Program
7. New Wholesale Sources for February 2007

Let's get started

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1. What Should I sell on eBay ?

"What should I sell on eBay?" is the single most posed question I receive from my newsletter readers and book buyers. Let me say right up front: "There is no way I can answer that question." No one can answer that except you.

Unless you have very deep pockets I can tell you what you probably cannot sell on eBay: Plasma TVs, iPods, the latest model laptops, digital camera and DVD players, Xbox, Gucci shoes, the latest perfume and other hot consumer products. The wholesale distribution of these products are tightly controlled by the manufacturer.

For example, if you want to buy iPods wholesale to resell on eBay, the distributor requires that you have a $200,000 line of credit. Channel will only sell their perfumes to a select few stores. You can buy overstock or surplus famous designer items (Gucci, Prada, Hermes, etc.) through a few outlets, but the latest merchandise is only sold through their stores and a few select upscale retailers.

Lately several supposedly wholesale suppliers and drop ship companies claim to have Xboxes and iPods at prices where you can make money. Be careful. Several of my readers have sent thousands of dollars to companies for a shipment of Xboxes that never showed up. Others listed them from drop ship companies that never delivered and never answered emails once the item was sold and paid for. Companies selling iPods via the drop ship channel have such a high price once you add in the shipping and drop ship fees that you can't make any money. Other companies claim to have iPods, but once you pay their $199 membership fee, all of a sudden they are "out of stock."

So back to the original question: What do I sell on eBay? As I said, only you can answer that question, but here are some tips to help you figure out what to sell:

• You have probably heard this a dozen times, but sell what you know and love. I have collected Starbucks mugs, bears and cards for quite a while. Last year I started selling and have built up a very nice small --yet profitable niche. Because I know so much about them, I recognize a good value when I see it and can often double or triple my money when I buy a collectible piece.
  
  I love my new laptop, but I am just not a computer expert. If I were a complete computer guy, I could not afford to become a distributor for a computer company, but there are sources of surplus and remanufactured computers. If I really knew computers and the market, I would know which ones were a good value for the price and how I could market and sell them. Not having this knowledge however, would make it very risky for me to buy a pallet load of surplus computers from someone such as Liquidation.com.
  
  
• Try and find a niche. A niche can be a product, a product category or even how you market a product. The main advantage of selling in a niche is that you really get to know the product, the market, the pricing and the sources and because it is a niche, there is far less competition.
  
  
• Pick products where you can be assured of making money. Making a small margin on something that sells for over $500 is fine, but if you are only making 10% after expenses on a $50 item, you have to sell a lot of products to make $500 a week. If I am selling anything for under $100 I look for a 35% net margin after cost, shipping, and eBay and PayPal fees.
  
  
• Research, research, research ! Don't buy anything to resell on eBay until you have thoroughly researched the product, the market and the competition. Make sure the item will sell at a profit. There are lots of research services. In fact Mpire.com just launched a new free service a few weeks ago that is getting rave reviews from sellers.
  
  
• If you are really stuck, start by selling things from around your home, then move on to selling items you buy at garage sales and thrift shops. As you do this you will see patterns emerging --things that sell well and are easy to buy. If you are patient and try a lot of things this will lead you to a niche.
  
  One person who did this found that old fishing gear sold very well and was easy to find cheaply at garage sales. He now has a large eBay business selling vintage and collectible fishing gear such as reels, fly rods, lures and so on.
  
  Another woman I know found that jig saw puzzles sold very well. Some went for just a few dollars while others would bring high prices --as much as $50 each. With experience she has now learned which ones to buy that will return huge profits. A few hours spent at garage sales spending less than $20 can often return over $500 in sales.
  
  
• Information products and taking advantage of eBay's new policy on selling digitally downloaded products may be the most profitable niche on eBay. Last month I did a great teleseminar with Tim Knox who is an expert on creating and selling information products. His book on creating information products is one of the best on the market. Tim recently wrote a short article that I have posted on my free articles page called How To Create Your Own Info Product. You can either read the article or click here to read about Tim's new book.

2. My New eBay Consignment Book is Published by McGraw-Hill

As many of my readers know I have been self-publishing How To Start & Run an eBay Consignment Business for the past two years. It has been a consist ant best seller. A few months ago McGraw-Hill publishing company approached me to discuss several eBay book ideas. We decided that the subject of eBay consignment selling would be a good topic. So I got busy and rewrote How To Start and Run an eBay Consignment Business for them.

This new book contains most of the material in my former book, but there is also lots of new updated information. The purchase comes with a special web page where I have links to all the resources, forms and contracts listed in the book. You can read about the book and order a copy online HERE.

If any of you are one of my affiliates and are linking to the old consignment book, this page has been replaced with links to order the book on Amazon and Barnes & Noble. So please replace your links with those to other products on the affiliate tools page as I cannot pay commissions on sales through Amazon. You, however, can become an Amazon.com affiliate by visiting their site.

One of the topics I spend a lot of time on in the book is marketing. Lately I have been speaking with several franchise owners of eBay drop off stores and a lot of them are struggling. These franchises sell for between $25,000 and $40,000 plus a monthly franchise fee and you have to pay for rent and employees. That is a lot of overhead to cover.

Amazingly, whenever I talk to owners who are struggling, they claim they have a great location but no one is walking in the door. When I ask them how they are marketing their business, almost all of them are doing very little and some nothing at all. This is a business where you can not wait for customers to beat a path to your door. You have to advertise, network and market your services if you want people to find you.

I have spoken to several customers for my original consignment book and many of them are doing very well using the marketing methods outlined in the book.

Many of them work out of their homes but several have opened drop off stores and are now making very nice profits. The successful sellers seem to have several things in common. All of them are aggressively advertising and marketing their services. They all have affordable space --not hyper-expensive, high-traffic retail locations and all of them are reaching out to the business community for goods to sell as opposed to waiting for Grandma to walk into their store with her collection of teapots. I cover all three of these issues in detail in my book. So if you think you may want to start selling on consignment, take a look here.

3. Skip McGrath Named Contributing Editor to eBay Radio

Internet Radio is hot! I have had the opportunity to be interviewed on eBay Radio with Griff Griffith and on Entrepreneur Radio with Chris Malta on several occasions. This month I was named a Contributing Editor to eBay Radio. I will be appearing on Griff's show once each month.

eBay Radio is steadily growing in popularity and listenership (I think that's a word). They cover a wide range of topics and a lot of experts are interviewed in various fields. If you would like to listen to the new shows or hear the recorded shows, just click here.

If you would like to hear the shows I was on, just type my name, Skip McGrath, into the search bar and a list of shows and the the subjects we covered will come up. Listening is as simple as clicking on the link. Once the audio starts, you can click off the page and go back to what you were working on and just listen in the background. If you would like to call in and ask a question, Griff is on every Sunday from 3-5 PM Pacific Time. There is a link to the show on the main page.

4. Should I Open an eBay Store?

The short answer is yes. You can list your merchandise in an eBay store for 30 days or Good ‘Til Cancelled (automatically renews every 30 days until it sells or you end it). You can list your merchandise in an eBay store for varying periods of time such as 30, 60, 90 or 120 days.

Until recently eBay store listings did not show up in search results unless a buyer was searching store listings only. Starting next month, eBay will place search results from store listings at the bottom of every eBay US search results page.

Why Set Up an eBay Store ? The first reason is larger profits. According to eBay’s research, store sellers see an average 25% incremental increase in sales the first three months after opening their Store. As a Store seller, you'll save on listings fees –just 2-cents for each 30-day period and 1-cent for the Gallery feature.

A eBay store can also save you time re-listing your items. Instead, stock your Store with Store Inventory listings that last for longer durations - 30, 60, 90, 120 days or even Good 'Til Cancelled!

A professional-looking Store gives you credibility as an online retailer - and makes shopping easier for your buyers. eBay includes a Business Resource Center where you can access tools to extend your store brand by downloading templates for professional-looking business cards and more. This helps you build your brand on eBay and build repeat business with your customers. You control the look and feel of your Store.

An eBay store is essentially a website with its own URL so you can drive buyers, both on and off eBay, directly to your Store. You can even optimize your web address so it shows up in search engine results. Whenever you drive qualifying traffic to your store from off of eBay, eBay credits you 75% of the final value fee on Store Inventory items. If you join the eBay affiliate program and this person signs up and buys for the first time, then you will also earn an affiliate commission. Some of the larger eBay store owners earn several thousand dollars a month in eBay affiliate commissions from this source.

Another advantage is the ability to cross-promote your products. Store sellers have the option to display complementary items from their Store to prospective buyers. With an easy-to-use Cross-Promotion tool, all Store sellers are given complete control over which items are cross-promoted to buyers. These cross-promotions show up at the bottom of your auctions when buyers click on them.

eBay also provides a dedicated Search box within your eBay store. Buyers will be able to search through your items to find exactly what they want. There's no other way on eBay for buyers to do such searching –and finding.

EBay will help you bring buyers to your Store through all eBay Stores pages, the Shop eBay Stores box on all search & listings pages on eBay, and Stores merchandising on the eBay US homepage.

Setting up and branding your eBay store is fairly easy. It only takes a few minutes to set up a basic store. Best of all, you have complete control over the look and feel of your Store. If you don't want to use eBay's templates, my friend Anthony McMurry at ProImpulse Design will design an eBay store for you. He designed my eBay store and it has really helped my sales.

5. Get Ready To Have Your Auctions Cancelled by eBay

In a recent announcement by Matt Halprin who runs global policy management, eBay recognized that some of their policies were hard to understand. eBay spent the last several months rewriting the policy pages to make them easier to understand and follow. Now each page includes:

• a clear statement of the policy and why eBay has it
• examples that illustrate what is and isn't allowed
• a list of the possible consequences of violating the policy

eBay also created a new Policy Hub page where you can more easily access all of the policies.

Recognizing that some policies are difficult to understand, eBay created five online tutorials covering

• Feedback
• Intellectual Property & VeRO
• Shill Bidding, Fee Circumvention
• Search & Browse Manipulation

Each tutorial only take a few minutes to complete and each one walks members through the details they need to know in order to stay in compliance.

eBay also announced new "Enforcement policy violation consequences and mitigation" (Boy, does that sound like it was written by a bureaucrat or what?)

eBay changed PowerSeller eligibility requirements to include "new thresholds on policy compliance." As a result, several sellers have already been removed or suspended who were repeat violators of eBay's policies from the program.

Frankly, most of these sellers deserved to lose their power seller status, but many were caught up in very minor and innocent technical violations. Often eBay does not warn you that you are in danger of losing your status and give you time to fix the violations before it counts against you. Then if you are suspended or lose your power seller status and you call power seller support to appeal for help, they won't talk to you because you were suspended and are no longer a power seller.

For other sellers eBay decided punishment or banishment wasn't working so they decided to try the carrot and the stick. Besides suspending accounts eBay has come up with new ways to work with sellers. eBay 's announcement states:

"Restricting repeat policy violators' ability to list items for a period of time – Depending on how often a seller has violated our policies in a 90-day period, they may be required to complete a 15-minute tutorial, or they could be restricted from listing new items for up to 3 days. We think of these consequences as "speed bumps" that can slow accounts down just long enough for them to be educated on the policy. Then they can get back on track.

Retaining eBay fees when canceling a repeat violator's listings for List Practices violations – If a seller repeatedly violates policies in a 90-day period despite previously having taken a tutorial on those policies, we're going to keep their listing and feature fees on subsequent listing cancellations that violate policy. We feel it is important to instill a financial penalty to protect the level playing field when our other efforts to educate and change behavior have failed. "

The last and most troubling part of the new policy is making it easier for people to report violations. Right now you have to jump through several hoops (pages) to send eBay a message that reports a violation. To make it simpler to report an auction that violates any one of the complex 150 policies, starting in the spring of 2006, every item page will have a Report this Item link at the bottom of the page.

This link will bypass the normal Contact Us process and take you directly to a list of reasons why a listing needs to be reported. If you are someone who is frustrated that it is so hard to report an obvious fraud or phony auction or someone egregiously breaking the rules, this new feature will make it very easy. On the other hand, there are thousands of eBay members with too much time on their hands who spend hours every day searching eBay for violations --both major and minor and are gleefully reporting them to eBay. These folks even have chat rooms where they place bets and run contests to see how many auctions they can cancel in an hour.

Your only defense is to learn and follow every eBay policy to the letter. With 150 complex policies, and eBay's attitude that a violation no matter how innocent or how minor is a violation to be punished, this new reporting feature will soon begin sucking the fun and a lot of the profit out of selling on eBay. Increased enforcement will in turn frustrate and deter the many small sellers (who originally built eBay) causing them to give up and leave eBay to the major corporations and the Titanium power sellers with deep pockets and dozens of employees.

Don't get me wrong. I support anything reasonable eBay does to prevent fraud and to remove sellers using unethical techniques to get bids and win auctions. Also I understand eBay's need to protect their marketplace. The problem is the platform and the rules have grown so complex, the number of reports eBay receives have grown so large that Trust & Safety simply cannot look at each report intelligently --electing instead to accept a report, make a cursory glance at the auction and send out a form email written in bureaucratese that no one can understand and terminate the auction. There has got to be a better way !!!

6. New eBay Coaching Program

Last April I launched a coaching program with a company in Nevada. In general it was successful. They trained several dozen students who are now up and running successfully on eBay. However, I was never really completely happy with the program, so recently I entered into a joint venture with Bright Builders, the company that sells the HammerTap line of software and eBay market research tools and the BrightBuilder web site solution. This company is more closely tied to eBay and I have to opportunity to work more closely with the coaches and train them in my methods. We have only just started but already I am happier with the results.

As you can guess, personal one-on-one coaching is not inexpensive. However, if you are really serious about building a long-term profitable business --and you have the money to invest, this is a great way to improve your chances of success by about one thousand percent. You can read about the program HERE. If it interests you, please give us a call to learn more about the program.

7. New Wholesale Sources for February 2006

Since I stressed niche marketing in several articles this month, I have worked hard to find wholesale sources that lend themselves to creating and filling a niche. I only have room for a few sources each month, but my Wholesale Buying System comes with membership to my wholesale-members web site where I have thousands of sources and specialized search engines available to my readers.

More and more eBay sellers are finding it highly profitable to import goods directly from China and other Asian countries. One of the best sites to find suppliers is Alibaba.com. But once you find a product and a manufacturer what do you do next? Importing can be a minefield. Are you really going to send money in advance to some stranger in a foreign country? What about shipping and customs duties? If you are going to do this you need some help.

Adam Wade at Wade Worldwide Wholesale, specializes in helping eBay sellers import goods from overseas. He won't find the products for you --you can do that on Alibaba.com, but once you locate a product, talk to him about providing the services you need to eliminate the risk and get the best rates on shipping and services. He works on commission, but often he saves you so much money that his services are essentially free.

Authentic Models sells all types of large models that are often seen in museum stores. You will have to register to get dealer pricing. There are several lines sold by this company that could make awesome niche markets on eBay such as Antique Globes, Early writing instruments, Sailboat and early aircraft models.

Boulder Creek Distributing is a large gift distributor that sells Link Charms, Mother's Birthstone & Loving Family Products, Holiday Pins & Charms, Tote Bags & Youth Gifts, Fashion Jewelry & Accessories, Men's Neckties, ETTE Gift Ornaments and Rustic Style Gifts.

INE Imports is a large importer of fine handmade and hand painted products from Bali. Each of their pieces are original and created by expert craftsmen. Products include Bamboo Wind Chimes, Buddha's, Mirrors, Boxes, Mobiles, and more.

The Holden Company is a large distributor of several unusual lines of fashion jewelry. They exhibit at the major trade shows. Register on the site for pricing.

Trish McGuire is known as The Professional Bag Lady. She searches the world for unique gourmet items and kitchen goodies. This is another great source for several unique niches.

Park Avenue Agents is a manufacturer's representative company that represents over 40 manufacturers. Their web site does not show the actual products until you contact them and request access. I strongly recommend you take the time to do this because this company has some great product lines --many of which represent great product niches.

Talk about a narrow niche. Brooklines sells a line of clear luminous candles with fishing flies embedded in them. Don't laugh, fly fishing and anything do do with it is a huge market.

A lot of people believe that magnetism is beneficial to your health and can prevent arthritis. Magnetic Product Marketing sells a large line of magnetic bracelets, rings, necklaces and jewelry accessories. Their web site is pretty basic --so after you contact them with your sales tax number, it is best to request a catalog.

Skorr Products sells a large line of buffet party serving sets. The web site is nothing more than a phone number to call. I have seen these products in person and a local store here in my town sells these things like hotcakes. I have not seen them on eBay. Call them and get the complete product catalog.

Well that's it for this month. Look for the next issue in early March.

Skip McGrath