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The eBay Seller's News, July 2006, Volume 6, No. 7
Welcome to our new subscribers. If you have not yet confirmed your subscription, please take a moment to do so by going back to the email you received and clicking on the link to confirm your subscription. This will ensure your newsletter makes it through spam filters. //// July Newsletter Addendum - Posted 8AM July 20th. I sent this newsletter out Wednesday evening and on Thursday eBay released their earnings and announced a fee increase for eBay stores. Both announcements were very interesting. eBay's earnings were in line with the high end of their guidance numbers, although they did soften their guidance for the upcoming third quarter --but the big news was that eBay is going to buy back $2 billion of eBay stock over the next two years. This will help support the stock price and indeed the market reacted. The price of eBay stock jumped 4% by the end of the trading day. That is good news for stockholders, but the fee increase is a challenge for eBay store sellers. The initial reaction from the blogs and message boards was "OUTRAGE," but if you take the time to read the entire announcement, eBay's action is not that unreasonable. It is important to remember that eBay has costs too. Just as you pay a fee for every listing --eBay has a cost for that listing. Store inventories have grown so large that they now comprise 83% of all listings but those listings represent only 9% of the total gross merchandise sold (GMS) on eBay. That is a pretty staggering statistic. According to eBay, the time it takes for an average store listing to sell is up to 14 times longer for most products and up to 40 times longer for media products such as DVDs where there are literally millions of items listed. If you just look at the raw numbers, the fee increase seems pretty steep, but when you examine it in the context of your cost of sales, it's not all that bad. eBay's strategy is to "rebalance" the amount of stores versus core listings. Given the nature of the increase, it should have that effect, as I will definitely be "rebalancing" my listings. Before we get further into this, here is the new fee schedule: These Store Inventory format insertion fees take effect Aug. 22, 2006:
Some Store Inventory format final value fees also will increase, effective Aug. 22, 2006:
Please note that for current listings, the new final value fees will apply only after these listings are renewed. eBay states that the effect of these increases on the average seller will be about 6% based on back testing of June 2006 sales. I calculated the effect of these new fees on my store activity over the past month. Had these fees been in place, my actual selling expenses would have increased about 9%. Some sellers will see less and some will see more --with those sellers of store items in the $1 to $100 range seeing the most impact. In my case, since most of my store sales fall in the $100 to $1000 range, I will not experience any change in final value fees which are by far the larger of the two. My listing fees will increase 500% per item (2¢ to 10¢) , but we are only talking about ten cents on items that sell in the $150 to $600 range --hardly something to get upset about. Part of the fee increase is also a change in how eBay displays search results for items in eBay stores. Currently if a search returns less than 30 items, eBay will display up to 30 store results. Starting next month, if a buyer clicks on the Buy-it-now tab for search results, eBay will display the store results along with the core results. To take some of the sting out of the announcement, eBay today announced a back to basics, 20 cent core insertion fee sale starting at midnight on the 19th --good for two days --the 20th and 21st. In the article below on eBay (written before the fee increase was announced) I noted that eBay was under some pressure from the street to show that they had the ability to continue revenue growth and that a small fee increase was possibly in the works. The strategy of rebalancing their income makes more sense than an across the board fee increase. I had suspected for some time that the rapid growth of eBay Stores would have an adverse fee impact on eBay --I just had no idea how big an impact it was. So the bottom line for sellers: Relax and take a deep breath. This isn't that big a deal. It would, however, pay to do some analysis of your listings to optimize your sell through rates and control your fees. eBay is offering store sellers free access to eBay Marketplace Research for the next 8 weeks so you can analyze your selling formats and optimize your listing strategy. ////
The UK version of The Complete eBay Marketing system was researched, rewritten and edited by my British daughter-in-law, Lissa McGrath, who recently presented us with our first grandchild --a beautiful baby girl named Rowan, who appeared right before eBay Live. Lissa is an accomplished eBay seller and author of 20 Questions to Ask before selling on eBay. //// Have you ever attended an eBay workshop? eBay holds online workshops on a wide variety of topics several days a week and they are really pretty good. You can get schedules and information by checking the Announcements link at the bottom of most eBay pages or you can sign up for an email notice at this link. Most of the workshops are very informative and not all are directly related to eBay functions. Recently eBay hosted Diane Kennedy talking about tax issues for eBay sellers. //// My long time readers will remember that I have recommended Luxury Brands as a source for authentic famous name designer goods such as shoes, handbags, fashion accessories and more. Last year Luxury Brands had some internal management problems and the company imploded, so I removed them from my wholesale sources. Well, they are back. They have formed some sort of joint venture with Magazzino Italiano (Italian warehouse), an online Italian wholesaler that deals in overstock merchandise from companies such as Prada, Gucci, Cartier, Chanel and others. Their announcement was a little vague about how the arrangement will work, but it looks like Magazzino Italiano is in the driver's seat which gives me confidence as they are a large and very respected firm. If you are already a Priority List member, they are offering a coupon for $100 off on your next purchase. This is only available to existing members. One benefit of the arrangement is better pricing. Magazzino Italiano was actually one of LB's sources, so now you will get the goods at direct prices. I looked at the catalog. It's not completely filled out yet, but some of the pricing I did see looks to be a little better. //// One problem with selling famous name designer merchandise on eBay is the fact that eBay is swamped with fakes. In a recent Wall Street Journal article, the reporters bought 5 handbags on eBay. Four of them were obvious fakes and one was a maybe --they couldn't be sure. The fact that there are so many fakes has driven the prices of authentic merchandise down. If you are going to sell this type of goods, I strongly suggest you sign up for buySAFE, a bonding service that guarantees your customers will not be defrauded. Having the buySAFE Seal in your auctions, can alliviate the problem. Another reason for joining buySAFE is the Trusted Merchants Gallery program with Overstock.com Auctions. When you go to the main search page, a buyer can check a box that says search trusted merchants only. This brings up results only from those sellers who offer buysafe. Since launching the program, Overstock.com reports those sellers experienced a 25% increase in exposure (clicks) and a 30% increase in sales. My experience with Overstock.com auctions has been a bit erratic. Some items that sell well on eBay just won't sell on Overstock, while others do very well. I think it pays to try it. Your success will depend pretty much on your product. //// I have just added a new section to the web site called Product Reviews. From time to time I recommend other educational and/or income producing programs in my newsletter, but these are often missed by new members who don't review all of the back issues. So each month, if I add something in the newsletter I will provide links to in on the Product Review. This month I am recommending a new program from The Internet Marketing Center called Warp Speed Wealth. If you are familiar with IMC's other training programs, this one is similar to the original Internet Marketing Course, except it is a fast-start system designed to get you up and selling on the internet and making money within 30 days. I have already seen the course and reviewed it and pronounce it EXCELLENT. Having said that, please use caution. If you are just starting out on eBay, you can wait until you get your eBay business up and running before starting something new. I talk to people all the time who buy my material and then buy another program (or programs) at the same time and get confused. Take things one step at a time. Master one method or process before moving on to the next. //// As this newsletter goes to press I am just wrapping up my first new product in over a year: How To Create and Sell Information Products on eBay. Karen and I have run a full-time eBay business for the past 6 + years and for the past 5 years I have written, produced and sold seven different books on and about eBay and internet marketing. I have also created two non-eBay eBooks that are selling very well. I have sold both printed books, eBooks and Audio files. Today, selling information products on eBay (and the internet) is responsible for almost one-half of our income. When I was brainstorming new products it occurred to me that many of you would like to learn what I have learned over the past five years. Whenever you hear the term "information products" you might think of the many money-making and get-rich-quick programs for sale on eBay and the internet. Although you can do that sort of product, my main focus is on creating information products that people can really use --products that actually help people --and products that you can make money by selling. In a previous issue I showed you how eBay is now embracing sales of both physical and digitally-delivered information products. These products include not only eBooks, but printed books, CDs and DVDs, original music, photography and art, public domian recordings, and much more. This is a new --and very wide open field that can be very profitable for eBay and internet sellers. My new system consists of a 130 page printed manual and three CDs with bonus materials. How To Create and Sell Information Products on eBay is $67 + $5.90 shipping and handling. We are in final production as this newsletter goes to press. I expect to start shipping around the 20th of July. So if you order before then, please be patient --it could take a week or more to get the book to you. As with all of my products, this book comes with a 90-day, no questions asked, money-back guarantee. //// In This Issue: 1. Management Changes Shake Up eBay Let's get started. 1. Management Changes Shake Up eBay In last month's issue just before eBay Live, I reported on persistant rumors coming out of the eBay campus that Meg Whitman would soon step down and that Bill Cobb, President of eBay North America was the heir apparent. I speculated that Meg may even step down at eBay live but that turned out not to be the case. When I was at eBay Live almost everyone I spoke with thought that Jeff Jordan, president of PayPal was most likely to succeed. That is not to be. The community (and investors) were stunned last week when Jeff resigned from PayPal (eBay) to "spend more time with his family." Rajiv Dutta, eBay's former chief financial officer who is now running Skype, will move over the take the reigns at PayPal. There were other management shakeups at eBay as well. Jeff's departure follows Marty Abbott, eBay's Senior VP of Technology, Lynn Reedy, Chief Technical Officer, eBay Marketplaces Product & Technology who left last year and Michael Dearing, Senior VP,who departed eBay last month. Reading between the lines --Jeff was not fired, he did indeed resign. My guess is that he was told he was not to be Meg's replacement. Jeff is pretty young and probably decided he didn't want to spend the next ten years running PayPal. I still think Bill Cobb has the inside track. He would definately be the favorite of the eBay community, but I am not sure he would have Wall Street's support. Jeff's departure will not please Wall Street and will put more pressure on Meg to step down. Time will tell. Watch for more news when eBay releases their quarterly earnings report later this month. To be completely fair, Meg vigorously denies she will be leaving anytime soon. While I was in New York on a book tour, I had the opportunity to brief a group of eBay investors --both fund managers and large individual investors. Most Wall Street anaylsts have moved eBay from a buy to a hold and a few have even issued a sell rating. Yet among people I spoke to, they see eBay's issues as temporary and still hold a positive long-term outlook for the stock. Some of these investors were disappointed that eBay did not have a fee increase this year and many of them posited that eBay's falling stock price will pressure eBay to reevaluate that decision. I don't think users will tolerate much of a fee increase but a small one may be possible. 2. eBay Issues Policy on Excessive Shipping Charges As I mentioned in the eBay Live Special Issue, eBay announced they would start enforcing a new policy on excessive shipping charges. You know --the sellers who sell a DVD for $1.99 and then charge $14.95 for shipping. Last week eBay formalized the policy. eBay states the reason for the new policy as follows: "This policy reduces the potential for confusion among bidders about the full cost of an item. Listings that include excessive shipping fees lead to a poor buying experience and un-level the playing field by putting sellers who charge reasonable shipping charges at a disadvantage. These listings undermine the trust and legitimacy of eBay’s marketplace." I agree that charging excess shipping leads to a poor buying experience, but eBay's explanation is somewhat incomplete --and perhaps disingenious. eBay's selling fees are based on the final value of an item. If someone sells a DVD for $1.99 their final value fee is $0.10. But if the seller sold the DVD for it's real value of $14.95, then eBay's final value fee is $0.78 --a 700% increase in fees realized. The rest of eBay's statement said:
The mention of insurance is interesting. This was not part of the original announcement and frankly seems a bit unfair. I see no harm - no foul in charging a buyer for self-insurance. For example I routinely self-insure the first $100 of value and I then purchase insurance for any amount over the first $100.00. This is no different they buying a deductible on your car insurance. If the post office charges $1.00 per hundred of value, and I choose to charge $1.00 for that same service, I am self insuring. Charging for self-insurance against loss or breakage is not against state insurance laws, (In my life, prior to selling on eBay, I was a licensed insurance agent) so I don't see eBay's problem. I use Discount Shipping Insurance (DSI). They charge less than either the post office or UPS for insurance. In the past, I charged the customer the post office rate and paid the DSI rate --thereby making my insurance a small profit center. It wasn't so much a profit as it helped offset costs for packing material and so on. (I self insured the first $100 and then purchased insurance on any amont over that). Also note that eBay no longer allows you to require insurance unless you use a third party. This is really puzzling. If I buy insurance from the post office or UPS, I cannot require sellers to pay for it. But if I get my insurance from DSI (a 3rd party) then I can??? Don't get me wrong. I do applaud eBay for the new policy --and frankly it is long overdue. Scammy sellers have been avoiding fees for years --and this type of selling does confuse people. But I don't really agree with the insurance terms and I think eBay should have mentioned the fee issue when they announced the policy.
If you walked into a bank and asked about financing for your eBay business you would probably be greeted with a polite giggle. Banks, and other traditional lenders, just don't understand eBay --or any internet business for that matter. To prove this point I asked my banker about a business loan for my eBay business. I don't really need any financing and I have excellent credit as well as a long relationship with my bank --but I just wanted to see what would happen. Despite giving my banker three years of financial statements showing a profit she told me they would not be willing to do the loan. She then handed me an application for a second mortgage loan and suggested I use that to finance my business. This is the typical response you get from a bank. If you have a brick and mortar store, such as an eBay drop off store, it may be a bit easier to borrow money--but even this can be difficult if you are setting up a new business for the first time. To solve this problem, I have just set up a eBay Financing Group with Prosper. This is a service where you can both lend and borrow money. You can lend money to other sellers who need money to finance their business or you can borrow money for your eBay or other internet business. Prosper is a lot like eBay --it is a community. To borrow money you post your business description, what you will use the money for, how you plan to pay it back and how much interest rate you are willing to pay. The better your credit rating, the lower you can set your interest --but even if you have poor credit, you can still borrow --you just have to pay more. The rates are higher than nominal credit card rates, but they don't have the late payment penalties. (Some credit cards charge up to 35% if you are late with a payment). Also, this is fixed credit which is a much better deal than revolving credit. Once you post your loan request in my group, people bid on your loan --just like eBay. For example if you were asking for $5,000 at 15% interest, lenders will come along and bid a specified amount of money --anywhere from $10 up to the whole $5,000. So you could actually end up with dozens of lenders --each taking a small piece of your loan. Don't worry --you don't have to deal with all of the lenders. Prosper will do that for you. To make this more attractive to my readers, as a group-leader I earn a fee on all loans, but I will be sharing part of that fee with anyone who takes out a loan thereby reducing your interest cost. Also, I will invest my personal money in each loan we approve for posting. If you would like to learn more, click here to join my group to apply for a loan, or to become a lender at Prosper. There is no fee to join the group or to apply for a loan. Their is a small funding fee if the loan is granted. Once you get to my page, click on the link that says Join My Group. Once you join, you can tour the Prosper site and learn how people-to-people lending works.
Even better than borrowing money for your eBay business is to use money you have saved up. But in today's economy this can be difficult. The problem most people have saving and investing money is too much debt. Excess debt is so pervasive in America that an entire industry has sprung up to help people get out of debt. You have all heard the radio ads to call credit counseling companies who can reduce your debt. Basically all these companies (many masqurading as non-profit orginizations) do is negotiate your debt down with the credit card companies. This sounds good, but it not only ruins your credit, it severely restricts your ability to get future credit until your loans are all paid off. These services are only a solution for people who are completely under water and can't even begin to meet their payments. There is a better way. Leo Quinn, a professional financial advisor, has been teaching people his unique system to get out of debt for years. He has recently released an updated version of his excellent book, How To Own Your Paycheck Again. Back in the 1990s, before I started on eBay, Karen and I were massively in debt way over our heads. I wish I had Leo's book back then. We were able to work our way out of it, but it was painful. When I read Leo's book, I learned several things that we did wrong (such as paying off the highest interest loans first) and several ways that we could have gotten out of debt much sooner and will far less pain. Whether you are completely overextended or just have a little too much debt to be comfortable, Leo's book will show you a quick painless way out of the woods that will not ruin your credit rating and you will not have to dramatically change your lifestyle while doing it. 5. Quick and Easy Web Site Builder - No Technical Knowledge Required I always get questions from readers asking what is the best way to set up a web site. Over the years I have used several services including everything from hiring a professional web master to using services such as Citymax. Last January when I contracted with BrightBuilders to run my eBay Mentoring & Coaching Program, I had the opportunity to use their system. I decided to try it out by building a web site for the firepits that I sell on eBay (www.firepit-grills.com). It took me about four hours working one day and about 1 hour the next day to get the site up and running. I am so impressed with the ease of use --and the results I am getting with the site, that I have just entered into a joint-venture with Bright Builders. We created a portal into the BrightBuilder's system called Skips-Website-Builder. The problem with most web site companies is the lack of support. Some use email and some use the dreaded trouble ticket system. If you have tried any of these you know what I mean. Also, the only support most web site companies offer is technical support. What happens when you have a question about marketing, pricing, design , or research? Skips-Website-Builder is a way to get your own e-commerce web site that comes with design, development and marketing telephone support including a mini-coaching program. Programs like this normally cost as much as $500 or more, but I am offering this program to my readers for only $197. This price includes all the services plus your first three month's of hosting. I am also throwing in three private tele-conferences with myself and a website marketing specialist. After the first three months, you will pay $29.95 a month for hosting and ongoing telephone support. I know you can find hosting plans for less than that --but the key word here is support. This is real support and covers not only simple technical support but marketing help and continuing education as well.
6. How To Start a Drop Ship eBay Custom Tee Shirt Business Tee shirts are big business on eBay. A few months ago I wrote about starting a tee shirt business and listed various wholesale resources where you could buy blank shirts, supplies and even get shirts printed for you. I have known about CafePress for quite a while but only recently did I figure out how you can use this great place as a source for printed tee shirts to sell on eBay. CafePress is a very interesting web site. If you have an idea for a tee shirt, you can set up an account and design your own shirt (or sweatshirt, cap, coffee mug, etc.). CafePress will make the shirt and ship it to you (or someone else). My son recently has a shirt made that said: "Si hoc legere scis nimium eruditionis habes," which is Latin for "If you can read this you are overeducated." He was continually stopped by people on the street asking where they could get such a shirt. The answer --CafePress! You can also set up a CafePress Store. You simply design shirts and list them in your store. People coming to CafePress (over 1 million visitors a week) search for shirts by theme such as patriotic, pets, sports, movie stars and so on. If you have a shirt matching a keyword or theme a person is searching for, it will come up in the store. People click on the shirt and order it through CafePress using their shopping cart. Once the sale is made, CafePress sends you the difference in their cost and your selling price. Taking this to eBay is very easy. You just create an eBay listing for your shirt with a photo. When the shirt sells on eBay, you order it from your CafePress store and just put in the buyer's shipping address. CafePress ships the shirt directly to your buyer and CafePress sends you your profit. Check out CafePress here. 7. New Wholesale Sources for July 2006 My regular readers know that wholesale trade shows are one of my favorite ways to find new merchandise to sell on eBay and your web site. Alibaba has just released a new version of their International Trade Show calendar. What is so good about this one is that you can search by product category, country or dates. The Alibaba Trade Show Calendar lists over 15,000 trade shows making it the largest and most complete directory I have found. +++ Automotive after market performance equipment such as exaust systems are big sellers on eBay motors. ANSA is one of the largest manufacturers of replacement exaust systems for import cars. This link takes you to a page where you can request a wholesale pricing catalog. +++ You can also find automotive after market products and a wide variety of other wholesale products at our Wholesale Search Engine. One word of caution. Just because a company shows up in a search, that does not mean I endorse it. Use the same amount of reason you would if you were searching on Google or any other search engine. The advantage of this our Wholesale Search Engine is that you can narrrow down the results to wholesale companies faster than you can with a Google or Yahoo search. +++ Auto Swag sells all types of automotive-related custom clothing, hats, decals, coffee cups, signs and accessories. (This site works somewhat like CafePress that I wrote about above). Auto Swag is not really a wholesale site, but you can buy wholesale. Here is how it works: You can buy a a T-shirt that retails for $24.00 for $16.95, but if you buy 24 each, they give you a price of about $8.00 each. Also if you join their affiliate program you will earn another 10%. So you have two choices. You can sell individual items and they will drop ship. The margin is lower, but still workable --and you don't have to carry any inventory. If you buy a quantity of 24 each, you will make much more profit, but have to carry inventory and do the shipping. What I suggest is sell using drop shipping and once you hit on a hot product that sells over and over, then order 24 of that product and take the higher margins. +++ Spa products such as soaps, wraps, skin cleansers, herbal lotions, and essential oils are hot products. They carry high markups and can be very profitable. There are so many companies in this industry I can't write about all of them. Spa Trade is not a supplier, but it is the web site of the Spa Industry. It's free to join and they have lots of information and resources and this is where the wholesalers and manufacturers advertise. Here is a partial list of Spa product manufacturers and distributors. Some of these web sites only show retail information, but all of them are wholesale. If they don't show wholesale info on the web site just use the contact form to ask for wholesale pricing. Pevonia - Supplier of professional spa masks, skin treatments, wraps and beauty supplies. Avanglion - Offers three different lines of sunglasses. Onox Inc. - Distributor of OTC personal care products including hand creams, sanitizers and itch relief products Paris Presents - Creates and distributes cosmetics, bath and body, and travel products for stores Of The Goddess Ltd. - Natural aroma therapy, bath and body products, essential oils, and herbal incense blends Carib Sales, Inc. - Health and beauty products wholesaler. Alibi - Offers private label brand of health, beauty, aroma therapy and hygienic products Real Natural - Wholesale skin care products +++ It's summertime and anything to do with boating is hot. Weems & Plath manufactures traditional marine navigation instruments and authentic seaworthy gifts of distinction. Fish-On.com - makes boat seats and cushions, rod holders and other accessories for fishing boats. Unified Marine -manufacturers boating accessories from kayak paddles to bilge pumps. Very slow web site so be patient. Once it loads, hit the distributor tab and it will list your closest distributor. +++ Having just had our first grandchild I am once again looking at baby stuff. I came across BOB Trailers and Strollers -Offers jogging strollers as well as bike trailers. Includes dealer list, specifications and catalog. V.I.P. Baby - Sells wholesale baby toys, bath products and gift sets. Bennington International Ltd. - is a Taiwan company that Manufactures bathing aids, strollers, furniture and accessories, bassinets and safety gates. They normally deal in large orders but will agree to small test orders. The pricing is incredible. Cartoonworld - Is a Wholesaler of Disney figurines, statues and small furniture. Features a product catalog. Get the catalog as the web site really stinks. Great products though. +++ Art is always a steady seller on eBay. If you love Picasso, Van Gogh, Monet or Cezanne and can't afford the real thing, Oil Painting Wholesale is a distributor of hand painted oil reproductions of well known scenes and old masterpieces as well as some modern paintings. Wholesale prices average from around $25 to $50 each. They have a $500 minimum, but they do offer a drop ship program with no minimum. Their is no drop ship fee, but the shipping charge is $18, however that is if you order one or any quantity. So if someone ordered three paintings the shipping charge would still be only $18.00 +++ There seems to be no end of the Tiki and South Pacific craze. It has been hot for over four years now. Benson's Imports is a direct importer of tiki, tropical, Caribbean nautical and south of the border look in decor, garden and accessories. +++ Ok - That is that for this month. August and September are back to school months. I will feature some BTS suppliers in the August newsletter. Skip McGrath
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