Will eBay's Feedback 2.0 Be a Headache for Sellers?

The eBay Seller's News, April 2007, Volume 7, No. 4

Learn How To Sell More on eBay with The Newsletter for Professional
eBay Sellers by:  Skip McGrath

In This Issue:

Musings

1. Will eBay's Feedback 2.0 Be a Headache for Sellers
2. eBay Niche of the Month: Antique Art Prints
3. Increase eBay Profits with Second Chance Offer
4. Update and Correct Your Contact Info To Avoid Being Shut Down by eBay
5. Is eBay Getting Fewer Eyeballs and What Does This Mean for Sellers?
6. Will eBay Start Issuing IRS 1099 Forms To Sellers?
7. New Wholesale Sources for April 2007

"Motivation will almost always beat mere talent."
Norman R. Augustine

Musings

Welcome to our new subscribers this month. If you subscribed to the newsletter you will have received a confirmation message. If you didn't get the message and confirm it, then you are not subscribed. Please check you email filter as these messages sometimes end up there.

eBay recently updated and expanded their FAQ service. This is an option you can select that can really reduce emails from bidders. You can read more about it in my blog. By the time you read this it will not be the top item, so just scroll down the page until you find it. Go to blog.skipmcgrath.com. My blog is where I put fast breaking news, cover topical issues and feature items that can't wait for the newsletter. At the top of the blog are RSS buttons so you can add the blog feed to your home page for faster notification.

Would you like to make money by helping others, or do you need money to consolidate debt, rebuild your credit or to invest in a business? If so, consider joining our group eBay Auction Pros at Prosper.com. Prosper is people-to-people lending.

If you want to borrow money you can often get financing at Prosper for much better rates than credit cards or banks. If you want to lend money you can earn high interest rates with lower risk by diversifying over several loans and credit risks and enjoy the benefits of helping others in need as well.

Right after Al Gore won an Oscar for his movie, Inconvenient Truth , it was revealed that his house in Tennessee consumes as much energy in one month as twenty average houses. Al explained this was not a problem because he purchases carbon credits.

I thought to myself, "hmmmmm, I wonder if I could buy carbon credits on eBay?" Yep - here is the latest new eBay niche market. Just type carbon credits into the search box on eBay and you can keep driving that SUV with no guilt whatsoever. Or, you can make some money selling carbon credits. Just launch an auction that says you will plant a tree in return for $20. When someone buys, you have to plant a tree (tree seedlings only cost about 50 cents each) and then send the buyer a certificate certifying their purchase. They can then tape the certificate to the inside window of their SUV so everyone knows they are helping Al Gore save the world.

In late March I sent out a special notice to my readers about a new membership website My Silent Team. This is a new eBay and internet training web site started by my good friend Jim Cockrum, author of The Silent Sales Machine Hiding on eBay.

Jim did something I have wanted to do for a long time; gather all of the best information from LEGITIMATE eBay and internet trainers and information providers into one place. Jim has gathered people like myself and other leading eBay authors and trainers to create new and frequently updated content as well as message boards, a weekly newsletter and blogs where the members can talk to each other, ask questions and get answers from the experts.

Jim has spent thousands of dollars and taken several months to track down the most successful, creative, and "ready to teach" entrepreneurs and managed to pull amazing amounts of information and step by step detail out of them. It's truly an amazing accomplishment that you must see before he caps off membership enrolment.

As you know there are a lot of charlatans out there wanting to take your money. But Jim is one of the good guys. Like me, he makes a living selling information and training material, but also like me, he is very careful what he recommends. The site launched last week and I was amazed at the response and the many positive comments on the site message board.

Here is just some of what you get:

• Members only forum
• Exclusive sign up bonuses worth hundreds
• Learn what to sell on eBay (actual specific ideas)
• An amazing collection of unique sales techniques
• Expert monitored help desk
• Ask and get answers from the most successful Internet entrepreneurs
• In-depth summaries of hot internet marketing products
• Hundreds of easy to search articles (many from me)
• TONS of step by step videos on the topics YOU'VE requested
• Suggest a video and we'll add it in quickly!
• Members only conference calls
• Free access to "Secrets of their Success" (This is worth $19.95 a month)
• Vast array of eBay and internet marketer's information
• Discounted or FREE information products that you'd have to pay full price for anywhere else
• All of our experts are heavily incented to regularly contribute to the site

Go to the Silent Team Website to read all about it.

Most of my readers know that I have been a fan or Michael Cheney for a while. If you have a website and need to get traffic to it or if you are interested in playing in the affiliate income sandbox, Here is a link to Michael's latest product. Just one thing I learned from him late last year, gave me a definite bump in traffic overnight. This new series is actually a better value and unlike a lot of programs you can get a free look without having to opt in or give up your email address.

* You'll discover how to attract new buyers to your site with 16 explosive traffic
generation methods (you can mix and match)

* Simple (yet cunning) techniques that get your site on the map as fast as humanly possible and send masses of hungry buyers to your pages

* Michael is an Internet marketing veteran online since 1995. He doesn't just sell training --like me, he actually does the stuff he teaches

* High quality videos, tailored Fast-Track To Traffic Action Plan and some really great bonus E-Books from the best Web 2.0 experts in the business

If you follow the news you know there was a major hack of a national credit card database, someone got into all of TJ Max 30 million + accounts and a hacker made it into eBay where they were able to access thousands of accounts. This is becoming a huge problem and it's only going to get worse. If you do become a victim of identity theft it can ruin your credit for years, tie up money in your bank accounts for months and cost you thousands of dollars.

I was hit last year by an identity theft fraud that I managed to catch in time before they did any damage. But I had to cancel all of my credit --and debit cards, change the cards on my eBay and PayPal account and change all of my important online passwords. It was a real pain in the you know what.

With all of this going on I decided to sign up for LifeLock Identify Theft Protection. They are the leading company in the field and have been featured on all the major TV shows. Their CEO is so confident of how the service can protect you, that he puts his social security number right on the front page of their web site.

LifeLock doesn't just report unauthorized use of your credit information, they actually prevent it by working with the top four credit bureaus to make sure you're contacted to approve any credit transaction before it takes place. They also remove your name from pre-approved credit card offers and junk-mail lists, so you don't get pre-approved credit card offers in the mail where they can be stolen from your mailbox. The service is a bit expensive --but think of it like insurance. The downside can be much greater.

In my books The Complete eBay Marketing System and How To Create and Sell Information Products on eBay I stress the importance of writing a good item description if you want your items to sell on eBay. But I always get email from readers who are challenged by writing. Well, recently I found a program that can help you write better. It works for people with low writing skills and can even improve the grammar and style of those with more developed skills. It is called WhiteSmoke. If you need a dictionary or thesaurus, to check your grammar, spelling, punctuation and content or to sound more professional in your writing, to say precisely what you intend, then this is the perfect solution. Best of all it's very easy to use.
 

Let's get started with this month's issue:

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1. Will eBay's Feedback 2.0 Be a Headache for Sellers?

Feedback 2.0 is the first major change to the eBay feedback system in ten years. eBay decided to use our friends in the UK and Australia as a beta test before rolling it out in the North American market.

The biggest change is the ability of buyers to rate sellers on shipping, communications and item description using a 5-star system --but the rating is completely anonymous --you have no idea which buyer rated you or why. So a buyer could leave you positive feedback, even post a nice comment and then hit you with a one-star rating. The other major change is that the item purchased and the purchase price shows up alongside the feedback comment.

Here is a screenshot from one UK seller that shows the system at work. I am sorry about the quality, but I had to reduce the size so the screen wouldn't scroll. If you want to see more examples, just log onto eBay.co.uk and click on any member's feedback number. You can also do a search for your own username and see what you'll look like soon on the US site.

Notice that this seller has a 100% feedback score but less than a 5-star rating on communications, dispatch (shipping) time and postage.

I spent some time reading and posting on the UK message boards and came away with some mixed feelings about FB 2.0 from UK buyers and sellers.

In general, buyers love it and most --but not all, sellers hate it. FB 2.0 makes it easy to see a snapshot of how the seller is actually doing business. Buyers love the anonymity of it (knowing they can't get slammed with a negative feedback in retaliation for being honest). However, some buyers are not so crazy about having the item they bought and the price they paid splashed on their Feedback Profile.

The reasons the buyers love Feedback 2.0 are the same reasons many sellers hate it. One seller said "I'm in the process of finding out if this is in breach of my human rights...eBay is my workplace [and] I am being graded and marked by people anonymously. I am not informed why I am being graded as I am, and I have no right to reply."

It's a valid point. Buyers can rate the seller however they want, but sellers cannot rate buyers. The other problem is that buyers are not blocked from commenting on an action even if the action didn't apply to that transaction. For example, one seller of eBooks said he is getting low stars for the shipping cost when the item isn't even shipped! Another seller offers free shipping for every item she sells, yet is getting low stars on the postage score.

One seller remarked that there is no real guideline for buyers for making (or reading) the ratings, "People's opinions differ wildly over what constitutes good, bad or average. We've had people saying they will start with 5 stars and only knock some off for very bad service - and we've had others saying they will start out by awarding 3 stars and only add an extra star if the service is out of this world."

Another seller noted: "Danger is that people who are satisfied will leave feedback but not use star ratings, while those with a gripe will. If this happens then the ratings will not be a true reflection through a lack of fives. If there is a star system then it should be compulsory."

Most of the sellers who posted had a negative opinion of the new system. Although, to be fair, many sellers think this is a lot of hype and it will settle down soon.

"It's a good feedback % score that will sway buyers, not that a seller hasn't got 5 star ratings across the board," said one seller. Another said, "There was a lot of concern here [on the message boards] about people loosing half a star for one thing or another, but it's settled down now and I don't think that anyone's sales have suffered because they have lost a star. It's the other issues going on that are loosing people sales."

It's the first time eBay has made a drastic change to the feedback system and at the moment any rating is going to make an impact on a seller's overall star level. Probably the most negative thing about this system is that it will hurt the small or occasional seller more than the large sellers with high volumes.

My advice is to continue selling as you always have been. Write complete descriptions, give excellent customer service, ship items quickly and in good packaging (and don't overcharge for it), and always describe your items honestly. With Feedback 2.0 even the best sellers will never achieve a perfect 5-star rating.

So what is my take on Feedback 2.0? If you strive to give good service it will probably not matter in the long run because within a few months after 2.0 goes live in North America, buyers will see that even top sellers only have a 4-star rating and they will think it's normal. I guess what I am trying to say is the whole star thing is a total waste or time and resources that could have been applied somewhere where it would really matter. I seriously doubt it it will improve the buying experience in the long run or contribute anything substantial to growing the user base. Personally I think eBay is reacting to competition from Amazon and someone thought the star system would appeal to Amazon users.

There is no question that FB 2.0 will be rolled out soon in the US --probably with a few minor tweaks, but it's coming. And it doesn't matter if sellers like it or not. Once eBay starts a project like this it's like a snowball rolling down hill --there is just no stopping it. The sad part about this is that it is so unnecessary. eBay is fixing the part of the feedback system that isn't broken, and ignoring the parts that are, such as protecting sellers from malicious and retaliatory feedback.

My final comment is on timing. I could be wrong, but I suspect we will not see FB 2.0 until after eBay Live in June. Sellers outnumber buyer-only members at eBay Live by a huge margin and eBay likes to maintain a "feel good" atmosphere at eBay Live. I doubt if they want the controversy 2.0 will engender, spoiling the event. But, as I said I could be wrong. So we have a little time to give input to eBay before they roll it out here. My advice is to spend some time on eBay UK, read the message posts and form your own opinion. Then start some posts on eBay US. eBay does read the boards and this is a great way to send them your opinion.

I have started a thread here that you can add to, but be sure and look at 2.0 on eBay UK (or eBay Australia) first, so you have a good understanding of how Feedback 2.0 works before commenting.

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2. eBay Niche Market of the Month - Selling Antique Art Prints

This is not a new niche on eBay and it's not really that small of a niche, but it is one of those markets where you can get started for very little money, the sell through rate is very high and the profit potential is anywhere from 100% to over 1000% on each sale.

Here are a couple of screenshots from eBay's completed auctions of recent print sales (each of these shots represent just a few days):

The shot above shows auctions in the Antique Prints category that closed over a 9-day period. As you can see the sell through rate in this range is 100%. When the price gets above $100 or below $25, the sell through rates drop steeply, so its a matter of finding the sweet spot.

OK - so how much do these prints cost and where can you find them? Most of them come from old books and magazines. An old book or magazine can cost as little as $1.00 --although the better ones --with more and higher quality prints can cost as much as $50 --but these can have as many as several dozen prints in each one that can sell for prices between $25 and $100 each.

Here is another shot. These sales average about $20 less than the ones above, but still very profitable when you consider that you can find these prints at prices between $1.00 and $10.00.

I don't have enough room here to explain all the ins and outs of this fabulous money-making eBay niche, but an English lady by the name of Avril Harper has written an excellent book called Make Money Tearing Up Old Books and Magazines and Selling Them on eBay. This is a great book with all the details. I am not currently doing this on eBay, but I did use this method a few years ago and I can attest that it is very profitable. Best of all, Avril is the real deal. She is doing this today and will show you exactly how to find the material and how to sell it on eBay.

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3. Increase eBay Profits with Second Chance Offer

 Back in 2004 eBay introduced a new feature called the Second Chance Offer (SCO). Although it has been around for almost three years, and is a fantastic way to increase your sales and profits --very few sellers bother to use it.

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. (This method doesn't work for one of a kind items. It works when you have identical merchandise to sell.

Here is an example from a recent auction for one of my Rachel Ray Knife sets I sell on eBay. These were the bids I received. The last three all came in the last few minutes of the auction.

OK. Betty wins the knife set for $99.23. But, I am happy to sell at any price over $89.00 and I have plenty of the knives in stock.

So I now offer offer both David and Charlie a second chance offer to buy a knife set at the price they bid. David would get his for $94.55 and Charlie would get his for $98.00. 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 set that Betty, the highest bidder, won. More importantly, you have sold three items for a total value of $291.78 for the time, effort and fees 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 $69.00, then you could have even had a fourth sale to Al who bid $69.05.

One problem is that a lot of eBay bidders have not heard of the SCO and don't understand it. I have even spoken with some folks that think it's spam or a scam. There isn't much you can do about this except encourage eBay to spread the word more to their members. What you don't want to do is put a note in your auction description telling people you send out SCOs. If I saw that I would not want to be the high bidder in an auction. because I would know I could get it cheaper by waiting.

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4. Update and Correct Your Contact Info To Avoid Being Shut Down by eBay

I often get email from eBay sellers who tell me their account was shut down by eBay for no apparent reason. But when I explain how to file an appeal and they eventually get their account reinstated the reason often turns out to be that they had invalid or incorrect contact information on their eBay and/or their PayPal account.

eBay is in the middle of a very aggressive anti-fraud campaign. Since there are literally millions of items listed on eBay at any given moment eBay has to rely on software that hunts for anomalies. One of the anomalies they look for is incorrect contact info. Also, other members can --and will, report you if they see incorrect or obviously phony info.

So if you have moved, or had a name change due to marriage or divorce, or gotten a new phone number or changed your email address, be sure and go into BOTH your eBay account and your PayPal account and update the information. It also really helps if you have the same email address (but not the same password) in both eBay and as your primary PayPal address. I have seen lots of issues arise that confuses both buyers and sellers when they are getting eBay related email from one address and PayPal payments or payment request from another.

The other thing that makes you a target for eBay scrutiny is selling items that are high on their fraud watch list. These would include any expensive name-brand designer item, items that are routinely faked (counterfeit merchandise) such as Nike shoes or rare coins. If you sell in these categories, you can bet eBay will be taking a close look at your auctions.

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5. Is eBay getting fewer eyeballs and What Does It Mean for Sellers?

Not too long ago eBay was the third or fourth most visited web site on the planet, but today they have dropped to number 16. I often here from critics that the drop is proof that eBay is losing business, but this is not really the case.

Here is the current list according to Alexa:

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6. Will eBay Start Issuing IRS 1099 Forms To Sellers?

If you own a business and you pay money to someone for services, the IRS requires you to issue a 1099 form that shows how much income you paid to someone.

For example at the end of each year I have to prepare and issue a 1099 to my web master who is an independent contractor. During the year I also earn affiliate income from various companies whose services I recommend. Those companies will send me a 1099 form. When you prepare and send a 1099 form, you also have to send a copy to the IRS. This way the IRS knows who is earning money. So, for example, at the end of the year I have to declare my gross income on my tax form and I put a copy of each 1099 I receive in with my tax return so the IRS can see that I claimed the income that someone else paid me.

eBay does not issue 1099 forms for the simple reason that eBay doesn't pay you any money. When you sell something on eBay, it is the buyer that pays you and they are not required to file tax forms on purchases. So it would seem simple that eBay (or PayPal who actually sends the money) would not have to file a 1099 form. Well my congressman, Rick Larsen (D-WA), and many other congress members don't think it should be this way. They want to re-write the tax law so at least eBay or PayPal (or both) would have to report how much you sold in a year. This could take the form of a 1099 or some other type of notice.

I am sure there are a few people selling on eBay who have made some money and not claimed it on their taxes. The same thing happens when millions of Americans have a garage sale every year. However, most serious eBay sellers pay their taxes, and I haven't seen any news stories about eBay sellers being prosecuted for not doing so --so where's the problem? The problem is that there are always some busybodies in congress looking to make a name for themselves and someone had an idea that eBay sellers might be a new source of revenue. So look for this issue to gain traction. What you can do is go to: http://www.house.gov/writerep.

From this page you can find your representative and send them an email. Tell them you are an eBay seller, that you already pay your taxes every year and you don't need any additional paperwork or regulations to help you do so.

While you are at it, you might throw in a comment about net neutrality. The big telecom companies are paying off your congress members with political donations to get them to create a two-tiered internet where you would have to pay tolls or fees to have the same access you have to the internet now. I don't have room here to discuss this whole issue, but if you Google "net neutrality" you will get plenty of information.

Just write a short simple message like "please keep your hands off of my eBay business and support a free open internet" and they will know what you are talking about.

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7. New Wholesale Sources for April 2007

This is the time of year it pays to be careful with your sourcing. Remember we are coming into the summer slowdown where sales of some goods can drop as much as 20%. If you are buying for fairly immediate shipment and selling then go for it. But if you are buying a large quantity of goods, just realize that in the slower selling periods (Mid June-Late August) that it may take you longer to turn the merchandise over.

Brooks Tree Farm sells a large variety of tree seedlings at prices starting at 35-cents per tree in lots of 100 trees each. If you would like to sell carbon offset credits on eBay here is a link to the complete catalog in PDF. Be patient it takes about 1 minute to download.

Ela's Gallery sells a beautiful line of silk scarves, handbags and sterling silver scarf clasps. This is very nice stuff and I haven't seen anything like this on eBay.

Another popular line of handbags is The Maggie Brown Collection. I haven't seen these on eBay yet, so if you jump on them you could be first.

BabyBeReady is the trendiest way to tote baby's 1st year essentials. All in one pre-packed diaper bag survival kit. The Dish-n-dat bag is the hippest travel/cosmetic bag owned by all the hollywood celebrities. The Baby Be Ready website is retail, but you can email sales@babydish.com for dealer information.

C. B. Distributing is a wholesale electronics distributor specializing in personal communications and accessories. They distribute over 5,000 different products in citizen band (CB) & 10 meter radio, marine radio, police scanners, GPS, radar detection, cordless telephone and audio/visual categories and will sell to e-commerce resellers.

Headline Products is a large distributor of tools, automotive products, home and garden products and personal care products.

Daron is The largest source of aviation toys models and collectibles, serving the aviation industry, independent toy, & hobby retailers.

Kenetic (a division of Pathway Corp.) is a manufacturer and distributor of a high quality line of steel cookware.

Axis International is an Australian company that sells a patented line of unique functional home storage and organizational items. Contact them through the website for dealer information.

The Fulfillment Force is a manufactures rep for several lines of kitchen products. Their web site isn't real helpful, but if you fill out the dealer application they will send you catalogs and get other information to you.

That's it for this month.

Skip McGrath