Experimenting With Coupons and Rebates

The eBay Seller's News, June 4, 2008, Volume 8, No. 10

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

In This Issue:

Musings

1. Experimenting With Coupons and Rebates
2. Putting The New eBay Policies Into Perspective
3. Is The Recession Affecting Your Online Business?
4. Niche of The Month: High Profit Used Toys
5. New eBay Wholesale Sources for June 2008

"To get profit without risk, experience without danger, and reward without work, is as impossible as it is to live without being born." ~ A. P. Gouthy

Musings

Meet me at eBay Live.  If you are going t o eBay Live, I am one of the sponsors of this year's eBay Meet & Greet. The event runs from 6:30 to 11:00 PM on Wednesday, June 18th. in the M/X lounge at the Hyatt Regency McCormick Place. This is right next door to the registration area where you pick up badges and priority passes. The event is free. We will provide some light snacks and there is a cash bar for drinks. This is the 6th annual Meet and Greet and is a great chance to meet and network with other sellers as well as many of the eBay movers and shakers and enthusiastic board posters. I am also speaking at this year's eBay Live on Saturday at Noon in the seminar about Sourcing Wholesale Products at Wholesale Trade Shows.

I keep getting email from readers worrying about their eBay and online business during the current economic slowdown (recession?). My friends at WorldWide Brands have produced a great set of 5 short videos to help you cope.  Click Here to see the first two videos and if you like them you can sign up to receive the final three videos which will be released over the next few days. Don't worry, they are good people. They won't spam you or sell your name. Whether you are currently a WorldWide Brands OneSource customer or not, I think this video series is really worthwhile.

If you are not familiar with WorldWide Brands they are simply the best source of wholesale sourcing information on the web today and the only wholesale information company I recommend. My readers can watch a short video about the product and get a discount if you go to www.worldwidebrands.com/skipmcgrath . 

With all the changes on eBay there has been a lot of interest in other auction sites and other online selling venues. Last month I told you about a new book by Steve Lindhorst about selling on Amazon.com called Selling on The River.  This month Steve did a great article for my readers that compares selling on Amazon to selling on eBay.  If you have any interest in learning how to sell on Amazon or if you just want to know what is involved, check out Steve's article at this link.

In the last issue I reported the demise of all links on eBay pages to any outside website.  The policy was somewhat confusing so I called eBay and received some clarification --and the news is not good. Basically eBay is banning any type of link that could lead to any off-eBay content including any links to social networking sites, websites, "non-compliant third party services," and active Skype call me buttons. You can still include an email address --and the person I spoke to said it was ok to put a phone number as long as it wasn't any type of link.  The policy does allow compliant third-party logos (PayPal, PowerSeller logo that links to the eBay PowerSeller Page and links to services like auction management companies that work within the eBay API as long as those links only lead to pages with information approved by eBay.  This last one worries me, because services like Vendio, Auctiva, SquareTrade and others may result in having your auctions shut down if their links are "non-compliant" for some reason.  I doubt this will be a big issue, I will be addressing it with those vendors when I go to eBay Live.

You can link to a page with additional photos of your product as long as that page contains nothing but photos and there is no way to get from that page to any other page where you could possibly buy something or learn where to go to buy something besides on eBay. One thing sellers used to do was link to information pages of various manufacturers where people could see detailed specifications or background information on products. This is also no longer allowed.

One of my readers pointed out that it is OK to put your website name and URL on your About Me page, as long as it is not a link. I will be checking on this and getting some clarification from the T&S folks at eBay Live and will address the whole links issue in our next issue.

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

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1. Experimenting With Coupons and Rebates

eBay did a great job over the years growing the site to where eBay US now has about 85 million members.  The problem is that many of those members do not regularly shop on the site.  Millions of members have joined --perhaps bought once or twice and then never came back.  In an apparent attempt to drive buyer loyalty eBay is experimenting with coupons and other forms of rewards. eBay often uses the smaller overseas sites to test out ideas before bringing them to eBay US.  Currently in Korea, eBay is offering a coupon that buyers can use towards their next purchase. My Korean language skills are a little rusty, so I don't have many details --only what I have read on the eBay message boards. But from what I read the test has been a big success in Korea, so we may see it rolled out on some of the English speaking sites soon.

The other program is here in the US.  It is called eBay Bucks.  I found the link at rewards.ebay.com.  I tried to sign up but when I signed in I got a message that the program was by "Invitation only."  There was a link to add my name to the list which I did. Apparently the program rewards buyers with a 4% rebate --but they have to spend it within a specified 30-day period.

I am pleased to see eBay working on programs to reward buyer loyalty and anything they can do to bring buyers back to the platform. eBay is currently sitting on about 4 Billion worth of cash.  I wonder if they might use some of it to get back into TV advertising. A coupon or rewards program tied into a national TV advertising campaign would be a real help to sellers who are struggling with the economic slowdown and the new policies that seems to be affecting sales.

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2. Putting The New eBay Policies Into Perspective

This has been a tough year for eBay and for eBay sellers. If you are a regular reader you know I have been somewhat critical of the new policies. This has led to a lot of email from readers wondering if I am giving up on eBay or discouraging my readers from beginning or continuing to sell on eBay. Yes, I am also selling on Amazon, my own websites and have even started experimenting with other venues such as eCrater and OnlineAuctions.com --but I have no plans to change the name of this newsletter. We are still The eBay Seller's News and I still plan to continue selling on eBay and I encourage my readers to do so as well.

eBay is changing and frankly a lot of the changes are not fun to deal with. Personally I think the changes to the feedback system are awful for sellers. Discontinuing the mutual feedback system changes the whole culture of eBay. When Meg was running eBay I was often critical of her policies --but the reign of Meg Whitman is starting to look like the good old days. Having said that --what are sellers to do?

It all comes down to coping with change.

I still make a good portion of my income from eBay and my knowledge and experience on eBay allows me to earn additional income from my eBay training books. I am not about to just walk away from that because I am unhappy with the new policies. With all the problems and recent turmoil, eBay is still the largest shopping platform on the web. As a seller I go where the buyers are. As long as eBay can continue to deliver buyers and I can make a profit I will continue to list and sell.

My sales are down somewhat over the past couple of months --but we are still selling and making a profit. We are clawing our way back little by little. The biggest challenge is getting our listings to come up well in the Best Match search algorithm. Every day I take a few of my listings and experiment with different keywords, shipping settings and so on.  

Here are some of the things I have learned about improving your search results in Best Match:

• Look at completed auctions for your (or similar) products that have closed successfully and try and spot keywords in your competitor's titles that you may not be using
• Make sure all of your listings have a return policy
• Always fill out the item specifics tab when listing an item
• Experiment with free or reduced shipping
• Items ending soonest tend to come up better. Increasing my listings so I always have something ending soon has resulted in increased sales --although at a higher cost in fees.

The other challenge is keeping your DSR scores high so you earn the fee discount and come up better in search results.
Since high shipping costs and shipping times earn the most negative hits to your stars there are a few things you can do to protect your DSR scores:

• Charge actual shipping costs and most importantly let buyers know you are doing that. Upon receiving payment we send an email to the buyer letting them know we have shipped their item and that we charged them the actual shipping cost.
• As for shipping time this is something you have no control over. The best thing you can do is ship items immediately after receiving payment --and again, let the seller know you have done that.

The new policies require that you spend more time communicating with your buyers. That is time that could be put to better use doing research, sourcing product and writing listings--things that could actually put money in your pocket. But if you don't take the extra time to communicate with your customers your sales and costs will certainly be impacted.

I mentioned in my last newsletter that eBay is rolling the dice with these new policies and none of us really know how this will all come out. If indeed, eBay's new policies work and result in bringing more buyers back to eBay, then we all win. If not, then eBay's management will be pressured to fix things.

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3. Is The Recession Affecting Your Online Business?

As I pointed out above, my eBay sales have been slowing the past few months --but to be fair, so have sales from my several websites and my sales on Amazon.com. eBay is down the most, but it does seem that the economic slowdown and high gas prices have affected online sales. In a technical sense there is no recession. Recession is when the economy experiences negative growth --yet the economy grew slightly in the first quarter. I think the larger issue may be inflation.  It's not only gas, but food and other staples are up as well.  Summer corn is here. Last summer corn on the cob was 3 or 4 ears for a dollar. Yesterday is was 3 ears for $2.00. That is a more than 100% increase. (Thank you Ethanol). Everything else is up as well --eggs, meat, fish, rice, etc.

When you start adding it up, consumers are seeing hundreds of fewer dollars in their pocket each month. That has to have an effect. Of course it's not only online sales --large retail chains are reporting shower sales as well.

You would think that high gas prices would help online sales, but I am not sure we are seeing that. I think the larger problem is that people simply have less discretionary income. The other factor is the high cost of shipping. High gas prices have translated into higher postage and shipping rates.

Having said all that, the news is not all bad. Economic slowdowns have a way of eliminating the weak players. As long as you are not one of them, this can be a good thing as it lowers competition. Business hasn't disappeared; it is just slowing down a bit.

So how do sellers cope with this. When business is slow the bargain hunters really come out. This means that you may have to cut prices to keep selling. If you have to do that then you need to increase your listing volume. I also use slow periods to revisit my business. I go through all of my listings and try and optimize them. I check my competitor's listings and see if they are doing anything different. Lastly I use this time to get rid of slow moving inventory. It's better to get rid of non-performing inventory even if you have to do it at a loss. then put the money you do get back into profitable products.

The economy is cyclical and all slowdowns eventually end. In the meantime all you can do is cope with it the best you can.
 

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4. Niche of The Month: High Profit Used Toys

First of all thanks to Jenni Hunt who publishes The Summer Toy Guide for help with this article.

It is no secret that toys sell extremely well during the holidays. New toys, in fact, often sky-rocket on eBay during the summer --and with the high price of gas and the slowdown in the economy, more and more moms will be looking to save money on toys. My son and daughter-in-law had a garage sale a couple of weeks ago and the toys were the first thing to go.

Although new toys can sell well all year... many don't realize that there is a huge market in selling used toys- and SUMMER is the prefect time to do it because inventory is easier to come by this time of year. Used toys, in my opinion, are quite a bit easier to sell too... and, the profit margins are often higher. The market can be just as good as new toys. Although finding used toys that are selling well can sometimes be difficult, if you have a general idea of what to look for, you can usually do well. In addition, because used toys don't usually increase in availability, they tend to remain hot sellers for longer periods of time.

Garage sales and yard sales are plentiful through the summer months - and they, along with thrift shops, provide are the perfect place for finding used toys for pennies on the dollar. It isn't uncommon to find toys selling for well under $10 that are currently selling on eBay for $40+. Here are a few examples:

1. Blues Clues Handy Dandy Notebook - selling used for twenty five cents to a dollar each... but, reselling for over $20 on eBay
    
2. Vintage Fisher Price - complete sets selling for under twenty bucks.... but reselling on eBay for over $200!
    
3. Fisher Price and Little Tikes dollhouse people - pick up at yard sales for a buck or so... resell sets on eBay for over $20
    
4. Parts to Little Tikes Activity Garden (3 plastic veggies, or mail pieces) - selling at yard sales for two to three dollars... reselling on eBay for over $20.

Considering that most sellers of new toys make gross margins of 20% to 40%, these are great markups.

Since used toys are no longer in production (usually), it can be difficult to find inventory; however, the secret is knowing what you are looking for ahead of time. Many times 'themes' sell well with used toys. For example, Fisher Price vintage items tend to resell very well. Now, there are some that don't really do too well - but, for the most part, you'll find that vintage Fisher Price can bring in a nice profit. I don't know exactly how many vintage Fisher Price products are out there - but, I imagine there are quite a few... I'd bet there are at least 50 different vintage Fisher Price items that sell very well on eBay.

Think about that for a minute... if you were selling NEW toys on eBay, you would probably discover that a few Fisher Price items are reselling for more than retail. Walking down the Fisher Price isle in a store - you wouldn't know just by looking which items are the eBay sellers. But, just with vintage Fisher Price alone, there are plenty of items that you can keep an eye out for at yard sales, estate sales (a great place for vintage toys!), thrift shops and consignment stores - and all you needed to know is that vintage Fisher Price is what you are looking for.  The point is - if a toy for a movie or television series is doing well - watch for other toys that are RELATED at yard sales.

Pros for selling used toys on eBay:

• Higher profit margins. The profit margins can be much higher because you are paying, literally, pennies on the dollar for items.
   
• Used toys hold their value longer. Usually there is a limited supply of used toys (they are no longer being manufactured).
   
• You can find inventory based on a theme rather than finding a specific item. A few examples of a theme would be: "Blues Clues" or "Disney Princess"
   
• Room to experiment. Since used inventory is so inexpensive, you can take a risk every once and a while and buy something on a hunch. A $1 investment could turn into a $30+ profit!

Now, there are benefits to selling both used and new toys - regardless, the absolute best resource for knowing what is selling on eBay... is eBay itself! Spending time browsing through toy auctions for a length of time will give you a sense of what is selling. However, don't be swayed but looking at prices for current auctions --they can be very misleading. Make sure and do a Completed Items search to see which toys are actually selling and the prices they realize.

If this profitable niche interests you, PowerSeller Jennie Hunt publishes a service called The Summer Toy Guide. I have recommended Jennie’s materials before and my readers have always been pleased with what she delivers.

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 5. New eBay Wholesale Sources for June

Recession or not, people keep having babies.  New moms are one of the largest and most reliable buyers on eBay. 

Mom Innovations is a distributor and dropshipper of dozens of baby products for the new mom.

Baby Emporio sells several unique baby items including a line of very nice fleece blankets.

The Closeout Club sells brand name merchandise, department store and hardware store closeout merchandise by the pallet load.

I have a lot of readers from the UK who are also looking for sources.  BelKoo is a UK Closeout dealer similar to the Closeout club in the US

The 4th of July is just around the corner. Meier & Frank and FlagsImporter are two good sources of flags and other patriotic goods.

The sale of cars on eBay Motors has slowed down, but aftermarket accessories are still a bright spot. Koby Products is a wholesale distributor of car stereo products. Wholesale Car Covers sells a nice line of car covers wholesale.

The Chemical Guys sell a line of car care and car cleaning products.

Roketa is an importer and wholesale distributor for ATVs, Dirt Bikes, and other off-road sports vehicles.

That's it for now.  Look for my next newsletter after eBay Live.

Skip McGrath
The eBay Seller's News

P.S. If you missed the last issue, click here to read it.