Has The Good Ship eBay Lost It’s Rudder?

The eBay Seller's News, June 25, 2008, Volume 8, No. 11

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

In This Issue:

Musings

1. Has The Good Ship eBay Lost It’s Rudder?
2. Is There Still a Place on The New eBay for Small Sellers
3. Tips for Improving Your Detailed Seller Ratings
4. Niche of The Month: Selling Used Books on eBay, Amazon and The Internet for fun –and lots of profits
5. New eBay Wholesale Sources for Late June 2008

"Tough times don’t last..but tough people do." 
~ Gregory Peck and Robert H. Schuller

Musings

This issue’s quote is often credited to Robert Schuller but it was also quoted often by Gregory Peck. They were both about the same age so I can’t really tell who actually said it first but it is nevertheless true today. These are “tough times” for eBay sellers.  But, the tough sellers will last.

Let me apologize in advance for this being such a long issue, but there is so much confusion and consternation in the eBay community that I want to try and cover all the bases for my readers.

I don’t know how many of you read my blog.   My blog is mostly about impressions and some news. AuctionBytes by Ina Steiner has more news and updates and covers several things that I did not. Another good eBay Blog is eBay Ink by Richard Brewer-Hay.

I have been to every eBay Live since the first one In Anaheim in 2002 and this was the least exciting, least memorable and the smallest one since that first one. It was contentious too. The rumored protests never materialized but there was plenty of shouting and booing in meetings with eBay execs. Several vendors cancelled and the overall number of vendors was down significantly from Las Vegas and Boston. In the past it took all three days to see everything in the Solutions Center (That is what eBay calls the exhibit hall). This year I saw pretty much all of it within a few hours.

Cost cutbacks by eBay were in evidence: Fewer seminars and panels, fewer events overall, lower cost food and entertainment and fewer goodies and giveaways.

Everyone knew that this eBay Live would be contentious. Sellers are not happy with the recent changes so I was surprised that eBay would choose to cut costs and excitement at this time. eBay not only has a PR problem with its customers (with us, the sellers), the atmosphere has spread to the general public and the investment community as well. Stories in the general press used to be about weird things selling on eBay. Today the stories are about all the unhappy campers. It’s starting to take a toll. Take a look at eBay’s 5-day stock chart below:

I sold my eBay stock last December so I wasn’t able to attend the stockholders meeting in Chicago during eBay Live. But I still follow the stock. eBay Stock is down about 7% from the annual meeting a few days ago and down 29% (from $34.20 to $27.73) since January.  eBay carries a lofty Price to Earnings (PE) ratio of 88. That is usually given to high growth companies –companies who can grow earnings at 20% to 25% rates or more. I don’t see that happening and apparently neither do the smart investors as the trend lines are down and down days appear to have heavier volume than up days. That is usually a sign of what the smart money is doing.

We do know that listings are up over 35% and I spoke to several large sellers who all say their business is great. Personally my business which was down the first part of the year is now recovering smartly –so yes I am confused. eBay could surprise the market with a good earnings statement in a few weeks after the quarter ends. Proving that the controversial changes are working would go a long way towards calming sellers who are skeptical. A solid sales and earnings report could do that. So, although I am not optimistic, let’s hope I am wrong and eBay hits one out of the park.

There was one bright note from eBay Live. Lorrie Northington who heads up the eBay Marketplace said at least two times that new and small sellers are still important to eBay and that she still hopes that eBay can be a place where people can learn to sell and make enough money to quit their day jobs. I am covering this topic in detail in the second item, Is There Still a Place on eBay for New and Small Sellers.

Last week I told my blog readers about the FREE Dropship Information resource called Drop Ship Focus released by World Wide Brands. Drop Ship Focus was a product that recently sold thousands of copies for $97. WWB is giving it away free as part of their promotion for their newest product called The Whole Sale that was released last week. The promotion for The Whole Sale consisted of a series of 6 excellent videos about product sourcing for eBay, Amazon and small web site sellers. I strongly suggest all of my readers watch the entire video series. Yes, this is quite an investment of your time, but there are tons of great material in there. But if you have seen the videos or just want Drop Ship Focus, then just watch Video number 4 you will see a link to download the information. Here is the link to the video series. If you just want to read about their new product, The Whole Sale, you can use this link.

If you already purchased their OneSource product then the new product The Whole Sale will be offered at a discount price. If you didn’t, then the new product contains both. I have had a look at The Whole Sale and strongly recommend it to my readers. This is the only wholesale information resource that I currently recommend to my readers in addition to my own. If you are interested in selling on Amazon, one of the bonuses that comes with purchase is Two (2) months waived fees (a value of $79.98) when you register for the Selling on Amazon program. 

Here is the link again to The Whole Sale.

I ran into Steve Lindhorst at eBay Live. He is the author of the now best-selling book, Selling on The River. (Since I recommended it a while ago I hope I had something to do with his sales). Selling on The River is the best book out there for small sellers who want to learn how to sell on Amazon.com. It’s a great read and I strongly recommend it to my readers. Steve is both a really nice guy and a very smart guy. I think you will like his stuff. A slogan on his shirt said it all, “From the Bay to the River to the Moon” as he is also looking into e-crater, aka the Moon.

PESA, the Professional eBay Seller’s Alliance was originally only open to top Titanium PowerSellers. But they have recently opened their membership to all. PESA is a great organization and has the ear of eBay management so they represent your interests and they also put on some great meetings, conference calls and training functions. And there is a board where you can post questions that will be answered by seasoned sellers.

For a limited time PESA is offering a 90-day trial membership for just One Dollar ($1). Here is how to get it. Go to their website at www.gopesa.org. Step through the membership sign up. When you get to the final page, enter the coupon code “Live” (without the quotation marks) and it will process your membership for just a buck.

WARNING – Please pay attention to this! It is only a few days to the first of July. DON’T FORGET, that as of July 1^st you can no longer have any active links to outside content or websites in your auction listings, about me pages, reviews and guides and eBay blogs or posts. And you can no longer place your email address in auction listings. I spoke to the Trust and Safety people at eBay Live and they told me they would be doing strict enforcement of this provision. A lot of you who are my affiliates have links to my products on your About Me Page. I sent an email to all of my affiliates reminding them to remove them. But email sometimes get caught in spam filters, so I wanted to let you know again.

eBay also announced that they would soon limit active content in auction listings. What this means is no animations, java script or flash code. Authorized eBay developers will be given exemptions, but everyday users like you and me will not be allowed. This will not roll out for a while as the developers need time to make changes, but if you have any code from third parties that are not certified eBay providers, then you should remove it.

Let’s get started with this month’s articles.

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1. Has The Good Ship eBay Lost It’s Rudder?

Everything changes and eBay is no different. When I was a young man I spent a few years in the US Navy. One of the ships I served on had three different Captains during my time. All of them were competent and all of them were different. When a new captain came aboard we knew things would change, but we didn’t know how competent the Captain was until we had sailed under him for a few weeks or months. That is kind of where we are with eBay now. There is a new Captain at the helm. We know he will make changes –every Captain does. But we don’t yet know if he is competent –only time will tell.

The new management team at eBay is essentially running a grand experiment --and we (the sellers) are the subjects. If the experiment is successful we all win. There will be more –and happier buyers. We sellers will make more money. And, the captain and his lieutenants will cash in big on their stock options.

Let’s look at some facts that led up to the changes:

• eBay listings and conversion rates were falling.
• Sales growth had slowed down.
• New buyers were deserting the site after one or two experiences.
• Fraud, although vastly overstated by the media, was still a problem.

• There were plenty of inept or even immoral sellers whose actions drove buyers away.
• The feedback system was broken. Non Paying Bidders were leaving underserved feedback, some sellers were engaging in feedback extortion, feedback farms were selling feedback for 99¢ and so on.
• Fakes and counterfeit merchandise was a real problem. We used to sell authentic designer handbags, but had to stop as the faked drove down the price of the real goods.

As eBay matured, it was inevitable that the quirky little company that the press loved to write about and comedians used to joke about would one day grow big and change. No I don’t like the changes, and I am not sure all of them will be good for the platform. I miss the old days. eBay was all about creating an experience where real people could sell to other people and it looks like eBay is moving away from that. Oh, individual sellers will still sell to individual buyers, but after eBay finishes implementing their changes, the buying experience will be more identical and streamlined. A lot of the quirkiness and individuality will disappear –and with it, much of the fun. That is what is really behind all of the anger and passionate debate.

There will still be an opportunity for new and small sellers to make money (see the next story), but it just won’t be as much fun. When you cut through all of the comments being posted in blogs and on the eBay boards, that is the heart of the issue. eBay’s management has started a massive cultural shift that will require all of us to rethink our business. It’s as if the new Captain of a submarine told the crew that we are going into dry dock and converting the boat to an aircraft carrier. That’s not what we signed up for, but that is where the Captain is taking us.

Despite all the problems eBay is still the largest online shopping site in the world, far ahead of Amazon which is number 2.

eBay had to act –but I am not sure they are going in the right direction. They have access to a lot of data and information that we sellers don’t. Although all of the top executives have golden parachutes to protect them financially if they fail –they make a lot more money if they win, so I have to assume they know what they are doing.

So has the good ship eBay lost its rudder? I don’t think so. Not yet. But there may be a few loose screws that need some attention.

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2. Is There Still a Place on The New eBay for Small Sellers

The short answer to this question is YES! But, the longer answer has a few caveats. The days when you could just slap up an auction listing for just about anything are long gone. So are the days when small sellers could jump into selling main line consumer products (electronics, name brand apparel, hot games and media, etc.). Those product categories are dominated by large sellers with deep pockets and resources that most of us just don’t have access to. And the large sellers are swamping the listings so the chances of your listings being found are slim.

Popular consumer products, media and automobiles make up the majority of the $64 billion worth of stuff sold on eBay. But all the other stuff still represents a nice chunk of business –and opportunity for small sellers.

eBay doesn’t break out their figures, but I would estimate that art, antiques, collectibles, used merchandise and new, niche product, merchandise still account for at least $20 Billion and perhaps more. This is the sweet spot for the new and small sellers.

One of the really neat things about going to eBay Live is that so many of my readers spot me and come up and talk to me. One of the first questions I ask them is “what are you selling on eBay?” I would give you the answers but that would be unfair to them as they are selling in carefully researched niches that are working for them. But when I got an answer to that question, I was often surprised. I heard of dozens of niches for both new and used products that I had never thought of. With all the problems, policy changes, the downturn in the economy and everything else that is going on, there are still thousands and thousands of small sellers succeeding on eBay.

I can tell you about one niche because the seller told me he has moved on to something else but this is how he got his start on eBay. He became a Silver PowerSeller selling used books on mathematics, chemistry and physics. He has now found an even better niche and is expecting to qualify for Gold PowerSeller this month. One of the reasons I mention this is that the next article is about the niche of selling used books and my new e-book on the subject.

eBay’s strategy is to deliver a more streamlined selling experience –much like Amazon, but unlike Amazon all sellers will still have access to coming up in search as long as they deliver a positive shopping experience as judged by their Detailed Seller Ratings. This has a good and bad side to it for new sellers.

On Amazon, new sellers can only sell merchandise that is already offered by Amazon itself or other large Amazon sellers. The Amazon results and the major sellers come up first in search results. People only see your item if they click on a subsidiary link for additional items.

On eBay all sellers come up separately in search results and sellers with high DSR scores will be advantaged in search results. Until now a new seller –or any seller for that matter, needed 10 DSR scores in a 30-day period before they would qualify. But starting next month all sellers –not just PowerSellers, can be advantaged in search if their DSR score is at least 4.6 and they have at least 3 DSRs in the prior 30 days. The good news for small sellers is that it is easier for us to maintain high DSRs than the big guys. When you are listing and selling hundreds or even thousands of items a week, you are relying on automation and employees. Your chances of making a mistake are much higher. Indeed, when eBay threw the switch on the new PowerSeller rules and standards over 50% of the top 100 sellers on eBay lost their PowerSeller status. Although some small sellers were hurt, the percentage was much lower. Small sellers were not hurt as badly as the big guys.

The bad news for small sellers is that eBay, like Amazon, will make it virtually impossible for sellers to brand themselves and to use eBay in any way to contact buyers directly and drive sales off of eBay. For the moment once someone buys from you, you get their email address so when you communicate with them you can at least capture that customer for future sales. But soon, eBay will "anonymize" (Not sure if that is a real word) all email addresses when bidders and buyers communicate with sellers. It will start with all communications prior to an actual sale, but eventually will carry over to PayPal so that you never see the email address of the buyer.

Nevertheless as a small seller you still have the ability to list items on eBay and within a narrow range you can personalize your listings and your business. And there is nothing that will prevent you from putting a card or little brochure in your packages when you ship that offers people a reason to visit your website. Every time I buy something on Amazon from an Amazon merchant, the box is stuffed with offers when it arrives. These are often coupons that I can use on their direct website for future purchases.

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3. Tips for Improving Your Detailed Seller Ratings

DSRs are here to stay. There may be changes in how eBay calculates and displays them; Intrepid shoe seller, and head of eBay marketplace, Lorrie Northington as much as said so. Changes to the feedback and DSR system have been promised before the start of the holiday selling season. A high DSR score is important for three reasons:

1. A good score will attract more bids
2. eBay gives sellers with a high average score (>4.6) an advantage in the search results
3. High scores earn fee discounts (4.6=5%, 4.8=15% and 4.9=20%)

So let’s look at how sellers can keep their scores high. eBay measures your scores in two ways but only displays them one way. Your fee discounts and search placement are based on your scores for the prior 30-days. But the score your bidders see in your feedback profile is based on the past 12 months or back to the time you started if you have been on eBay less than 12 months.

The 30-day score has a good and a bad aspect to it. The bad happens if you don’t have many total scores and you get one bad star rating, it has a greater impact. The good part is that any bad scores go away in 30-days, so you can recover quickly.

eBay has recently rolled out Seller Dashboard. Take a look two views of my dashboard below. The first one is for 12 months and the second one is for 30 days.

In the 12 month average you can see that I have some pretty good scores. Interestingly just three weeks ago all of my scores were either 5.0 or 4.9, but all of them have dropped.

When you look at my 30-day scores you can see they are lower. I am not doing anything differently. We still have friendly, detailed and complete item descriptions. We still give the same high level of customer service. We ship the same day we are paid. We do not mark up shipping and in fact over half of our items are sold with free shipping. On one heavy product with a high shipping cost, I even charge the customer less than we are charged –eating the difference out of our profit. This has actually increased sales, but our DSRs have still gone down.

Although my scores do not qualify for the 15% discount it still shows that I do. I believe that is because eBay only looks at a snapshot at the end of the month before the billing period –but I am not sure. I think the answer to the suddenly lowered Shipping Time (this was at 4.9 last week and 5.0 a few weeks ago) is due to the floods in the Midwest. I did a blog post about that the other day. I contacted UPS, FedEx Ground and they both reported East/West shipping delays of 2-3 days and 1-day delays in the rest of the country. In the past eBay has posted notices to buyers to be patient when there have been natural disasters –but although this is the worst flooding in the Midwest in years eBay didn’t post a notice this time.

I don’t know why my Shipping and handling charges score fell. I am offering free shipping on a large percent of my products and I don’t mark up shipping and handling. That leads me to believe the problem is systemic –in other words there are issues such as buyers who think 4 stars is a good score.

So how do you keep your scores up? Let’s look at each one.

1. Item as described – This is probably the easiest one to control. Even before the advent of DSRs I have always taught sellers that they should write complete and detailed item descriptions that reveal any flaws or shortcomings in the product, list all the specifications (size, color, weight, voltage, tech specs, etc.) and that all of this should be delivered in a friendly style. The same goes for your policies. I have seen too many sellers who write policies that sound like the text from inmate instructions on the wall of a jail.
   
   
2. Communication – Good communications is another thing that successful sellers excel at. One problem beyond your control could be spam filters. Another one is buyers who have one eBay address and a different PayPal email address and don’t check the other one that often. But in general you are in control of this area. We always send an end of auction email to winners. We send another email when payment is received letting the buyer know we are shipping the item and invite them to email us back if they want tracking info. We always post feedback at this time and we let them know we just left them positive feedback. Then a few days later we send them an email asking if they received their package and if everything was OK.
   
   Some of our goods are drop shipped, so we can’t put any communications in those packages. But when we ship an item from here we always have a short note inside. What we are going to start doing is get a printed card that we insert that explains the star system and telling the buyer that we are trying to earn 5 stars on every sale and asking them to give us 5 stars if they are happy and to please contact us by phone or email if they are not.
   
   
3. Shipping time – This one is more problematic. There are two things you can control. You control when you ship. Sellers who only ship on certain days of the week are going to earn lower stars. I suggest you ship any order that comes in before a certain time (Noon, 1 PM, etc.) the same day you get payment and let the buyer know you are doing that. Then ship all orders that come in after your cut off time the next day –and again let the buyer know.
   
   
4. Shipping and handling charges – I think the days of adding a handling charge are probably over. I looked at the star rating for 20 different sellers and this is almost always the lowest of the four ratings. Interestingly those sellers like me who offer a lot of products with free shipping don’t seem to have better ratings. So free shipping may be good for sales as it does make you listings come up better in the new Best Match search results, but I am not sure if it helps for getting higher stars in this segment. I have only had feedback from a couple of buyers but the most delighted are the ones who get their item quickly at a fair price. Where I have the margin, I may actually reduce my shipping charge a buck to get it below the actual cost. Also I have stopped using stealth postage. This is a service that doesn’t list the shipping price on the label. If you are charging actual or reduced shipping then I believe it is better to put your shipping cost on the label so people can see what the actual cost is.

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4. Niche of The Month: Selling Used Books on eBay, Amazon and The Internet for fun –and lots of profits

If you are wondering why I picked this niche this month it is because I have just written a new e-book on the subject. Besides small antiques, books were one of the first things I sold on eBay. I am not going to pretend to be a full time professional book seller, but I have –and still do, sell a lot of books on eBay –and more recently on Amazon. To make sure that I was up to date on all of my tips and techniques, I also consulted several professional book sellers, one of whom operates both a very successful used book store and sells hundreds of books a month online. I also spoke with some eBay and Amazon book sellers and sellers who sell on both of those as well as some other book sites.

When you think of selling books, most people think about selling modern first editions of fiction and literature. This is indeed a good area to get into –and many sellers do this, but the learning curve is very steep and this can be a highly risky endeavor if you don’t know what you are doing. Non-fiction books, however, are easy to source and sell, have very high profit margins –and with some basic learning there is almost no risk. You can start this business with nothing if you already have a bunch of saleable books to get you started as I did when I started. If you don’t have books you can sell, you can start with as little as $50, although I recommend an investment of about $200 will give you a faster start and it is actually less risky to start with a higher amount as you are less likely to make one or two mistakes that can wipe you out.

The nice thing about non-fiction books is that there are two markets: readers and collectors. With fiction the readers market is solely for cheap reading copies and the collector market is for very hard to find first editions, limited editions, signed copies and so on. But with non-fiction books, the reader market consists of people who need the information and will pay good money for it. The collector market for non-fiction books tends to be more subject-oriented –and not as fussy as fiction collectors. The other advantage of non-fiction books is that they are usually produced in far smaller volume than fiction so there are fewer of them out there. This tends to keep prices higher.

You may not realize it but books are one of the most successful collectible categories ever. Prices paid for collectible books –both fiction and non-fiction, have risen faster than almost all other collectibles including baseball cards, glass, silver, coins and even stamps. Recently gold coins have outpaced book prices due to the rise in the underlying value of gold, but that is about the only major category of collectible I can think of where the growth has been consistently faster than books. Many collectible values can be volatile, but books have always been very steady in price appreciation. My first edition, first printing copy of Atlas Shrugged by Ayn Rand purchased over 15 years ago for $300 is now worth close to $5,000. Of course that is fiction. Very few Nonfiction books reach those lofty prices but some do. Many nonfiction books that can be bought for a few bucks are now worth in the hundreds of dollars. For example, a while ago I came across a very nice book called the Art of The Puppet by Bill Baird. I didn’t know the book but had a hunch so I bought it at an estate sale for $5.00. When I arrived home and researched it I found out that Bill Baird was the puppeteer who taught Jim Henson creator of the Muppets. The book sold for almost $500.

Now of course you aren’t going to do that every day. But what I will show you how to do is find books every day at prices between 25¢ and $10.00 each that you can sell at prices from $10 to $50. This is the sweet spot in the market. It is easy to find books, easy to sell them and you can make markups of 200% to 500% and even more.

There are plenty of free articles on the web about selling used books if you search for them. But I have put my strategy, tips and techniques down in my newest e-book, How To Sell Used Books on eBay, Amazon and The Internet. Click here to read about my new book.

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 5. New eBay Wholesale Sources for Late June 2008

When I was at eBay Live I met a lot of folks who are doing well selling liquidation and closeout merchandise. The biggest liquidation dealer that deals with eBay sellers is Liquidation.com. Every once in a while I get an email from someone who had a problem with Liquidation.com. The problem is not Liquidation, but the people selling on Liquidation. They are a lot like eBay. There are different dealers selling wide varieties of items. Most of them are completely honest, but just like eBay a few bad apples sneak in once in a while.  Some of the goods are being sold by Liquidation.com themselves. These are usually fine. What I suggest when buying from someone else is to contact them and see how they respond. Good dealers will respond professionally with lots of information. If someone is being deceptive it will probably come through in their communication. The other thing is to check the shipping price. I have had some buyers who got a pallet load of great stuff at a great price and then the shipping cost robbed them of any possible profit.  Having said all that, I can tell you that a lot of successful power sellers deal with Liquidation.com and make really good money reselling the goods on eBay.

When dealing with any closeout dealer, be sure and understand the quality, condition and type of merchandise you are getting. Do NOT buy returns or warranty returns. These products are highly problematic unless you can repair them. Some of these companies sell right off of the web, while others you have to contact to get their stock lists.

Here are some other popular liquidation and surplus dealers:

Topper Liquidators

Countryside Closeouts

AllStar Closeouts

H&J liquidators

RhinoMart

Now here are some other sources for this month:

Elms Gifts Wholesale is a wholesale supplier of Licensed merchandise like Coke, Jack Daniels, John Deere, I Love Lucy, Harley Davidson, Elvis, Betty Boop and so much more. And they have a free dropshipping program.

Hollywood Licensed Products-n-Bags specializes in licensed character backpacks, designer inspired handbags, luggage, school backpacks and licensed bedding.

Real Action Paintball sells paintball guns, supplies and gear.

All Star Lighting is a wholesale distributor for all types of lights including the compact fluorescence bulbs and environmentally correct lighting products.

Sugar Street Weavers manufacture a delightful selection of woven cotton coats and jackets, cardigans, totes, accessories, and more - all 100% American made! The website is open to qualified resellers only. To access the online catalog, please register your store. Registered users may login to view products and place wholesale orders online.

Siskiyou specializes in the finest cast pewter products available. From belt buckles to glassware, and jewelry to licensed sports products.

Motorcycle Closeouts doesn’t sell motorcycles but they do sell gear –helmets, clothing, gloves and accessories. This is actually a retail closeout operation but the prices are such that you can sell some of the items on eBay. Also, if you see something you think would be a great seller, you can email them a get a quantity price that should be lower than on the website.

That's it for this month.

Skip McGrath
The eBay Seller's News

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