Can Sellers Still Make Money With The New eBay Fees?

The Online Seller's News, February 2010, Volume 10, No. 2

Tips, Tools, News and Resources for eBay, Amazon and independent Online Sellers
by: Skip McGrath

In This Issue:

Musings from eBay and beyond

1. Can Sellers Still Make Money With The New eBay Fees?
2. Making Money With Affiliate Marketing
3. Updates to Make Money Blogging and Ten Niche Products
4. Amazon Blows The Door off Earnings, but Stock Falls on Apple iPad Introduction
5. New Wholesale Sources for February 2010

"Success means having the courage, the determination, and the will to become the person you believe you were meant to be." ~ George Sheehan

Musings for February 2010

Karen and I just got back from our annual winter vacation. This year we decided to try Maui. We had a great time, but someone told eBay I would be out of town and of course that’s when they announced their new eBay Store fees.
I got a ton of mail while I was on vacation wanting to know my take on the fees. When I told Karen about it, she threatened to move to Tahiti for the rest of the year if I did any work on vacation, so it had to wait until I returned.  I cover this in the first article.

Let me apologize up front for this being a long newsletter, but this topic is important and I only did one newsletter last month instead of the normal two.

Buried in the eBay fee announcement was a notice that eBay PowerSellers can no longer use the PowerSeller logo, or refer to being a PowerSeller in their description, about me page or in any templates or standard language.  I predicted this last year when eBay announced the Top Rated Seller program. It makes sense – that eBay doesn’t want any buyer confusion and will promote the Top Rated Seller program instead of the PowerSeller program. Just another bit of eBay’s lost culture and one step closer to the Amzonification of eBay.

Our eBay Training webinar last month was a big hit. We had over 100 people register and about 90 who actually showed up. I know many of you wanted to attend but couldn’t, so we recorded it for you. The topic of this webinar was auction review. I got together with one of our coaches, Suzanne Wells, from our coaching program and we reviewed the auction listings that were sent in by readers. You can listen to the eBay coaching webinar here.

If you are interested in personal coaching and would like a free evaluation, Call 1-800-578-3449 or fill out this contact form to see if you qualify. We only take a small number of students at any one time. All of our eBay coaches are active eBay PowerSellers and our Internet coaches all currently run successful online businesses.

I told you about this last month but wanted to repeat it because the offer was so successful. I got a ton of email from readers telling me how good this product was. Last month my good friend, Steve Lindhorst, author of Selling on The River released a great new eBook called Amazon – The Quick and Dirty Guide.

This great little book makes a great companion to my book, How To Make Money Selling Used Books on eBay, Amazon and the Internet. In this book Steve lays out his recipe that shows step by step how he went from $0 to $2000 per month selling used books part-time on Amazon.  Some of the things he includes are:

• Where you can find LOTS of profitable books, CDs, and DVDs consistently
• How to find thrift stores wherever you go
• How to choose what to buy and what to leave on the shelf
• How to use Amazon’s Sales Rank to determine the likelihood of a sale
• What to do if you find products with no barcodes or ISBNs
• How to improve your chances of a sale
• Why you should charge a little more than your competition – and still beat them to the sale
• How to clean and repair books, CDs, and DVDs to pull higher prices

There’s a lot more. Steve calls it "quick and dirty" because he didn’t spend a bunch of time on a website or fancy graphics. It’s pretty much just "meaty" stuff that can help you make money in a short time. This is all new stuff. There is little if any overlap between Steve’s book, Selling on The River or my book, How To Make Money Selling Used Books on eBay, Amazon and the Internet. This book makes a great companion to either or both of those books.

Here is the link to read about Amazon – The Quick and Dirty Guide

I have written a few articles here and in my blog about setting up your own dropshipping operation with third-party fulfillment services.  This week I got a great article about this topic from Nate Gilmore at Shipwire. This is a comprehensive article that answers all your questions about this profitable eBay opportunity. Click here to read More Than One Way To Drop Ship for eBay.

One of my readers alerted me to this. It was something I didn’t know. Apparently if you take out an eBay classified ad and you use PayPal for payments, PayPal sets it up as a recurring subscription. Then, when you end the ad, the recurring payment keeps on going unless you contact PayPal to cancel it. So if you are using PayPal with eBay classifieds, you might want to look into that.

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Well, let's get started . . .

1. Can Sellers Still Make Money With The New eBay Fees?

eBay made a major fee announcement last week that has a lot of sellers confused. After ten years selling on eBay, I was not surprised that eBay made the changes, but I was a little surprised –and a tad confused, by what they were doing.  A lot of people rant and rave when eBay does this –but as I said I am used to it by now and have learned that the only way to get along is to go along. You can rant all you want but that doesn’t change the facts. What you need to do is change your strategy to take advantage of the new fee schedule.

There is one huge piece of good news in the changes. Fixed price items in eBay stores will now show up in eBay search. That is really good news for store sellers as it will give your products much more exposure. The other feature is lower auction-style listing fees although this is offset by the higher final value fee. But lower listing fees are always good because they reduce risk and the cost of auctions that are not successful.

Here is the outline of the announcement from eBay. I have compressed some of the details to make this more readable –but all the basics are here. Once you read this, I will discuss the impact on sellers.

eBay Announcement:

Starting March 30 the upfront cost of selling on eBay will be reduced for sellers of all sizes with our lowest Insertion Fees ever. Whether you’re running a business or selling to earn extra cash, choose from a range of options designed to make your selling easier and more profitable:

Choose the option that’s best for you:

1. New "eBay everyday" standard rates: List Auction-style FREE—pay only if it sells

The new eBay standard rates are perfect if you sell occasionally.

• List up to 100 items a month Auction-style free—no Insertion Fees—when you start your Auction-style listing under $1.
• Get new, lower Insertion Fees for all other start prices.
• Either way, pay one easy Final Value Fee of 9% of the winning bid—and never more than $50—pay only if your item sells.
• List in Fixed Price for 50¢ with Final Value Fees mostly the same as today

2. New eBay Stores subscription packages: Fixed Price with full search exposure as low as 3¢ plus great low rates for auctions

The new eBay Stores subscription packages are the right choice for most sellers with 50 or more listings a month:

• List in Fixed Price with full search exposure for as low as 3¢ Insertion Fees with Final Value Fees for the most part the same as today
• Get FREE pictures
• Get deeply discounted fees on Auction-style listings

Only one Fixed Price format

"Full search exposure" is key because starting March 30, there will be just one Fixed Price listing format on eBay. Store Inventory Format listings will automatically become regular Fixed Price listings with the same duration and renew at the new rates—and surface in search results right along with all other listings.

Subscribe or upgrade your subscription early and save!

We want to make sure you have plenty of time to get ready: Use the handy Fee Illustrator to determine which option will be most cost-effective for you. Then subscribe or upgrade now with no additional monthly fee until April.

BUILDING BUYER CONFIDENCE—NEW EBAY BUYER PROTECTION PROGRAM

• We’re making a big move to bring buyers and keep them on eBay with the new eBay Buyer Protection program. All over eBay, the message to buyers will be loud and clear: "eBay’s got you covered," so buy on eBay with the confidence and satisfaction you expect from a trusted retailer. As always, direct communication between buyers and sellers to get issues resolved will continue to be encouraged.
• The eBay Top-rated seller badge also ensures quality service and keeps buyers coming back. More and more of you are now enjoying the benefits. U.S. sellers can also now qualify for Top-rated status in more countries.

MORE UPDATES TO BOOST SELLER EFFICIENCY

• Sellers in eBay Motors Parts & Accessories will be able to create one listing with a complete list of compatible vehicles—a huge saving in Insertion Fees and time.
• You’ll be able to list multiple variations of a product in one Fixed Price listing in many more categories.
• Return policy and handling time will be required for new listings and re-listings in eBay Motors Parts & Accessories in June—editing tools make updating listings easy
• Category and Item Specifics changes are also coming with the rest of these updates.

In keeping with the commitment started last year, we’re continuing to consolidate changes that impact your business into two or three major releases a year. Get details on all the updates coming in the spring 2010 update, including the new fee structure.

As always, thank you for partnering to make eBay a thriving, successful marketplace for its 90 million buyers and sellers.

Sincerely,

Dinesh Lathi, Vice President

The most interesting change is that store listings will now appear as fixed-price listings. I have been pretty successful in the fixed price listing format since it appeared and was wondering why you even need a store anymore. Well eBay settled that by making the listings identical. The downside of the announcement is the huge increase in final value fees.  Lets do a comparison with one of my products –a barbeque firepit grill that sells for $227.

Current fee: $9.26

New 9% fee:  $20.43

Under the current schedule my final value fee is $9.26. With the new auction-style 9% flat fee, my final value fee is $20.43. The difference is $11.17 and increase of 220%.  That’s a killer!  It is still somewhat less than Amazon who charges a flat 15% in my category. Of course I also have the listing fee of $1.00 and PayPal 1.9% + $0.30 ($3.36).  So this brings my total fees to $24.79 to sell an item for $227.  That works out to 10.9%; much higher than before but still less than Amazon.

The other big change is to the store fees.  Basically if you opt to sell at fixed price through a store then you have to pay a monthly subscription fee and receive lower listing fees in return. But if you sell directly through fixed price listings without a store then you will pay a higher listing fee. The level you select really depends on the number of items you sell.

If you list only a few items per month, I would not bother with the store and just list at fixed price. But if you are listing about 50 items or more then you can save money with the store. Of course stores have other advantages as they provide a place to brand your items. Also you can save listing fees with the feature that allows you to offer choices such as color and size in one listing, without having to run a separate listing for each variation.

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2. Making Money With Affiliate Marketing

You may or may not know about Affiliate marketing, but after eBay and Amazon, it is probably the most popular way of generating income online. There are thousands of people that make full time and part time income with affiliate marketing. Just last week, The Affiliate Summit in Las Vegas sold out with over 4500 affiliate marketers attending.

There are several advantages to affiliate marketing that make it attractive to people whom want to start an online business from home:

• Minimal Start-Up Cost — Start-up costs are likely the number one reason most people shy away from the idea of starting an Internet business. Many people out there have always thought that to make money online, you have to build a huge website to sell physical products. This is a myth and completely untrue. As an affiliate marketer you receive all the financial benefits of running an online business, without any of the hassles or excess costs.You don’t need a lot of money to get started. In fact you can begin affiliate marketing on zero budget if necessary –although investing a few dollars a month can accelerate your income.  But you don’t have to invest hundreds of dollars like many other start-ups require.
• No Products Required — As an affiliate marketer you don’t need your own product because you are promoting other people’s products and you are free to choose from virtually any category or type of product.
• No shipping, support or refunds — All this is done for you by the merchant. You don’t have to invest anything more than the cost of advertising. As an affiliate, all you need to concentrate on is sending targeted traffic to the merchant’s pages via your affiliate link.
• You keep all the profits — Almost all of the profits go directly to you. There are no employees to pay, no huge hosting fees or suppliers to pay off.
• Flexibility — You can change your business model or the product line you promote at will.

I am not trying to discourage you from selling on eBay or starting a website, but affiliate marketing can be a business on its own –or a great way to supplement your income from these other methods.

Affiliate marketing may be the quickest, easiest money-making model online. With affiliate marketing you get to work "smarter" instead of "harder," because the merchant has already done 90% of the work for you.

As an affiliate marketer, your job simply involves sending traffic to the merchant along with pre-selling the potential customer on the product and reaping the rewards of commissions you earn on those sales.

I’ve recently came across a very affordable home study course created by one of my long-time readers, a fellow named Izet Hasanov which has over 5 hours of video training about affiliate marketing and driving traffic with absolutely no money down.  His program is called The Affiliate Cash Cow system.

Izet offers a basic training program at a very low cost with an up-sell to his Gold program for somewhat more. I normally shy away from offers that contain up-sells, but I have carefully looked over his program and feel he delivering a lot of value for the money.

You can check it out at affiliatecashcowcraze.com where you can watch the free short video and then sign up to see the offer.

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3. Updates to Make Money Blogging and Ten Niche Products

Two of my best-selling books over the past couple of years have been:

• Ten Little-Known Highly Profitable Niche Markets on eBay
• How To Make Money Blogging From Home

The blogging book is fairly recent (2009) but the Ten Niche Markets book was originally written in 2007 and updated in 2008. So we have just completed revised and updated versions for 2010.

When you purchased your book, you received instructions to bookmark (add to favorites) the page where you downloaded the book. If you did that, you can go back to that page and download the current versions.

The changes aren’t huge, although we did replace a couple of niches in the ten niche book for better –more profitable ones.  The changes to the blogging book are fairly minor –mostly tweaking the instructions to make them easier to follow. If you have already set up your blog, you needn’t bother getting the update because you are already there. But if you haven’t then you should get the update.

If you haven’t read either book, you may want to take a look at them. They both come with a money-back guarantee –and of all of my books, these two have generated the most positive response from readers who told me they found them easy to follow and make money. The 10 Niche Book is especially good for those of you who are struggling to find a product to sell on eBay.

Every time we do an update there are a few people who did not bookmark the page who email me for the link. If you do this be sure and include the email address you used when you purchased the book and the approximate date (month/year) because that is how we look it up. We cannot send the link unless we can verify you bought the book.

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4. Amazon Blows The Door off Earnings and Adds 400,000 new sellers

Amazon announced earnings earlier this week that shocked Wall Street.  Net sales were up 42%. Net Income (profits after taxes) were up 71% for the quarter and 40% for the full year to $902 million.  These are numbers that eBay can only lust after.

But more amazing was the increase in the number of independent sellers who now sell on Amazon.  The number of independent sellers grew 40% to over 1.6 million.  eBay doesn’t release their numbers, but I believe that is higher number of sellers than eBay has. Of course that doesn’t mean that all of those sellers are active. Amazon is like eBay in the sense that a lot of people only sell occasionally.  I would guess that 10% of the total sellers on both networks represent over 75% of the sales.

If you want to learn more about selling on Amazon, you may want to attend the SCOE meeting of Independent Amazon Sellers that will be held in Seattle this coming July. I attended last year and really enjoyed it and learned a lot.

The first day consisted of vendor meetings & presentations and networking with other Amazon sellers. The second day was a series of presentations and seminars with Amazon executives and on the last day the meeting closed with a visit to Amazon headquarters.  I found the Amazon execs to be very accessible and helpful.  At last year’s meeting they announced that they were going after new sellers aggressively and it has worked –evidenced by bringing in almost 400,000   new sellers since that time.

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5. Wholesale Sources for February 2010

If you are attending the ASD/AMD wholesale trade show in Las Vegas, February 28-March 3^rd, look for me Monday morning at 9 AM where I will be presenting a seminar about selling on eBay versus Amazon. Afterwards, I will be going through the show and would be happy to let any of you tag along with me (within reason).  You do need a sales tax number to register for the show. You can register here. I strongly encourage you to register in advance as the lines to register on site can be really long.

Now To our wholesale sources:

Master Cutlery is one of the largest wholesalers of Knives. They sell both sporting and combat knives as well as kitchen and chef’s knives. The have a lot of licensed brands including Top Chef and Iron Chef licensed products. You will have to register on the site to access the wholesale information.

Kitchen products are hot right now so I will list a few other suppliers:

Kinetic Cookware sells a nice line of cookware.

Harold Imports, Inc. sells several unique kitchen gadgets. Contact them through the site and ask for the name of your local representative. Once you get in touch with them you can access the wholesale products and pricing.

Lamson Sharp makes an excellent line of high quality chef’s knives. Again they work through local reps. So contact them through the website and they will connect you with a local rep so you can actually visit them and see the products.

Jaccard is one of the oldest suppliers of high-quality kitchen gadgets. Once again, you will not see wholesale pricing on the website, but contact them through the contact link on the site and they will set you up with their local reps who will give you catalogs and pricing.

Ok – Enough kitchen stuff. Here are some other suppliers:

The Itin Scale Co. sells and stocks all types of scales for all types of weighing applications.

Studio 500 sells a large line of artwork from posters to prints to suppliers. Click on the navigation link that says "wholesale" to access the wholesale info.

Ann’s Trading provides beautiful handbags, luxurious bedding and home decor accessories

Overstock 101 sells liquidation clothing for department stores including many name brands.

Affordable Products 24/7 is a wholesaler of Dual Sim Card Cell Phones and other unique electronics such as MP3 Sunglasses, Bluetooth Headsets, etc. If you are interested in buying their products for resale please contact them by email or phone via the website.

Well that’s it for now. See you in a couple of weeks.

Skip McGrath
The eBay Seller's News

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

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