Is the Famous Name Designer Market on eBay Dead?

The Online Seller's News, February 23 2010, Volume 10, No. 3

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

In This Issue:

Musings from eBay and beyond

1. Is the Famous Name Designer Market on eBay Dead?
2. Is it Time to Abandon Google AdWords?
3. Using Analytics to Increase Your eBay Sales & Profits
4. Is California the Next State after New York to Pass the Amazon Tax?
5. New Wholesale Sources for February 2010

"Don’t be afraid to take a big step if one is indicated. You can’t cross a chasm in two small jumps." ~ David Lloyd George

Musings for February 23, 2010

If you are thinking of attending the ASD/AMD Wholesale trade show in Las Vegas, March 1-3, I will be speaking on Monday, March 1^st. My topic is comparing eBay and Amazon for resellers.  ASD/AMD is one of the largest wholesale trade shows in the world. And Las Vegas is offering some great deals on Hotels. I am staying at a luxury hotel on a deal I got. Buy one night for $195 and get 2 nights free. That works out $65 a night at one of the top hotels in Vegas.

This issue is a little shorter than usual, as I will be doing a huge wholesale sourcing issue when I get back from the show.

One of the more interesting sites on the web to help you avoid scams is the Internet Marketing Report Card.  This in an interesting site where you can look up marketers and their programs and read independent reviews before you buy.  They also rate the top 25 marketers.  I came across the site by accident and didn’t even know I was rated. I was please to see that I was ranked 5^th overall with a grade of "A."

I even have my own review page. If you would like to read my reviews, click here.  The other cool part of IM Report card is that you can join for free and you earn points for doing reviews and commenting. Each point can be traded for dollars.  It’s not the sort of place where you can make a fortune, but if you comment on a regular basis you could earn and extra $50 or $60 per month.

I would love to have my readers leave comments and feedback, so I hope you will check it out.

AuctionBytes reported on an interesting item in eBay’s recent 10K filing with the Securities Commission (SEC). The SEC requires public companies to reveal any risks to their business. In the current report eBay acknowledged that recent changes to the platform and policies may be alienating sellers and that some sellers could reduce their volume or even leave the platform. You can read the whole story at AuctionBytes.

For those of you who are rethinking eBay and would like to try Amazon, Steve Lindhorst’s book, Selling on the River is still the best-selling book that helps new sellers get started on Amazon.  Steve continues to update the book on a regular basis so readers always have the latest info.

A couple of months ago I mentioned the new free online classifieds site, Upillar. Upillar is now the fastest growing classified site on the web with tons of eBay sellers listing their merchandise there for free.  I have already had several readers write me after the last article and say they had really good results and they like the ease of use.

Unlike Craigslist, which lists your items regionally, Upillar lists items you sell nationwide.

Lets get started

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1. Is the Famous Name Designer Market on eBay Dead?

Last week eBay lost an important legal case in France. eBay lost a lawsuit filed by luxury goods maker Louis Vuitton Malletier (LVM). The Paris Court ruled that eBay was liable for harming the reputation of LVM's trademarks, company name, and domain name. LVM had sued eBay claiming that the site was using keywords that hurt the Louis Vuitton brand.

The Paris court ordered eBay to pay damages of Î200,000 ($273,176) and to cover LVM's legal fees to the tune of Î30,000. eBay will also be fined Î1,000 for each future violation.

The $273 thousand is a drop in the bucket for eBay, but the longer-term cost is losing the revenue from all of the people selling Louis Vuitton products.  Since the fine applies to use of keywords this would preclude selling even used products.

I get email all the time from sellers who want to sell famous name designer goods and my standard answer is to avoid them like the plague. That goes for buying as well.  Despite years of efforts by eBay to police counterfeit goods on the site, they are still a problem.  Not only would I not sell these goods on eBay, I won’t buy them either.

Karen and I used to have a good business selling designer goods on eBay until 2004.  It was a pretty good market until then. But about that time so many fakes started showing up and eBay started making so many restrictions on sellers that it quickly became unprofitable.  The presence of fakes made buyers wary and they stopped bidding up prices. Pretty soon we were lucky to get rid of our stock at break-even prices, let alone making a profit.

The other big problem sellers have is sourcing legitimate products. About the only place to source legitimate designer goods is at the factory outlet stores outside of Rome and Milan. Now, I love Italy, but that is a long way to go to find products to sell.  Whenever you see the big dropshipping companies selling designer goods you can be assured that most of them are fakes.  They may be very good fakes, but they are fakes nevertheless. And if they are real, the price is so high that you simply cannot make a profit.

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2. Is it Time to Abandon Google AdWords?

Over the years since Google started offering advertising with their Google AdWords program, I have probably had more success and made more money with AdWords than any other marketing method available on the web.  But that started to change last year.  If you are not familiar with AdWords, that is Google’s pay-per-click (PPC) advertising program.

The way it works is you go to Google and create ads that will show when people type keywords into a web search that you purchase. For example, when I want to sell one of my books, I use the keywords sell on eBay and make money on eBay.  When someone types one of those phrases into a Google search, my ad will be displayed along with others.  Google charges me every time someone clicks on my ad, which takes him or her to my webpage.

The position of my ad depends on how much I bid for those keywords. When I first started advertising on Google, I could get in the top 5 positions for less than $0.20 per click.  Today if I want to be in the top 5 positions, I must pay up to $1.25 per click. That is because those keywords have become so competitive.  The problem is with the ROI – return on investment. At $0.10 or $0.20 per click I could make money.  Typically for each dollar I spent, I would see a return on sales of $1.60 to $1.75.  But now, I am lucky to get $0.60 back on each dollar I spend.

I have tried everything. I have bought training programs, hired a consultant, and revised my ads and keywords, bid on cheaper niche keywords. Nothing has worked.

There are three problems with Google:

1. Too much competition
2. Traffic is unqualified
3. Google is arrogant and unhelpful and has more rules than eBay

Last week I ran across a guy by the name of Ryan Deiss.  He has pioneered a system for advertising on Facebook. Frankly I was skeptical, but someone I trust recommended him and I decided to give him a try.  His course is a little pricy –but believe me, if you are spending even $5 or $10 a day on Google, this will save you money in no time.  It works for physical products, information products and even affiliate sales, which Google won’t let you do anymore.

What platform does he use?  Facebook. That’s right  - Facebook.  You know those ads you see on Facebook? –Well those are PPC ads.  And what I learned quickly was they are cheaper and more targeted than Google.  My ROI is not back to where it was in the early days of Google –but it is back over $1.15 and I am still learning –I have only been using it for a week.  The neatest thing about the system is that you can see results within 36 to 48 hours.

Warning – the presentation is a bit long –about 20 minutes. So come back and click this link after you read the rest of the newsletter and when you have time to fully listen because you can’t pause the presentation.  So CLICK HERE to learn how to advertise on Facebook when you are ready.

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3. Using Analytics to Increase Your eBay Sales & Profits

A lot of people have asked me about "analytics." What are analytics, how can I get them, and what can I use them for? But more importantly: Will using such a service increase my sales?

According to several user testimonials, the answer is a definite yes. In fact, you're lucky to be reading this article. Implement even a few of the techniques offered by analytics services, and your sales will increase almost immediately. Your buyers might even thank you.

Here's why it matters. As a sales person, you deal with a large number of variables. The decisions you make directly shape your income and your buyers experience. Analytics are a toolbox to create happy buyers; a way to make things easy for them.

Here are the questions you can answer to increase sales:

• When are the best days and times to list?
• Which auction template option sells the most product?
• Should I bother to sell internationally?
• How long does it take for me to make a sale from the first click to the last?
• How much do sales increase during the holidays?

Or, use analytics for problem solving:

• Why are people not bidding on my items?
• Why do people leave without bidding?
• How much did the last outage cost me?

Most people generally "feel" the answers to these questions based on their experience and implicit knowledge of their product.  What if you find out three months from now that you have been losing money … for three months?

Now, you can get the answers to these questions in much shorter time.  Analytics is a new area of expertise:  People used to care about how many visitors they got, now they should care about what visitors do.

I recommend Sellebrity Analytics. First of all, the site is 100% free if you have 50 concurrent listings or less. If you have more than 50 listings running at any given time, you will need to upgrade starting at $4.99 per month. You can also manage several user IDs with one login, starting at $9.99 per month.

Sellebrity Analytics claims not to hurt your sales in any way. For example, appending the small 88 x 33 tracking counter to the very bottom of your listings will not result in an unfavorable change to Best Match because you are not changing the description.

Here is a testimonial from eBay user "ladydaysvintage:"

"Sellebrity has helped me a great deal. I'd pretty much stopped selling international. Your site showed me how many international sales I've missed out on due to high shipping. I made some adjustments, offer lower cost shipping, and international sales have increased. So I am very pleased."

I contacted Sellebrity and asked them if they would make a special offer for my readers and they agreed.  They offer 3 months free data storage under their free program. However, if you use this link to join, you will get six months free.

This one is a no-brainer. It’s free and it works. I can’t see any downside.

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4. Is California the Next State after New York to Pass the Amazon Tax?

Even though Amazon is located in Washington State, The California state senate passed a bill requiring Amazon to start charging sales tax on purchases shipped to California residents.

The so-called "Amazon Tax" was included in a $5 billion state budget package. The legislature estimates that taxes paid by Amazon, Overstock.com Inc. and other online retailers would add $107 million annually to California's budget. Gov. Arnold Schwarzenegger said last year he would veto the measure and he is said to still be against the tax plan. So we will see if he keeps his promise in light of California being on the verge of bankruptcy.

For those of you who are not familiar with the sales tax law, most states, including Washington State where I live, require sellers to collect and pay sales tax on merchandise shipped to residents of their own state. But sellers are not required to collect and pay sales tax on sales and shipments out-of-state.

In the days of traditional retail, most everyone shopped at stores and malls in their own state. But today, over $400 billion in retail sales take place on the Internet and the states are not getting their piece of the action. At 8% average sales tax, that is $32 billion in taxes that are not being collected.  So almost every state legislature in the country is looking for a way to get their share.

Can you imagine what it would be like if at the end of the month, you had to sit down and calculate sales taxes for every sale you made in every state and then write checks to all of those states. It would be nightmare and would put most small and individual sellers, including eBay and Amazon sellers out of business.

Companies like eBay, Amazon and Overstock are fighting the legislation because it would impact them the most since their business depends on individual sellers. On the other side are online giants like Wal-Mart who support the idea, as it would eliminate competition because they don’t deal with individual sellers.

Eventually the states can’t really affect this on a large scale, which is why they are pressing their members of congress to pass national legislation to fix the problem. And the congressmen (of both parties) are paying attention. My local congressman, Rick Larsen (D) seems to support not only this legislation but always seems to come down on anything that sticks it to small home based businesses. There have already been several bills in congress aimed at small sellers like us. So far none of them have gotten very far. But as both the state and federal governments continue to overspend and go further into debt, they will be looking for additional ways to tax us.

Of course there is one other tax risk on the horizon.  Most of the pundits in Washington DC are betting that President Obama’s Budget and Taxes Task Force will recommend a national sales tax or a value added tax like they have in Canada. And this tax would hit every Internet reseller regardless of what state they live in.

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5. New Wholesale Sources for February 2010

This month we welcome a new partner, Wholesale Central. They have provided us with a new wholesale search Engine for our readers. You can use Wholesale Central to search for wholesale suppliers across 50 different Categories.

The Gas Gripper is an innovative product for cars. The website is retail, but click on the link that says Distributors and you will get an email address to email for wholesale pricing information.

Spring is coming and people will be riding their motorcycles again. The Jafram Company carries a complete line of riding gear.

Genco Marketplace is a huge liquidation supplier to many eBay sellers.

The HOMIER Company is a large wholesale distributor of a wide variety of home, garden and hardware products.

OPTEKA, Inc. is a wholesale distributor of photographic equipment such as lenses, lighting and tripods.

Wedding dresses are big business on eBay all year around, but really big from March to July. And a lot of wedding companies went out of business during the recession. So Topper International liquidators have a huge supply of brand new wedding dresses at below normal wholesale prices.

Unilution is a large importer of electronic products located in Georgia.

Tool Logic has a great line of tools and gadgets aimed at men.  Click on the link that says Become a retailer and register to get wholesale information.

That’s it for February.  I’ll have a special wholesale sourcing issue in early March when I return from the ASD/AMD Wholesale Trade Show in Vegas next week.

Skip McGrath
The eBay Seller's News

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

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