Happy, happy weekday from Oak Island beach in North Carolina. My family and I are attempting to spend 8 weeks at the beach this summer, and I have to say happy “weekday” because I have literally already forgotten what day it is. When you’re on beach time, the only time that matters is Now.
As I write this, I am sitting on a wooden chair underneath an umbrella, 10 yards from the water. The sun is shining and it’s 90 degrees, but the cool ocean breeze drifting in from the water cools the air a bit. The air smells of salt and happiness. The sand is cool underneath my feet and I am unconsciously digging a small pit with my toes – it’s like a natural stress ball for my feet. The sky is clear save for the occasional kite and the precision flying formations of pelicans and seagulls. I am naturally dark complected, but now I’m just being unfair.
Writers write, so of course I have started a blog to chronicle my beach adventures this summer called CTRL-ALT-DABEACH.COM , and you are welcome to it. I don’t want to forget anything so I blog just about every day. They say that the ocean has no memory….Zihuatanejo. That was for my fellow Shawshank Redemption fans. You’re welcome.
Luckily for you, I have very clear memories of when I began selling on eBay. Like any new eBay seller, I was inexperienced and naive when I started. eBay was simply a gigantic trial and error experiment for me for a long, long time. I was fortunate to be able to grow my business rapidly and eventually bloom into one of eBay’s largest sellers, but in the beginning I was selling unwanted Christmas presents just like everybody else (sorry Grandma – the sweater just wasn’t my style, size, or generation!)
As I look back at my 10 years selling on eBay, there is one glaring thing that I wished I had known when I started that probably would have affected my entire career on eBay. Ready? Here it is:
eBay is not your business partner. They will be just fine without you.
Now, that sounds like a harsh statement, so I want to spend some time explaining it to you.
eBay has a pretty impossible job in that eBay has to try to satisfy 3 groups of people at the same time: The Sellers, The Buyers, and The Shareholders. That’s a pretty difficult dance to do for them. Remember – eBay doesn’t sell anything. eBay simply facilitates transactions between buyers and sellers. Trust me, eBay has an army of lawyers who have proven that statement in court against very large companies over and over again. So, eBay has to manage to provide an excellent buying experience for a buyer while at the same time raking in truckloads of cash so that the stockholders can see good growth and hopefully a higher stock price.
How does eBay make money? From the Sellers. eBay charges sellers 3 times: when they list an item, again when they sell an item, and a third time when a buyer pays for the item with PayPal. Now, you would think that eBay would pay an awful lot of attention to the source of their revenue, and eBay does have account managers for larger sellers and a support team for the entire seller base – over 1 million sellers worldwide. So eBay is able to listen to the seller community if they want to.
Gather around the fire kiddies and let ole Kev tell you a story about the old days. When I became a larger seller, I joined a really passionate group of large eBay sellers called PESA – the Professional eBay Sellers Alliance. We had roughly 150 or so members who would communicate very often on message boards and we even started having independent conferences.
Anywhoo, back in those days, a common complaint of our group with eBay is that eBay loved to communicate with our members, but then ignore all of the wisdom that they gathered when they made changes. That sounds great, but it became really frustrating after a while because eBay constantly wanted our opinions on eBay issues such as the buying experience, the feedback system (OY VEY, THE !$@%# FEEDBACK SYSTEM!!!), and, of course, seller fees.
Seller fees in particular on eBay have always been a hotly debated topic with the sellers. Most of us considered fees to be really high and an actual limitation as to how much business we could do on eBay. eBay knew this, and would reach out to all of their large sellers individually to gather our opinions on fee amounts and structure. For me, insertion fees killed the partnership idea between sellers and eBay. We could never be partners because eBay made money on me whether or not I sold anything. When I was listing the entire DVD CD and Book catalog on eBay, we would have to spend $40,000 every month BEFORE WE SOLD ANYTHING, with no guarantee of sales. As you might imagine, that sucked. So the sellers, as a group, really complained about insertion fees, and eBay told us that they had heard us and were going to change them.
In those days, eBay liked to roll out changes to the sellers at eBay Live events. So one year, after spending months communicating with us sellers about what should be done with fees and feedback, eBay gathered all of the large sellers into a meeting at eBay Live and laid out their fee changes to us. What they had done was shift fees around – lower insertion fees depending on this or that, higher final value fees depending on this or that, etc. It took the sellers in the room about an hour of calculations to realize, after months of listening to us explain our business to them and how badly the fees affected our profits and sales, that eBay had just RAISED our fees.
Now, that obviously upset a LOT of the large seller community, and I can probably point to that moment as the moment that eBay jumped the shark with their sellers – many sellers went home from that conference and immediately began making plans to sell on their own websites or on Amazon or Overstock, etc. We had lost faith in eBay and it was time to diversify.
I learned an incredible lesson from this experience that I wished I had known when I started, and we PESA members began a furious debate about it. For me, the bottom line was this: eBay provides sellers with a model for selling goods on the internet, and it is the sellers’ job to construct their business in such a way that it fits into the eBay platform. We are not partners – eBay wins even if I lose. This is a one way street – it does not work the other way. In other words, your business model has to work on eBay – eBay does not have to change its’ business model to fit your business. If you look at the eBay sales model and it does not work for your business, than don’t sell there. Don’t spend years and hundreds of thousands of dollars, as I did, trying to get eBay to change fees so that you can profitably sell on their platform.
eBay doesn’t care about your business – YOU have to care about your business. If your business fails while selling on eBay, eBay wouldn’t even notice it. A lot of us large sellers saw that too late. We spent so much time trying to get eBay to work for us that we didn’t place the proper importance on broadening out our sales channels. As a new seller in 2001, I wished I had known that – it would have changed everything for me. eBay would have still been an important part of my business model, but we would have made sure that we survived without it.
From day 1 on eBay, every new seller should be looking at the eBay sales model and deciding several things:
1. Is eBay going to be profitable for me even after paying unrecoverable upfront fees and then paying final value fees? Most sellers are paying 15-25% gross fees to eBay. Are you still profitable? eBay does seem to be moving to lower insertion fees finally.
2. Where else can I sell my products?
3. What percentage of my business should be on eBay?
4. Are the seller policies fair for my business? Does the feedback system make sense? Will I be able to achieve Top Rated Seller status and thus be seen in search results? Will I have any problems selling branded merchandise?
5. Will selling internationally on eBay be worthwhile?
6. Is there room for growth?
7. Do eBay fees make sense vs. eBays market growth against e-commerce and eBay’s competitors? In other words, are you getting the traffic that you’re paying for on eBay?
If the math works, great. Go for it. There are many, many sellers on eBay doing very well. Make sure your business model will work on eBay before you seriously consider it as a sales channel. Also understand that the eBay sales model that you based all of your decisions on will change dramatically in a short amount of time, so prepare yourself to completely re-evaluate your business model EVERY TIME EBAY MAKES CHANGES.
A great example of re-evaluation happened to me big time. All of us media sellers, because of the massive volume of listings we have, utilize the eBay Stores listing format. One year, eBay raised the insertion fee in the Stores format from .02 cents to .05 cents per month per listing. Big deal, .03 cents, right? Somebody grab a calculator and multiply .03 cents X 1,000,000 listings and tell me how big a deal it is then.
eBay can be a great way to sell your goods online – there are many sellers who do great on eBay Just understand that the eBay sales model has varying degrees of success for your business depending on what you are selling, how fierce your competition is, and how your business processes are set up to sell product on eBay. Happy hunting.
Zihuatanejo.