Thursday, January 17, 2013

Things That Newbies Forget About eBay

Things That Newbies Forget About eBay
By Kerri Van Veenendaal

I have been involved with ecommerce for over 10 years and have for the last couple of years been working with businesses that are starting out on the long trek of on line retail.

The very first place many of them head is to eBay. Especially for Australian businesses this is basically the only major market place that they can try out. When I sit down with a business I ask some general housekeeping issues regarding their listings.

1. What is the cost of your listing? In other words have you factored in the listing fee plus the final value fee? Many times they have not actually calculated the full cost. They have not added the gallery fee, or the final value fee.

2. Have you ever read your eBay invoice? The answer is usually, 'well I got an email and I haven't actually opened the invoice and gone through it'. So I ask you all, how many times have you gone into a shop and paid for a service without checking the bill or actually adding up the tab? So why do so many business people just not even go through their eBay invoice. The answer is, eBay deliberately make the bill hidden. It is just there, and it is confusing, long, complicated and takes hours to reconcile. But, you must go through it. eBay are not without mistakes and they happen. If you don't find them you simply pay more.

3. Where is your money sitting that you have earned from the sales? A lot of newbies have their money sitting in PayPal. This is another problem. Like any business, your PayPal account needs to be reconciled. You need to set a particular time every day or every week when you transfer your money from your PayPal account to your business account. Then you need to reconcile this with the sales that have taken place. This is no different to reconciling your cash register in a store. It must be done for accounting and tax purposes.

4. What end margin after the fees and the time are you making with the eBay sales. Some business that I work with work on very small margins. They may only be making a 25% margin on a product. Be careful, once your eBay fees come out, and the PayPal fees, this can gobble up more than 12% of your margin. In some cases I have actually seen new e-tailers only making 2% margin which then does not even cover their cost of labour, packing and rent.

5. Hidden extras. Like all businesses the eBay model likes to upsell you. Be careful if your margins are small. Adding a sub-heading may help you product sell, but what is the point if you don't make any money. Then there is the fee for your eBay store each month, fees to schedule your item, template fees, extra photos. All of these eat into your costs. eBay recently sent out to new sellers an 'improve your performance or else' email. This was a fear mongering email that eBay sends out to start you thinking that you need to add more of these on your listing. Beware is it a clever marketing trick to make you buy these hidden extras. One of my clients actually had a 100% perfect feedback score and got an email from eBay telling them that they had to improve their performance. If you get this please realise that eBay is in the business of making money.

In all eBay has an excellent place in the online retail arena, but it is not the place to only sell your products. Remember don't put all your eggs in one basket and certainly remember that eBay can easily pull the plug on your business without your consent. So please spread your product around and be aware of your costs.

Kerri Van Veenendaal has been an expert in online retailing for over 10 years. She has consulted to many companies and is now sharing her thoughts through this article.

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