It is more complicated than that of course but she estimates that a maximum of two out of three listings fetch bids first time arround.  The remaining items, when relisted, again sell two out of three, and so on.  As long as you know your exact costs and profit margins this is a very good way to test new products.  In fact knowing your full costs and profit margins is key to selling successfully online be that on eBay, Amazon, or any site.

Sell successfully online

Sam from Hong Kong has asked me about my last post.  He wonders if I ever deviate from my rule that I want to make 200% profit from goods I sell on eBay and Amazon.

He thinks that I am looking for too much profit and that if I bought with a lower profit margin in mind I would sell more and so make a greater overall profit.

I do deviate from the 200% profit rule if I know that the goods will sell easily and quickly.  I have to take a lower profit on my main ebay line as it is price sensitive.  Others are selling the same line of goods as me and I beat them on price and my feedback alone.  So my margins are lower but the stock turn around is quicker.

Assume that a widget costs you £100 and that you stand to make £5 gross profit but it takes a year to sell.  If you had that money in a bank you could have made £5 in interest and it would have been safe, no risk of losing the money (assuming that our governments continue to underwrite the banks).  In this case why bother risking the money in stock that you may not sell?  You would be better advised to leave the money in the bank (remember, you need to deduct all shipping and fees from the gross profit).  If your gross profit was £200 for stock that costs you £100 then, obviously, buy the stock and try to sell it.

However, if you can buy 20 widgets at £5 each selling them all for a net profit of £3 each in a week and keep buying new ones to sell every week then a lower profit margin makes sense.  That is about turnover and I will talk about that in a later post.

Sell successfully online

The other week Jane and I went away for the weekend (it was lovely, thanks for asking).  While we were enjoying a very brisk (i.e. cold) weekend on the North East coast of England I found a copy of a book called The Letters and Diary of Kathleen Ferrier that was in excellent condition, except for one thing.  The frontispiece had been torn out of it.  If it was intact it would have been worth £40, with this damage it was worth £6.  As I paid £1 I still made a nice profit on it (at least in percentage terms).

However, it got me to thinking.  My two general rules of thumb are never to pay more than 1/3 of what I think I can sell any item for and only buy items in the best possible condition.  This ensures that I make a reasonable profit and that I do not have too much of my working capital tied up in slow moving stock.  It also ensures that a collector interested in what I am selling will always consider my stock and come to trust me as a seller.

Selling goods in good condition helps to build both my profit and reputation.

I read a couple of interesting things recently.  The first is an article on Time.com about John Donahoe the CEO of eBay and the driving force behind the recent (and dramatic) changes to eBay.  Read it here. The second thing I read was about some research done by Channel Advisor.

We all know that times are hard, we have seen the recession coming from the first time the scandal of people who could not afford it borrowed from those who did not have it broke.  So it comes as no surprise that the rate of growth in online sales has declined.  Channel Advisor says that in the third quarter of 2008merchant sales at Amazon was up by 45% (year on year) and eBay’s by 7%.  Time says that eBay has 84.5 active users and Amazon 81 million customers.

What does all this mean?  The my main conclusion is that Amazon is catching up eBay very quickly (remember that that 45% growth comes from a smaller base line) but that eBay is still ahead, at least for now.  Now more than ever can you really afford not to look at selling on Amazon as well as eBay?

My second conclusion is that the Channel Advisor figures explain why Donahoe has been acting so quickly to change the cost base and direction of eBay.  Will his changes work? we can only wait and see.

I have to say that over the last few weeks I have found that going to car boot sales at 7a.m. on freezing Sunday mornings a bit dour.  Sometimes turning over and going to sleep again was very tempting.

Selling successfully online is not easy.  Anyone who says that it is probably does not do it.  Online selling is great, as we all know, but demands that we keep a focus on what we are doing and why.

There are 4 things that we need when we embark on a successful selling career online.

1.                  Honesty, only if we are honest, to ourselves and our customers, will we succeed.

2.                  Good products.  Sell tat and you will fail.  Always strive to sell better and better goods.  Not necessarily more expensive goods but better quality.

3.                  Tenacity.  Turn over on Sunday mornings and you can kiss your successful online business goodbye.

And, last but by no means least;

4.                  Vision.  More specifically, a vision of why you are selling online.  What do you want and why?  Take time to write down why you are selling online.  Be as specific as you can be.  Do you want to quit the day job?  Do you want to make £1,000 in 10 days?  Do you want an extra £500 a month?  All are possible but you need to know, understand and believe your real motivation.  If you do not know why you are doing something you will stop at the first obstacle.  If you do not have a target how do you know if you are getting there?

What the mind of man can conceive and believe it can achieve.

Stability.

OK, hands up anyone who fears for the future viability of either eBay or Amazon?  No one?  Absolutely right, they are both here to stay.

However, stability is more than the question about the corporate survival of either of these global brands.  It is about the stability that we as sellers enjoy.  How often have you logged onto eBay to find yet another announcement about changes?  Has that happened when logging into your Amazon seller account?

Result; Amazon wins.

Score

Amazon            5.5

eBay                0.5

Formats

Auctions – There is no contest here, literally no contest.  eBay wins!

Fixed Price – Certainly until recently there was no real contest here, Amazon was king.  However, 2008 has seen eBay move more towards fixed price listings while downplaying auctions.  The “best match” searches being just the last in a series of moves towards encouraging corporate sellers rather than hobbyist sellers.  So far, however, the advantage still lies with Amazon.

Result; Draw

Score

Amazon            4.5

eBay                0.5

This is a short series of posts comparing selling successfully on eBay and on Amazon from the seller’s perspective. This time I am looking at buyers and their expectations.

The buyers on Amazon and eBay are different.  Amazon buyers are loyal to Amazon many would not dream of buying on eBay.  eBay buyers often feel that Amazon sellers charge too much.  On eBay they expect less, post an item within a week and the buyer is happy.  Post an item sold on Amazon more than 2 days after the sale and the buyer will complain.  Amazon buyers are more expectant and demanding.  Depending on your point of view, this is either a good or a bad thing.

Personally, I think that customers with high expectations are a good thing.  It drives bad sellers out of the market.  Conversely it can make them a pain to deal with.  They do not expect to have to email to ask if their purchase has been posted, and neither should they.  It is just that they will do it after 24 hours, eBay buyers will do it after 96.

I enjoy working with eBay buyers there is more interaction than with Amazon buyers.  Consequently, the average time spent on eBay sales is less than on Amazon sales,  From the point of view of your business the advantage has to go to Amazon.

Result; Amazon wins.

Score

Amazon            4

eBay                 0

Question: How much does shipping cost on eBay? 

Answer: As much as the seller thinks he can get away with!

Question: How much shipping cost on Amazon?

Answer: As much as Amazon thinks is reasonable!

Which do you prefer as a seller?  Some eBay sellers use a lower price for their items and charge high shipping fees to boost their profits.  I am against this practice but it goes on and some buyers seem to be taken in by it. 

 With Amazon the shipping costs are constant between sellers and so it is easier for the buyers to make comparisons.  Usually, the Amazon shipping fees are reasonable for the seller.  If they are too high then you can reduce the price of the item.  If they are too low then the price must reflect that. Either way it does mean that the seller has to know the true cost of shipping.

Advantage;  Amazon

Score;

Amazon       3

eBay            0

Sell successfully online

This is a short series of posts comparing selling successfully on eBay and on Amazon from the seller’s perspective. This time I am looking at the payments methods and costs.

Ebay has its own proprietary payment system PayPal. It is quick and fits seamlessly into the auction process. You may also accept alternative methods of payment up to set limits (£500 in the UK). For all payments collected via PayPal there is a charge (1.4% to 3.4% + £0.20 GBP). Sellers send invoices, track whether payment has been made and chase non payers. Funds are released to the seller on request to Paypal.

Amazon collects the payments for sellers. There is no alternative, and no charge for using the service. Amazon invoices and collects payment and chases non payers. Payment is not realeased into the seller’s account until it is cleared by Amazon. The seller does not become involved in payment tracking or chasing non payers. Payments are made to the seller’s bank account every 2 weeks for the total of all sales made in that period.  There are no charges for Amazon collecting the payment.  However, for a true comparison of overall charges I will be posting another piece in a few days (when I have done the maths…..)

The Winner is: Amazon

Aggregate Score

Amazon 2

eBay 0