posted on December 2, 2002 08:25:18 AM new
After going nuts on ebay a few years ago (working a full time day job + several hundred auctions a month), I've taken it easy over the last couple years. Taking the summers off to play golf and only listing items from the end of November to the beginning of spring. I must say I'm impressed with some of the changes since last year. It seems to me that Paypal has evolved into a very feature rich site. I was not very happy with them after they started charging fees. But I really think they have improved a bunch. Now that it is integrated with ebay it's really cool. I purchased a couple items recently and it couldn't have been easier. Buy it now -> Paypal -> Done. On three of my auctions that ended Sunday. I was paid before I had chance to send an end of auction email. It seems that things are evolving nicely on the technology side of ebay, now what can we do about the fees we pay?
posted on December 2, 2002 12:15:26 PM new
People are always complaining about the fees, but fees are a fact of life. With paypal and ebay, you are probably paying around 8%. I look at it this way. Some of the things I sell are collectibles, and if were to consign it to an in person auction, I would be paying 15% fees to sell my item. Paypal is no different than a merchant account in that I pay about the same fees for both, so I don't find paypal unreasonable at all. With the debit card cash back, it is actually a good deal. I leave on vacation in 10 days, and almost every single charge for a 3 week vacation will be done on my paypal debit card so I can get the 1.5% cash back. Thanks Ebay!
posted on December 2, 2002 12:38:32 PM newahc3 - You're right. I said that last part kinda tongue in cheek. When you equate fees to overhead they are reasonable. Ebay has definitely changed the way people do business.
posted on December 2, 2002 12:46:07 PM new
You would be surprised at how many people complain about it though. Sure, I don't like paying fees either, but considering how many eyeballs I get to see my auction, I find it on the reasonable side. I suppose if someone wants free, you can sell at Bidville, and cash only.
posted on December 3, 2002 05:37:42 PM new
ahc3, you need to check your numbers out.
My numbers run approximately 15%-17% (which
includes listing fee, FVF and PayPal fee,
while higher % includes use of 10-day and
BIN fees). My average sale price per buyer
hovers around $10.00 per item. I ran the
numbers on several deals, and your 8% figure
was never even close...
And I also think those fees aren't that bad.
I would prefer to pay eBay $0.10 flat rate
to list my items and a flat 10% FVF on all
items, but it is their site and I can only
suggest such things. PayPal's fees range
between 4% and 6%, with 5% the most frequent.
This is reasonable, and I am paid faster.
---
"Cannot say. Saying, I would know. Do not
know, so cannot say". -- Zathras (Babylon 5)
posted on December 3, 2002 05:43:29 PM new
Yes, you will pay more on a $10 item, no question. Also, probably half of my buyers use paypal, the rest send checks or money orders.
I calculated $20, and with about half paying paypal and half money orders/checks, that is more like 9% in fees then. I rarely do 10 day or BIN auctions. If you have a lower priced item, and use 10 day and BIN, then it will be considerably higher. That will get to the point where the fees start to become questionable as to the profitability of the transaction. At $10, with all the extras, you are paying 10% to ebay alone.
posted on December 3, 2002 06:31:35 PM new
I can't complain either. Today I got my eBay bill which was lower than my mall space and made much much more. Even with the AW and paypal fees I do much better here. I am starting to use my mall space as a close out of the items I don't sell on eBay. I had 4 auctions end Sunday night and by the end of the night I received all of my payments and mailed my packages on Monday. The only thing that takes the time is transferring funds from PayPal to my bank account.
posted on December 3, 2002 06:48:24 PM new
"considering how many eyeballs I get to see my auction, I find it on the reasonable side."
Don't you learn anything from the Dotcom fiasco? Eyeballs don't matter, buying does. 100 eyeballs means nothing if no one buys, or worse, you have a low start bid and get one bid, yet had 20 lookers. Very common for many sellers.
posted on December 3, 2002 06:58:06 PM new
That doesn't make sense quickdraw, this isn't a dotcom thing, this is a business thing. Say you have a B&M store located in your cousin's barn, outside of town, out of view, and it does not advertise. Compare that to having a store at a busy mall. Which store is going to have more business? It certainly costs more to have a store at the mall, and while it might be free in the barn, unless there are extraordinary factors you won't stay in business long.
If traffic to a commercial site does not matter, then location should theoretically make no difference.
posted on December 3, 2002 07:18:54 PM new
ahc3, that doesn't make sense. Say I have a store in a mall, I may have to jack the prices high to cover the overhead, and hardly anyone will buy, so I lower it to a more reasonable cost. Ok, no profits, great! Does more eyeballs keep you in business at that mall?
Or, move across the mall where the costs are 15% less, lower your prices 15%, people notice your lower prices, and flock to your store, rather than the competitor in the mall.
posted on December 3, 2002 07:57:14 PM new
Agreed quickdraw29. The only ones who made off well with "eyeballs" were advertisers. Now the model is pay-per-click because clients learned they needed a better return on investment.
If you get a lot of traffic and you don't sell it... there's something wrong. Is it the price? description? picture? layout? category? whaaaat?
posted on December 3, 2002 08:42:26 PM new
I would love there to be a store across from the mall that had less traffic but you could still be in business, but there really isn't much competition to ebay. That store does not exist yet, I hope it does someday...
I still think in an online auction environment, more people visiting = more sales. While I usually use yahoo for sales instead of auctions, when I do an auction there, I am lucky to get one bidder. Ebay, you never know what an item will go for. It has more traffic, more traffic is good. It's worth it from my perspective to pay ebay 5.25% + 30¢ to sell an item instead of Bidville, where it is free, but most likely it will not sell.
posted on December 3, 2002 09:15:04 PM new
"ahc3, you need to check your numbers out.
My numbers run approximately 15%-17% (which
includes listing fee, FVF and PayPal fee,
while higher % includes use of 10-day and
BIN fees). My average sale price per buyer
hovers around $10.00 per item. I ran the
numbers on several deals, and your 8% figure
was never even close... "
Not to butt in, or sound daft -- but I think a lot of eBay sellers suffer from myopia with regards to thinking their business is the norm, when (if you ask me) eBay sellers own an extremely diverse group of businesses.
For instance, my eBay fees run at right under 3% of my total revenue and that includes FVF, Listing Fees and Fees for unsold items, -- Pay Pal fees are a shade over 1.5% -- but when you factor in Cash Back from purchasing done via my Pay Pal Debit Card it's under 1% (E.g. A lot cheaper then a merchant account).
For the last invoice -- I earned $111+ in net profit for every dollar I spent on AW and in terms of % of revenue AW fees are well under 1% of total revenue.
But that's how MY business works -- I'm fanatical about efficiency with regards costs and can tell what my best performing products (down to the day if you give me a few minutes), etc.
Not saying that your math is off, I doubt it is, I'm just pointing out that everyone's business is different, so saying that person A's overhead in terms of % of revenue is off because yours is some number X doesn't make sense, since everyone's business is different.
For instance, my average sale varies between $270.00 - $310.00 so obviously, our economies of scale are going to be different. Even if we listed the same # of auctions via AW -- I'm getting more for my fees then you are.
On a slightly unrelated note -- if I was going to give a tip to an auction seller, it would be to track how various products perform over a week/month/quarter/year and periodically remove underperforming products from your roster/portfolio -- it could be the smartest business decision some of us ever make.
The Management Consultant in me is still "seething", shall we say after reading the article in Fortune about the seller who said his fees are more then his profits and who said he can't afford to list more products then he already is.
Reading that, my first thought is that a lot of products sold for less then the listing fee (let alone the cost of the product itself) and/or that some products return less then profit then the listing fee -- it seems to me that if he would just identify what those products were, remove them from his roster and focus on the more profitable ones, he would:
1. Run a more efficient business
2. Have profits that outpaced fees
3. Have more time & resources to focus on expansion
posted on December 3, 2002 11:19:44 PM new
pretegra345, what you say is true. But your product doesn't magically disappear if you wish it away. Lesson learned not to buy that type of item again, but your current inventory still needs to be sold.
posted on December 3, 2002 11:26:30 PM new
ahc3 said, "more people visiting = more sales"
If they are not the right people visiting your auctions, you could have all the traffic in the world and no one would ever be influenced to bid on or buy one of your items.
