Wednesday, April 20, 2011

eBay Spring 2011 Fee Changes - Strategies For Vintage Sellers

If you are a seller on eBay, I'm sure you have already read the 2011 Spring Seller Update, and you've already taken a look at your business to see how the new final value fee structure is going to impact you. If you haven't read it yet, head on over and get caught up and come on back here - I'll wait. ;)

The bottom line - fees are going up. Don't let their tiny reduction of final value fees fool you - for a lot of sellers they don't even come close to cancelling out the extra you will be paying when they start charging fees on shipping. eBay's answer is to roll your shipping cost into your item price, so you can dazzle your buyer (and eBay's Best Match search results) with the illusion of "free shipping".

Even if you do go ahead and make all of your items "free shipping" guess what - your fees will still be going up! You can only hope that you will sell more (because of the bump in Best Match) to help offset the increase. Or, if you are a Top Rated Seller, you will get 20% off your FVFs - on the item price fees ONLY, not on the shipping fees price. So, rolling your shipping cost into your item price would allow you to get that 20% discount on all your final value fees.

I did a quick bit of math the other day and posted it on the List's Facebook Page - and I got a pretty big response. Here are all of my comments:

"Interesting: Under the coming new eBay fee structure, with Final Value Fees being charged on the cost of shipping as well as the item price, an $8 item with $8 shipping will have a FVF of $1.76. The same item sold on Etsy, will have a FVF of $0.28."

"The eBay FVF under the current fee structure is $0.96. Suddenly Etsy is nearly twice as attractive as a selling venue as it used to be. :P"

"By the way, if you have worked really hard to become a Top Rated Seller to achieve that 20% FVF discount, that discount DOES NOT APPLY to the FVF on the cost of shipping. So in the above scenario, your TRS will save you a whopping $0.18."

You might not be as negatively impacted by this increase if your average selling price is over $50.00 - once your price gets high enough, the fact that your shipping cost is such a small percentage of your item price means that in the overall scheme of things you will only be seeing a small increase, or your fees will remain basically the same, due to the lowering of the final value fee percentage.

If you are like me and your average selling price is more in the range of $10.00 - $20.00, then you need to start looking at ways to make sure you can still sell profitably on eBay.

Watch Your Margins

The saying "you make your money when you buy, not when you sell" is now more true than ever. With eBay taking more in fees, you need to be extra careful that you are not cutting into your profit by overpaying for your inventory. This could mean:

- Making fewer "risk buys", where you buy things and you aren't sure of the value or demand. Save your money for items that you are certain will bring a good return.

- Haggling more often on individual items, and buying more inventory in bulk so that your per item price is less. Often if you make an offer to "take it all" - buying an entire collection rather than cherry picking a few items from it - you can get a better per item price.

Raise Your Average Selling Price

The only real way to stop feeling like eBay's overworked/underpaid employee is to raise your average selling price. This is difficult if you are like me, and your comfort zone is in selling lower dollar items. This is a strategy that can be employed slowly over time though, working to gain the knowledge and experience it takes to venture into higher priced items. A good and hopefully attainable goal is to get your ASP to 50.00 or more.

Raise Your Volume

While you are working to build your ASP, raising your number of listings will (hopefully) bring more sales and help offset the money that you are losing to eBay in fees.

- If you buy collections as mentioned above, you can often list them quickly since you will be using essentially the same listing for all the items - "sell similar" is your friend! It is more time consuming to list 10 different items than it is to list 10 similar ones, simple as that.

- Sell items in lots. If you have a group of low dollar items, listing them individually may not be the best way to go anymore - list them as a lot, and free up that extra time to list more higher dollar items.

- Set listing goals in the terms of numbers - "I will list 50 new items on eBay this week". Just telling yourself that you will list "more" rarely works - believe me, I'm a living example of it! I am going to start setting daily and weekly listing goals for myself to try to keep my numbers UP.

Sell More Lightweight Items

If you tend to deal in larger, bulkier items it is time to start looking at selling more smalls - especially things that are under 13 ounces and can be shipped 1st class - or items that can be shipped via Media Mail. You don't have to get rid of the larger items all together - especially if they could help you with your higher ASP goal - but having the smalls in your product mix will help build your number of items listed and keep your fees down.

Raise Your Price / Add A Handling Fee

This is not really an ideal solution - I'm sure most of you are like me and it makes you feel a little icky to pass this fee increase on to your buyers. But, if you want to stay out of the hole this is something to consider. Of course any raise in item price or handling fee will also increase your eBay fees, so you have to do a bit of math and see what could actually be helpful. Be careful - if you overshoot and raise them too much, you will either lose sales or get dinged on your DSRs! Now is a good time to do some testing, before the fee increase kicks in in July.

Get a 2nd (or 3rd!) Selling Venue

This isn't really a strategy to stay profitable on eBay as much as it is a strategy to stay profitable in GENERAL - and that's what we all really need, right? So if you haven't explored selling on other venues, now is the time to start!

One of the best things I ever did for my online business was starting my Etsy shop back in 2008. The fees there are significantly lower than on eBay (see my above fee breakdown). It takes time and some experimentation to figure out what the buyers on other venues are looking for, but it is definitely worth doing, especially now.

Another popular venue for Antiques and Collectibles is Ruby Lane. I haven't sold there personally, but I know people who do, and they seem to like it and have success there.

Marketing yourself on these alternate venues is very important - their built-in traffic isn't as high as eBay's. So if you haven't started a blog, a Facebook page, a Twitter account, etc. you will need to do so to help drive traffic to your listings on other sites. Really it isn't a bad idea to also be marketing your eBay listings off of eBay as well!

I hope that these strategies are helpful to you, and to me too! I'm trying most of them as we speak. There isn't really one strategy that will work for everyone and everything, but hopefully with time, experience, and determination we can all figure out what will work best for our businesses. :)