Friday, February 1, 2008

eBay Changes = Too Much Stress!

I've come off the high of being quoted on CNN finally, and am back to worrying over the changes eBay announced. Here is the rundown of changes, and my thoughts on them so far (warning - if you aren't an eBay seller, reading the following could be like watching paint dry):

Free Gallery, Listing Fee Reduction, Final Value Fee (FVF) Hike

This is a horribly complicated issue, that varies from seller to seller depending on how you run your business. As far as I can tell, the ones who will be hurt the most are the sellers who didn't regularly use the Gallery option and have an average selling price of under $25. Those sellers that maintain a high sell through rate are also going to feel the FVF increase more, because they were losing less money in listing fees and so the FVF increase will not be offset.

For me, I think that I might save a little money on my auction fees, or they will be around the same. I always use Gallery, and my sell through rate hovers around 35%, which means I spend a lot of money listing and not selling. Where I have been spending 75c to start an auction at $9.95, now I will be spending 35c. Not too shabby!

What is bothering me the most is the raise on FVF for store items from 10% to 12%. It was already too high, and now it is just over the top. Between the FVF and PayPal's take, I'm looking at about 15% in fees when I sell something out of my store, not including the cost of the item, all the time it takes to process the item, taxes, etc.

I'm currently thinking on how to handle this. One option is to not list anything in the store that is under $25. Once you are over the $25 mark you actually pay less of a percentage in FVF, as the amount over $25 is only hit for 8% instead of 12%.

The problem is that the majority of my items are under $25. My average selling price on store items is around $15, actually. So what do I do? Raise prices across the board, and most likely sell less? Move my lower priced inventory to my Etsy store, where the fee is only 3%, but where I have less traffic, less experience, and less of an idea about the marketplace and what it will pay?

Or, do I go ahead and make the jump to setting up a store on my dot com, where I would just pay PayPal fees? This is where I would like to be eventually, but traffic is the big issue. Would people find my store? If they did, would they feel comfortable buying from me?

Of course I could also research other selling venues that I haven't used before - Ruby Lane and Tias come to mind. I have always kind of thought of them as higher end markets though, more of an antique mall atmosphere rather than a flea market one. But maybe that is what I should be trying for anyway?

Like I said, it's all very complicated. I'll keep you posted on what I decide.

No negative feedback for buyers, DSR ratings tied to search/Powerseller status/PayPal

The feedback issue is what has the sellers most upset, and understandably so. The "level playing field" has been obliterated, all in the name of "improving the buyer experience." Now I understand the idea behind the whole thing - weed out the bad sellers. I am actually all for that, because bad sellers drive buyers off the site altogether, which hurts everyone.

What I don't think is fair is that under the Best Match sort some sellers are going to be favored over others according to their DSR ratings and Powerseller status. We all pay eBay to list our items, we should be treated equally. Personally, I switch to either Time Ending Soonest or Price + Shipping Lowest when I do a search, and hopefully most other people will too. Best Match is trying to do a bit too much thinking for me, when I am more than capable of making decisions for myself, thankyouverymuch!

What bothers me too is that eBay is apparently underestimating the impact of bad buyers on their new feedback system. Bad buyers are out there, and removing our ability to warn other sellers about them through feedback is a scary thing!

I would say 95% of all my eBay transactions are very easy and positive, for both me and my customers. I have 100% positive feedback, with a DSR (Detailed Seller Rating, otherwise known as Star Rating) right at the average - 4.8 out of 5 for Item As Described, 4.8 out of 5 for Communication, 4.8 out of 5 for Shipping Time, and 4.6 out of 5 for Shipping Charges.

I am not super worried that the niche I am in has a large number of buyers who want to leave negatives and bad star ratings maliciously or on a whim... I guess time will tell. The 5% of transactions that have weirdness or issues I have always managed to make right, without them hurting my feedback score. I hope that this will continue!

The trouble is that eBay has tied the DSR ratings not only to Best Match but to your Powerseller status as well - you have to maintain 4.5s across the board, and if you can maintain 4.6s or higher you receive a discount on your final value fees. My 4.6 for Shipping Charges is a little too close to the line for me to feel comfortable, which means I need to figure out a way of still shipping quickly, but at a lower cost.

Right now I think that means taking on extra risk by not requiring insurance, and figuring out a way to get my shipping supplies more cheaply, so I can cut my handling fee. We ship a lot of breakables, and go through bubble wrap and packing peanuts like they are going out of style. I like having new clean packing materials, but they are expensive!

They also are going to start holding PayPal payments hostage for up to 21 days if your DSR rating falls below 4.5 across the board, or if you have more than 5% buyer dissatisfaction. Personally, I don't think it should be legal for them to hold money sent to you, no matter what. Sellers shouldn't be asked to ship products when they haven't received the money! It's ridiculous.

There are other changes, the list is a mile long! These were the ones with the most impact, and as you can tell it is going to take a long time to figure it all out, and to see the kind of true affect they will end up having on doing business on eBay. I think it is good that they are forcing everyone to take a close look at their businesses though, that is never a bad thing!


swapatorium said...

I used to sell on eBay in the early days. One suggestion I have for you is that you sell lots of items instead of singles. This way, you could raise your prices. Just be creative. Instead of selling a purse, add some matching accessories, like a scarf and jewelry. Or do multiples of items, like all owls. This would also help to keep your shipping work down. Whatever you decide, in the long run, having your own website is the way to go and something you should work towards. Best of luck!!

Mitzi said...

I make lots and sets of things sometimes, I guess I should consider it more often in the future. I like your idea of pairing up things like purses and scarves, I will definitely try to do something like that and see how it goes!

amodernguy said...

Mitzi -

Great post. As you know, I have written a letter to eBay regarding my concerns with these new policies and posted it on my blog as Open Letter to eBay.

I urge everyone, buyers and sellers alike, to also express their concerns to eBay. These policy revisions are the biggest change to eBay's terms of service ever made and, in my opinion, are in direct contradiction to eBay's stated community values. These will change this marketplace - and I predict not for the good.

As always, enjoy your blog - and it was great seeing you appear in the CNN piece. It's so nice to know a media star!

Monica said...

I have put enay on hold for the moment, it was getting to be too much money!!! i got a regular job but I dont know how long it will last

I dont like the feedback thing and they lowered some fee just to make some higher, its nuts!! Payl was free way back in the day

As for a website its hard to get taffic, you are nto suppose to link your store to ebay but I have seen some people get around this by linking ebay to myspace and on the my space page they link to their selling sites.....its getting tough out there!!!!!!

Mitzi said...

Awww Monica, you aren't selling at all anymore? I dread having to find another job, I am trying to avoid it at all costs! lol Ebay isn't making it easy though. I've got my fingers crossed and will keep on keepin on, but I am going to put more effort into my Etsy store at the same time!

Telesha said...

Looks like we having some seller reblling against eBay unfair business practice, I cant blame them because every single thing you do on eBay you have to pay a fee. Check this out, look at what you have to pay for to sell an item, its just plain madness

1. for have to pay
2. bold letter in title, you have to pay
3. Listing your item for more than 7 days, you have to pay
4. eBay store was once a flat $0.02 per item per 30 days, now you have to pay more.
5. Buy It Now, you have to pay fee
6. Gallery fee $0.35
7. Subtitle $0.50
8. Highlight $5.00
9. Home page Feature $39.95 for 1 item, $79.95 for 2 item
10. Border $3.00
11. Feature Plus! $19.95
12. Gallery Featured $19.95
13. Bold $1.00

I'm joining the movement against ebay, see us at the link below

The Nostalgic Nugget said...

Hey Mitzi, I noticed you talking about how your items are mostly under $25. I feel for you. We stopped listing items under $30, 2 years ago with the last increase. I honestly, truly, 100% believe your best option is opening up other venues and let eBay go.. I have taken the time to provide a lot of good links on the right side of my blog. I know they could really help you figure this out. Read the blog about Steve Grossberg's interview...I read all 39 pages..and it was exactly as bad as I thought from day one.

All I did the first week after the announcements was snoop for the facts. eBay only has a 30% sale rate as it is and we think they are the best???..and honestly, we all have to ask ourselves who is getting more of the pie..ebay or the people doing the work?

I am in the thanking ebay mode now because seriously, this was the kick in the butt to get me to do what I know I needed to do for years. There will be a lot of work, listing, etc but I truly believe it will be worth it.

WE CANNOT continue to rely on eBay forever. It's like staying with an abusive mate because we are safe knowing how abusive he gets..and we walk around with black eyes thinking it is ok because he hasn't split our skull. Seriously. You can do it girl..from one vintage geek to another..I have a lot of faith in you.

Anonymous said...

I would totally have to agree with The Nostalgic Nugget on this. I simply moved off Ebay to save cost and take back my business. I had too because honestly the traffic for vintage one of a kinds has not been there like it used to be. You can see the tons of competitors your up against on a site like Ebay that demeans the values of collectibles so badly, that you literally are like a needle in the hack sack over there. I do get traffic to my sites and I do get peace of mind back. It takes awhile, yes, but I don't feel like I am running my business on a sinking ship anymore. When my customers come to my websites, they see my stuff and they aren't comparing to several others. Honestly, I love selling vintage, but had I stayed on Ebay or any other venue I would have grown bitter working for some other company other than my own. Ebay taught me a lot about running a business and I am grateful for that. However, I won't sell on Ebay where traffic is difficult or competitors demean my product. I can't live in a dog eat dog world with so many unknowns that another company has the power to do that will drastically affect my business.

It isn't worth that to me anymore.