“To be successful online, you have to offer something better than the department store down the street.”

I totally agree, what makes anyone think they can sell a commodity item cheaper than Walmart?

The key to success is to create an exclusive product and build in enough padding into the price to offset any fees.

That is what I do

The consumer is completely empowered and can comparison shop in seconds. With that kind of instant gratification why wait on an auction for up to a week?

It’s the same for buyers and sellers. The thrill of the hunt is gone. Case in point, they ditched that ’shop victoriously’ tagline pretty darn quick. Shop empowered.
Dan Williams
Special Ops Media

eBay has extended the highly touted “double discounts” for offering “free shipping through March 31 2008. Why not? eBay is still raking in your money! And here’s how:

First, you have to be a powerseller to qualify. If you qualify for the double discounts also included is a sub-title and a “boost” in “best match”.

The catch here is that the double discounts are added to your DSR’s percentages. In other words, if you qualify for 5% DSR discounts, you’ll get 10%, qualify for 15% – get 30%, qualify for 20% – get 40%. Qualify for 0% – get 0%. Got the idea?

Just because you offer free shipping, doesn’t make it free. You’ll have to recover those delivery charges. How? You’re going to add the shipping costs into the actual selling price of the item, of course.

Under eBay’s current policies standard shipping such as calculated or a flat rate (not offering free shipping) does not incur a fee, they leave that one to PayPal who charges a percentage on the over-all sale including shipping charges.

Now let’s modify our listings and get our “double discounts”!

Go ahead and offer free shipping and add that item’s shipping costs to the items actual selling price. Now that the new shipping figure has been added to the actual selling price, it can and will be charged the selling percentage fee for that particular category. If the selling price is under $50.00 those percentages will be 15%, 12%, 8% and 6%. Following the trail here?

Let’s take an average shipping price of $13.99 which is now added to the item’s actual selling price:

Ready? Take a deep breath. These discounts really add up, unfortunately not for the seller’s offering “free shipping”.

S & H Costs:———————-Double Discounts——-
—-S & H @ $13.99———10% off—30% off—40% off
$13.99 x 06% = $0.84——–$0.76—–$0.59—-$0.50
$13.99 x 08% = $1.12——–$1.01—–$0.78—-$0.67
$13.99 x 12% = $1.68——–$1.51—–$1.18—-$1.01
$13.99 x 15% = $2.10——–$1.89—–$1.47—-$1.26

As you can clearly see by offering free shipping, seller’s will gain nothing. In fact, you will lose, even with the highly touted “double discount” deal. I think more appropriate wording would be the “double dipping” deal, as eBay gets a new cut along with PayPal.

I find the main advantages are the new 30 day and ‘good till cancelled’ listing formats. Also you can list multiple items without paying a penalty. Whether you sell 1 or 1000 items you can do so at the same price. Before it was a graduated scale.

I now sell 300-400 items per month with the new format (instead of 75 to 100 previously). This has made me a silver power seller and I get discounts and improved search rankings.

Finally it saves a LOT of time since you can add items to an existing listing and you don’t need to waste time constantly relisting things.

All this was a direct result of their changes (I did nothing different).

It is not all good however I wish they’d provide better integration between eBay and PayPal as iI find myself having to log in to each site 5-10 times a day.

Quite simply, buyers have realized that it’s cheaper to shop at WalMart.

Why? Here’s a break-down of the cost to sell on eBay and why buyers have left for calmer and certainly cheaper waters.

When sellers have to increase the price of their products in excess of 15%, plus 2.9% PayPal fees (an eBay company – how convenient since sellers can no longer accept Money orders, only PayPal), plus listing fees, plus store fees, plus conversion fees, and no protection, this is a recipe for complete and total destruction. In fact the only zero in this equation is eBay’s customer service. That part seems to comes easy to them.

Follow the trail and the cost of doing business on eBay:

An original item cost of $49.99 with $13.99 shipping (modest shipping costs considering UPS and USPS have raised their costs yet again), will actually translate to a minimum selling price of: $73.91 and up! AND this is without adding your own profit!!! This figure is only to pay off the greed monsters.

Here’s the breakdown:

*Original item cost to seller refers to what it will cost the seller to purchase this item from a distributor or manufacturer and then to resell it:

Original Cost: $49.99 x 15% (eBay FVF Fees)
eBay FVF fees: $7.50 (sub-total + $57.48)
Listing fees: $.35 (sub-total + $57.84)
Shipping: $13.99 (sub-total + $71.82) x 2.9% PayPal Fees
PayPal Fees: $2.08 (sub-total + $73.91)
—–GRAND TOTAL: $73.91 Without any profit!!!

Now let’s add some profit to this figure – I mean…. this is why we are in business right? Remember, your profit should never be less than what you pay to the monsters to sell an item. So let’s add a profit of $10.00.

Now we have a whole new ball game! Different tiers and percentages that even an veteran accountant would have trouble understanding. I’ll try to break it down for you:

Original Cost: $49.99 + 10.00 profit (sub-total $59.99)
x 15% eBay FVF Fees (Tricky, so watch carefully)
15% x the first $50.00 = $7.50 plus 5% over $50.00 which would be on $9.99 x 5% = $0.50
eBay FVF Fees are now $8.00 (sub-total $67.99)
Listing fees: $.35 (sub-total + $68.34)
Shipping: $13.99 (sub-total + $82.83) x 2.9% PayPal Fees
PayPal Fees: $2.40 (sub-total + $85.23)
—–GRAND TOTAL: $85.23

OH MY GOSH!! Buyers pay $85.23 for a $49.99 item!!!

I can guarantee the consumer won’t be blind for long when they realize they can go down the street to WalMart, examine, touch and test the same product for a whole lot cheaper and take it home the same day – and not pay return shipping charges if the item is defective.

To be successful online, you have to offer something better than the department store down the street.

This is why eBay IS failing! WalMart has better prices. Buying on eBay is not a deal anymore. Not now, not tomorrow, not ever.

There you have it. The recipe for complete and utter destruction of a once great place to sell.

Exactly. Thank you for a great read, John.

Is that the most ridiculous statement you’ve ever heard? Especially as he walks away with his obscene, multi-million dollar salary “earned” for annihilating eBay?

Perhaps Donahoe will need to “let go of a very successful past” in the very near future.

For years sellers wished for an alternative. They needed someone to come along to break the monopoly Ebay had over them. Well, like it or not the time has come….only its left up to us small sellers to build the up and coming sites the same way we built Ebay. Ebay will never again be a monopoly…and they did it with their own hands! We are watching the slow and painful death of a once healthy and loved company.