Preparing to Sell
You’ve set up your account with eBay, but you’re still not quite ready to buy. You need to be more familiar with the system, for a start; if you don’t understand how to buy on eBay, it will be hard to sell, so we recommend you start buying right away (in fact, whatever you buy, see if you can buy it through eBay). As you’ll learn, there’s an added advantage: you’ll boost your feedback rating. You also need to understand the different ways you can sell through eBay, primarily Auctions, Fixed Price Listings, and a hybrid “Auction with Buy It Now.” Each has its advantages and disadvantages, of course. This chapter also explains the fees you’ll have to pay eBay, both when you list and when you sell your items. You’ll learn about different selling and timing strategies, too, and before we move on to actually listing an item for sale, we’ll discuss setting a few preferences.
Learning How to Buy on eBay
We recommend that you learn to buy on eBay. Each time you need to purchase something— a toner cartridge or a book, pens and paper, a CD—begin your online search at eBay, and buy from an eBay merchant. There are three important reasons to do this:
■ You’ll find great deals on eBay.
■ You’ll learn to understand the system from the buyer’s perspective, and in general get more comfortable working with eBay.
■ You’ll boost your feedback rating.
You can get good feedback, and you can get bad feedback. People feel more comfortable buying from someone with a lot of good feedback, of course, and lots of bad feedback will eventually kill your chance of doing business through eBay . As a new merchant, you’re at a real disadvantage—with no feedback, you’re an unknown entity.
This merchant has great feedback. With 669 positive remarks and one negative, the negative score disappears in most people’s minds. feedback. Thus, you should get into the habit of making all your online purchases through eBay—you may even save money, and you’ll build a better reputation as a seller.
Understanding the Selling Formats
You can sell through eBay using several different formats, as shown in the following list:
Auction: The most common form of eBay transaction Has the potential to get a high price Preferred by many eBay buyers Has low listing fees Seller can set a reserve price (for an additional fee).
Fixed Price: Involves no bidding—either someone buys or they don’t Often leads to quicker sales Convenient for customers who want to buy quickly and move on Good for listing multiple items
Combination—Auction and Buy It Now: An auction that can be cut short if someone meets a fixed price (We’ll discuss this a bit later.)
Real Estate Advertising: Not a sales tool so much as a lead generator (We won’t be covering this form of selling.) A reserve price is the minimum at which you are willing to sell. If the bidding on an item doesn’t reach its reserve price, the auction is canceled. How do you decide which format—auction or fixed price—you should use?
Consider using an auction when . . .
■ You don’t know for sure what price the product can be sold for. In this instance, an Auction uses the market to set the price.
■ The product is likely to have a high price if exposed to enough people. This is particularly true if the item’s a hard-to-find or especially valuable product.
■ It’s likely that buyers will be excited to see the listing.
■ You have only one copy of the item to sell.
■ You can afford to wait for the sale.
Consider using a fixed price when . . .
■ The item is a “commodity” item, where nobody cares to bid on it.
■ It’s a low-cost item.
■ You have multiples of the same item.
Using Buy It Now—BIN
You can also combine a Buy It Now function with an auction, creating a sort of auction/fixed- price hybrid. BIN listings have a little Buy It Now icon next to them and a Buy It Now button on the product page. If someone clicks the Buy It Now button, the auction’s over and the item is sold for the specified Buy It Now price. On the other hand, if nobody clicks it before bidding begins—or, if you have a reserve price, before the bidding passes the reserve price—then he Buy It Now option is removed.
You can use Listing Tools software to automatically re-list a product as soon as it’s been purchased, allowing you to keep a product posted at all times and thus maximize sales.
BIN can be useful . . .
■ For commodity items that many people want to buy without having to bid for them.
■ For items that have a pretty predictable price, meaning there’s no need for an auction to set the price.
■ For items that people may want quickly. This way they can buy them now rather than having to wait for the auction to end.
■ For speeding up product turnover. Products are often sold much more quickly in this manner, allowing you to push through a greater number of products. Buy It Now is often used for commodity items, where pricing is fully understood. You know what the price is likely to be if sold at auction, and you know a reasonable starting price. You set the BIN somewhere around the maximum—a little below perhaps or a little above—which lets many people simply click the button rather than being made to wait.
Different Quantity Options
You can list an item, sell just one of the item, or sell multiple products simultaneously. The following list outlines the different ways to sell multiple items:
■ In an auction Bidders specify how much they’re willing to pay, and how many of the item they want. A bid must have a higher Total Bid Value than the prior bid—that is, the number of items multiplied by the price must be greater than the previous bid. (This often doesn’t come into play since people often bid on one item.) Buyers don’t necessarily pay the bid price, though; everyone pays the lowest successful bid price.
■ Fixed price You can provide a fixed price for multiple items. Buyers can buy the number they want, at the price you fixed, and the listing doesn’t end until they’re all gone. (Particular criteria exist for this type of listing—you must be ID Verified, for instance.)
■ Lot sale You want to sell multiple items to a single buyer as a “lot,” rather than one by one to different buyers. Selling multiple items through an auction is typically known as a Dutch Auction.
eBay Fees
eBay is not a charity, of course; it’s going to charge you to list and sell your products. Essentially, two main fees must be paid: an Insertion Fee, charged when you list your item, and a Final Value Fee, charged when you sell the item. You can find a listing of all the fees at the following web address: http://pages.ebay.com/help/sell/fees.html. You pay the Insertion Fee whether or not you sell the item. Plus, you pay a fee for each category into which you place the product. The Final Value Fee is charged when you sell the item. If you don’t sell, you don’t pay the fee, of course. The Final Value Fee is based on the actual price you sold the item for; this doesn’t include any shipping charges. Remember, other fees are involved in completing a transaction. If you’re using PayPal, for instance, you’ll probably be paying 2.9% of the transaction price, plus 30 cents. In the case of vehicles, eBay charges a Transaction Service Fee, payable, whether or not the item is actually sold, when the first bid is placed, or, if using a reserve price, when the reserve is met.
Another special category is that of Business & Industrial products, such as farm machinery and manufacturing equipment, which have $20 insertion fees and a 1-percent Final Value Fee with a $250 maximum. Other fees to keep in mind are those for ancillary services and for using specific categories on eBay. The following shows a more comprehensive list. Reserve Fees $1 for items up to $49.99, $2 for items up to $199.99, and 1% of the reserve price above that (to a maximum of $100). But note that if you sell the item, these fees are refunded. Buy It Now Fees From 5 cents to 25 cents depending on the Buy It Now price. Picture Services Fees When you list an item, you can include one picture free. You can add more, though, for 15 cents each, “supersize” a picture (75 cents), create an animated picture show (25 cents), or purchase a special Picture Pack that allows you more images than these other image services for $1 or $2. Listing Upgrade Fees You can “tart up” your listing by including a photo in the search results (Gallery), adding bold to your listing text, putting your item in the Featured Items section of a category (Featured Plus!), adding the item to a special placement program that may see it placed onto the home page, and so on. These fees vary from 10 cents to $80.
Selling Strategies
As you’ve seen, there are different ways to sell through eBay and different strategies you can use. Now we’ll discuss a few concepts and things to know. When you list an item on eBay, you are committing to sell it under the conditions you set. If you set a $10,000 product with no reserve, and someone bids $1, you’re obliged to sell! Of course, eBay won’t send thugs around to your house to beat you up if you refuse, but you could find yourself getting kicked off eBay if you don’t honor your commitments.
Traditional Auction, No Reserve, Low Opening Bid:
No-reserve auctions get a lot of bidding; reserves often put people off, because they feel that there’s little chance of getting the product at a price they want to pay. Paradoxically, because these types of listings get bidding rolling quickly, they often end up with a high sales price. There’s a danger, however: you may end up selling the product very cheaply.
Auctions with a Reserve: You can set a reserve price, letting you limit your liability. Often used on expensive items. If bids don’t reach the reserve price, the item isn’t sold. Reserves tend to discourage bidding.
Auction, No Reserve, Higher Opening Bid: These help limit your potential losses. Merchants often set prices from 20–40% below market. Because there’s no reserve, you’re still likely to get good bidding.
Auction with Buy It Now (BIN): Decreases sales time. In some cases, it may decrease sales price. Merchants sometimes post a high BIN price to make buyers think the item is more valuable. However, this can backfire and lead to low bidding and a lower sales price. Merchants often use an average selling price as the start price and then a BIN price that’s a few dollars above. Don’t place the BIN price too low because the BIN acts as a cap; nobody’s going to bid higher than the BIN.
Fixed Price: You’ll never see the highest prices generated by enthusiastic bidding. Involves no liability and has a totally predictable selling price.
Timing Strategies
The timing of an auction is also important. When you list an item, you define when the auction starts and how long it will last. The following are a few ideas:
■ More people browse and search through eBay during evenings and weekends. Thus, letting an auction extend over a weekend is often a good thing.
■ The longer something is on sale, the more people will see it. However . . .
■ If an item is very popular, with heavy bidding, you need less time.
Once you’re selling a lot of products, you should consider the effect of timing on your workload! You don’t want to have all your auctions end at the same time and be unable to process them quickly.
Setting Your Preferences
Before you’re ready to sell, you should at least check your preferences. Go to your My eBay page, and click the eBay Preferences link (in the My Account links, on the left). You don’t need to worry about everything here—when you have a spare moment, click a few Change links and read through the descriptions. But there are a few things you should adjust.
■ Add PayPal. If you’ve set up a PayPal account, click the Change link next to Payment Preferences, and select the Offer PayPal as a payment method in all my listings check box to automatically place the PayPal logo in your pages. You may also mark the Tell Buyers that I prefer PayPal payments check box if you wish (doing so gets you a rebate on your PayPal debit card.
■ If you’re going to accept mailed checks, enter a Payment Address on the same page.
■ If you have a UPS Daily Pickup Account, see the UPS options at the bottom of this page, too.
■ Specify how much you plan to charge for sales tax, in what states, and whether you have to apply sales tax to shipping fees. Click the Change link on the Use Sales Tax table line.
■ You can customize your checkout pages, invoice e-mails, and end-of-auction and transaction e-mails if you wish, adding logos and personalizing the messages. Use the Change links under Customization Preferences.
