One Seller’s New Search to Find the Fun on eBay

Posted on July 7, 2008. Filed under: eBay | Tags: , , , , , , |

I remember thinking how “fun” it was to sell on eBay back in 2002.  Buying and selling on eBay was considered to be “fun” by a lot of folks back then.  But buying and selling on eBay has become anything but fun and it has been quite a long time since I have heard any eBayer describe their eBay experience as “fun”. 
Despite eBay’s whimsical campaigns to promote fun, such as Windorphins, or their silly commercials depicting someone “winning” an item on eBay, there is no more fun to be found on eBay.  Buyers are tired of navigating through the huge number of counterfeit items on eBay and then dealing with sellers who are less than ethical and less than honest in their item descriptions.   And, for eBay sellers, the fun disappeared when the profit margins disappeared. 
Assume sale of a $99 item on eBay in 2002:
Total eBay fees (insertion and final value fees) $5.30
Assume sale of a $99 item on eBay in 2008:
Total eBay fees (insertion and final value fees) $6.78
From 2002 to 2008, eBay has raised fees 28% ( from $5.30 to $6.78 ) for the sale of a $99 item.  The fees charged don’t consider payment transaction fees, such as PayPal.  In comparison, the price of a U.S. first class stamp increased less than 14% from 2002 (37 cents) to 2008 (42 cents), less than half the rate eBay fees increased.
Between 2002 and 2008, wholesale prices increased approximately 15%, about the same percentage rate as U.S. stamp increase.  A seller’s wholesale price, therefore, would have gone from about $60 in 2002 to about $70 in 2008 for an item that sold for $99.  During the same time, average selling prices on eBay decreased about 10% so that an item that sold for $99 in 2002 on eBay would sell for about $89 in 2008 on eBay.  The decrease for eBay’s average selling prices occurred for a variety of reasons including the fact that eBay was considered increasingly more unsafe so that “good” buyers, willing to pay a higher price, migrated to more reliable sites like Amazon.  Also, the number of sellers on eBay ballooned out of control and most of the new sellers had no brick-and-mortar overhead and were often willing to sell items at or below wholesale pricing.
Given that eBay raised fees about 28%, manufacturers raised wholesale prices about 15%, and the average selling price on eBay decreased about 10%, a comparison between 2002 and 2008 for an eBay seller might look something like:
eBay Sale ( 2002 )
Selling Price $99
Wholesale product cost $60
eBay fees $5.30
Margin (before Paypal fees) $33.70
eBay Sale ( 2008 )
Selling Price $89
Wholesale product cost $70
eBay fees $6.25
Margin (before PayPal fees) $12.75
The fees calculated assume the item was sold on fixed price.  If the item had sold out of a seller’s eBay store in 2008 then the eBay fees would have been even higher.  Not only has the average selling price on eBay decreased but the sell-through rate is so low that lots of items end up not selling and the insertion fees for those items must be covered from the margin of the items that actually do sell.  And the margin must also absorb the loss incurred from eBay scammer buyers who purchase items and then claim unauthorized charges or significantly not as described and return something other than the original item, or sometimes nothing at all, so that they can get a PayPal refund or credit card refund while keeping the item.
At the end of the very long work day, most eBay sellers are too tired and frustrated to think of their eBay experience as being anything close to “fun”.  In addition to making considerably less money for the financial investment, it takes significantly more time in 2008, versus the time in 2002, to answer emails from potential eBay buyers who ask the most outrageous questions and to chase down buyers after the fact just to get them to pay.  It is a continual struggle to “convince” buyers to pay for the items they purchase on eBay and the time necessary to do so has increased by more than 40% over the last 5 years.  So eBay sellers have to work twice as hard in 2008 to make 1/3 of the money they made in 2002.
What would it take for me to enjoy selling on eBay again?  Personally, I don’t think there is anything eBay can do today to make me have “fun” on eBay again.  They won’t lower their selling fees, they won’t rein in the fraudulent buyers, they ignore the problem of slow paying and nonpaying bidders, and they can’t do anything to raise the average selling price or the sell-through rate in the long-term.  Whether they will admit or not, eBay is a flea market venue that charges high-end rental prices for their flea market selling spaces simply because they can bring together the largest gathering of flea market buyers in the world looking for a bargain. 
Selling on Amazon is “fun” for me because the customers are wonderful and easy to deal with.  Selling on my ecommerce websites is “fun” because I make the most money through that venue.  Selling on eBay is just a necessary evil, something I must to do liquidate inventory and something I do to get eBay buyers to my own venues where the cost of selling is significantly lower.  Over the last 10 years, the product mix I have sold on eBay has changed considerably and I have done so in order to survive the economic and eBay-specific changes.  I have had my own ecommerce websites almost as long as I have been selling on eBay and I just started selling on Amazon in February 2008.  I change with the times because I am motivated to sell what I can, where I can, for the most that I can.  The direct actions of eBay management have motivated me to sell elsewhere where I can be more profitable.  And let’s face it, having money is fun.  I don’t mind working hard for my money but working hard just to pay eBay fees so that they can have fun is not something I want to do.
Even if I were looking for “fun” on eBay today, which I am not, I would never be able to use eBay’s “Best Match” search function to find it even if it did exist.  But perhaps if I click on one of the new “sponsored links” on eBay’s site I’ll be taken to an external site where fun can now be found.  It seems most likely that in the new eBay of 2008, one can most easily find what they are looking for by going outside of eBay.  Thank you eBay for putting down the bread crumbs, in the form of sponsored clickable links to outside sites, so that those who are still searching for fun on eBay can find their way more easily now.


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One Response to “One Seller’s New Search to Find the Fun on eBay”

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Excellent post. I have been selling on ebay for 3 years now and I have much the same feelings. They increased the fees while decreasing the value they provide for those fees. Not to even mention the increased hurdles and hassles.

Time to diversify your channels.

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