Friday, February 29, 2008
Look for announcements in the coming months from Amazon and Half.com about increased S&H reimbursements. Hopefully the increase will be enough to cover your increase in postage. I'm anticipating an increase in FBA shipping rates as well so I will have to adjust my BuyBack prices to compensate.
If eBay execs are wondering why the "best deals" can no longer be found at eBay, its because the increased cost of doing business has to be passed on to the customer, but online sellers still have it far better then their Brick and Mortar competitors.
Thursday, February 28, 2008
I'll be checking in, on and off, to see if anything earth shattering happens and of course I'll post something if it does.
For new readers; I'm only posting this because some of my regulars get upset when I'm not posting regularly and I have to keep the natives from getting restless.
Wednesday, February 27, 2008
Kevin will be a guest on America’s Nightly Scoreboard at 7:00 and 10:00PM EST tonight. Hopefully your cable network carries the Fox Business Channel.
I believe the topic of the interview will be comparing Amazon to eBay. So it should be fun. I hope to get a replay of the interview and will try and post it here.
Scot Wingo was able to figure out how to embed the video in his blog. I must not be as smart as Scot. So if you want to see the interview go here.
"I've been darting in and out of 2010 over the past few weeks, taking a glimpse at what some of my favorite companies may look like in the future. Today, I turn my attention to the company that may one day sell me the necessary time machine: Amazon.com (Nasdaq: AMZN).
How does the leading online e-tailer look in 2010? Surprisingly good, my friend. It's still the undisputed champ in moving physical goods via online orders. Growth in digital delivery has propped up margins. The company is also a bigger player in areas like content and merchant services, which seemed like mere specks in the business model back in 2008."
These kinds of posts are what make blogging so much fun. I get to peer into the future and speculate or dream about what could be. In this example, other than Mr. Munarriz's love for the "Kindle", I would agree with many of his ideas and projections. I look forward to a 2010 where 3P merchants have more access to Amazon and maybe the "Kindle" will actually reach its potential.
Here are some of the other companies in the series:
"First off, in the real world, I would never get a chance to fix eBay, but in Utopia who knows. Any suggestions I would make from this side of the fence may not carry any water because I'm not privy to the inner workings. I don't have access to the data from which to base decisions.
I suggest they do three things:
- Create eBay Classic with auctions only and make it truly a venue again. It would have its own fee structure.
- Create a fixed price marketplace for everything else and take control of that marketplace like Amazon takes control of theirs.
- Spin off eBay stores into their own platform, give them a shopping cart and charge them a monthly fee. Store owners could then list on eBay Classic and the New eBay for the items that made sense and market through Google adwords etc to their Stores.
eBay has been very successful driving traffic to a separate eBay Motors platform, so why can't they accomplish the same thing with an eBay Classic platform or a Stores only platform? At least they could run the numbers and look at the possibility.
Auctions need scarcity and uniqeness to work and that is the beauty of what eBay created. Fixed Price items require selection and great prices. eBay Stores/Shops are a fantastic entry point for the online seller, but they are too expensive for the value they provide.
I know several of my readers believe that auctions could not survive on their own, let alone thrive, but if that is true than they will eventually die off in their current form anyway. Why not at least attempt to save them.
Just my 12%
Club "O" membership costs $29.95 annually and appears to be Overstock's answer to Amazon's Prime. Overstock has been very aggressive recently, trying to get some traction during the recent eBay Seller Boycott and announcing plans to expand Internationally, as well as expanding its strategic relationship with ChannelAdvisor.
For a company struggling to make money, offering "Free Shipping" smacks of desperation but only time will tell if it increases Club "O" memberships.
Tuesday, February 26, 2008
With Best Match Store items no longer sort by lowest price. So if that has been your strategy up to this point, you may want to see how you will be affected.
Just my 12%
Monday, February 25, 2008
Today, eBay announced "Feedback issues over the weekend may have impacted how and whether some buyers left Detailed Seller Ratings. To ensure that sellers are not negatively affected by this site issue, eBay will be automatically updating any Detailed Seller Ratings left during the period of the issue to the highest score of 5. As noted previously, the original issue was resolved on Saturday 2/23." (bold is mine)
IMO, eBay quickly responded to the problem and should be commended for their response -- the former management team would have done nothing.
I know sellers are still upset about the glitch, but believe me, the previous managers would have done nothing to compensate sellers for the problem. The new managers have acted decisivly and appropriately. Giving all 5s for the DSRs, serves as compensation for the error.
What happened to eBay's ______ ?
- eBay Express - They shut down the UK site and have put the other sites on cruise control. I call it "milking the asset". eBay doesn't commit any resources to Express, so it has to grow organically and eventually they will just shut it down.
- Half.com - Half has been on cruise control since they decided not to shut it down in 2004. Once again, they are "milking the asset". Had Half.com not been successful with Textbook sales twice a year (August/Sept and January,) they would have shut it down years ago.
- StumbleUpon - eBay acquired Stumbleupon a year ago and still nobody knows why.
- ShopVictoriously - This was an ad campaign that was supposed to identify eBay as the fun place to shop and win. I always thought it was a bad campaign and it appears to have gone the way of the Windorphin.
- eBay Neighborhoods - eBay's attempt at social networking has really not done much. The Coffee Drinkers Neighborhood has the most members with 4,179 members.
What about StubHub? Why has it not been expanded to additional regions? I would think the UK and Germany would be perfect fit for a roll-out.
Many of these sites and ideas start out real promising, but when eBay does their ROI evaluation they find that growing them will cost more money than they want to spend and require resources, so they get put on cruise control.
What is the old saying? "If you don't grow you die!" In many ways this is the same thing that has kept eBay's marketplace business from growing because they aren't investing enough in the business to make it grow. They continue to milk the asset and even though they have made some significant changes in the marketplace this year, they aren't radical enough to reinvigorate the business.
So, 10 years down the road will the question just be "What happend to eBay?
Sunday, February 24, 2008
- My Experience with Amazon FBA!
- I'm Sold on FBA - Apparently So is Amazon
- My FBA Fulfillment Stats
- My Cost to Ship Via FBA
- Why Wouldn't you Test Amazon's FBA?
- FBA (Fulfillment by Amazon) Q&A
- Update: More FBA (Fulfillment by Amazon) Advantages
This information is geared towards Media Sellers, but if you sell in other categories, it will serve as a starting point for your research.
Small media sellers will get the most benefit from FBA, at this time, because they don't have the large commitments to facilities, employees etc. Larger media sellers can benefit by segmenting their inventory and using FBA for their Amazon orders.
A new resources for eBay sellers, looking to sell on Amazon, is called "Selling on the River". It's an e-book written by a former eBay employee and seller who began selling on Amazon. He found it wasn't the easiest of transitions. His tips and information will save you hours-upon-hours getting listed on Amazon.
Just my 12%
This info is based on selling media items through Amazon.com and does not deal with Basic Fulfillment costs which are higher. Basic Fulfillment is for shipments outside of Amazon.com (eBay, Website, etc.)
First let me explain Amazon's FBA Rate card, for Amazon fulfilled orders, based on a single DVD:
Amazon charges sellers for four things:
- Inventory Storage - Amazon charges a fee to store your items until they are shipped to fulfill an order. An avg. DVD would cost $0.02 to store for 30 days. They only charge you for the time the item is in the warehouse, so if it sells in 15 days, your warehouse charge would be $0.01. (Warehouse fees do increase during the 4th Quarter)
- Order Handling - Media Items do not incur a handling charge. Non-media pay $1.00 per order.
- Pick & Pack - Media items are charged $0.50 for items under $25.00 and $1.00 for items over $25.00.
- Weight Handling - The rate is $0.40 cents per pound but Amazon only charges you for the actual weight of the item to the nearest ounce. If a DVD weighs 4 ounces it would cost $0.10 cents in this calculation. I am used to calculating the packaged weight for postage but Amazon uses the item weight before packaging.
Additional related costs: (These are costs that you will need to calculate in your overall cost)
- In-bound Freight - Shipments from your office to Amazon's warehouse. Amazon has a service where you can print out UPS shipment labels using their UPS rates, which saves a lot of money on in-bound shipments compared to UPS retail rates.
- Labels - A label has a product identifier specific to Amazon Fulfillment Services, including a barcode of the product identifier, item description, and item condition. They are standard 1" x 2-5/8" labels and when purchased in bulk will run you less tha $0.01 per label.
- Direct Labor - This is the cost a seller incurs to process and ship items to Amazon.
So lets compare an item sold and shipped through Amazon.com and fulfilled by FBA, with that same item fulfilled by Glacier Bay DVD (my previous company). My Glacier Bay numbers may be a little dated because I believe there has been at least one postage increase since I stopped selling.
For this example I am using a DVD called The Ghost And Mr. Chicken which I am selling for $9.16 and weighs 4 ounces before packaging. (This item may be sold by the time you read this so please click on the image to see what it looked like in search)This comparison includes Amazon.com fees and assumes that the seller has a Pro Merchant Account.
Processing and In-Bound Freight Fees: ($0.20 cents per item)
- In-Bound Freight - My shipments to Amazon average $0.10 per item, using Amazon's in-bound UPS program.
- Labels - Labels costs me $0.01 cents per item.
- Direct Labor - It takes me roughly 3 hours to process and ship around 300 items to Amazon. If I were to pay an employee $8.50 per hour to do this job (3 x $8.50 = $25.50) it would cost me $0.09 cents per item (300 items). This doesn't include any additional G&A burden for that employee.
Amazon FBA Fees: ($0.62 cents)
- Warehouse Fee. This fee is charged by actual size, based on a $0.45 per cubic foot rate and is charged only for the time the items are in the warehouse. An avg. DVD costs me $0.02 a month for warehouse fees. Since 75% of my items are sold within 30 days. This amount is miniscule. My total warehouse fees for January were under $3.
- Fulfillment Fees: Since I only sell media, my pick and pack fee, for this item is $0.50
- Weight Fee: My weight fee for this DVD is $0.10. FBA charges you for the actual item weight, to the closest ounce. Boxsets 2 Disc sets are obviously more.
Amazon Marketplace Fees: ($2.17)
- Amazon Referal fee - 15% on media items (this fee varies by category and includes all transaction processing fees) is $1.37 ($9.16 x 15%)
- Variable closing fee - $0.80 on CDs and DVDs
My total cost to list, sell and ship "The Ghost And Mr. Chicken " after 30 days, using Amazon's FBA is: $2.99 (Inbound Fees $0.20 + FBA Fees $0.62 + Amazon Marketplace Fees $2.17)
Now Lets look at Self Fulfillment:
- Pick, Pack and Ship - $1.81, includes facilities burden, customer service burden, packaging, delivery confirmation, direct labor and postage. These numbers are based on what I remember it used to cost me 2 years ago.
- Amazon Marketplace Fees - $1.73 ($6.18 x 15% plus $0.80 variable fee)If I was self fulfilling the item, I would charge $6.18 for the item and get the $2.98 S&H reimbursement from Amazon. My total revenue would be the same but I would pay less commision to Amazon.
My total cost to list, sell and ship "The Ghost And Mr. Chicken " after 30 days, fulfilling the order myself is: $3.54 (Pick, Pack and Ship $1.81 + Amazon Marketplace Fees $1.73)
So you can see, by using FBA to fulfill your orders you can save $0.55 cents (in this scenario) and you do not have to worry about customer service, warehouse expense, packaging, delivery confirmation, insurance, shipping and customer service employees, going to the post office, etc. I could go on and on.
If you are an online media seller and sell on Amazon, just replace your costs to ship with my costs from Glacier Bay DVD. See how much you could save.
IMO, FBA, is the ideal fulfilment method for Amazon.com orders (especially media sellers). But don't take my word for it - test it! Take 100 skus, that normally sell well on Amazon and send them to FBA, compare the sales velocity and costs to your current self-fulfillment velocity and costs. After you have the data make your decision.
One more thing: Many of you may wonder why I provide all of my sales info, well it's because I'm a blogger that sells, not a seller that blogs. I sell on Amazon, so I have something to blog about and I can give you the real skinny on how things work. Now, that doesn't mean I want you to always beat my price on Amazon, so be kind when you see any inetmediasource listings and remember who gave you the scoop. Heck, buy one of my items and see how FBA works from the customer's perspective.
Saturday, February 23, 2008
Here are some of the friction points I'm hearing about:
- I'm not sure that Amazon is committed to the service. Well, from everything I can see, FBA is the future for Amazon.com placed orders. It is part of their long-term business plan, so they are going to make it work. Better to get onboard now then be the last one to the station.
- I sell on multiple marketplaces and I can ship them for less. Amazon's Basic Fulfillment rates can be more costly then shipping items yourself, so don't use FBA to ship your non-Amazon orders. With FBA, you can put your Amazon business on cruise control and concentrate on sourcing product, merchandising and expanding it. Just keep shipping your orders from the other marketplaces yourself.
- I have virtual inventory. Well, if that is the case FBA is not for you. That is how I ran Glacier Bay DVD, but I still had returns, miss-ships etc build up in my warehouse. If FBA was around when I was selling, I would just package those all up and ship them off to FBA.
- I have to convert my current Pro-merchant account to Seller Central. I did that without a hitch and if I chose to, I could manage my FBA, Self Fulfilled and Webstore inventory from one place. BTW, my guess is everybody will eventually be in Seller Central so you might as well move now.
- I don't want to give up the shipping reimbursement. You don't have to, just add it to your price. I add $2.97 cents to each of my items and still show up as number one in the item sort. I only re-price 2 times a week so occasionally my items move down the list but that doesn't stop customers from buying them for Super Saver or Prime shipping.
- I don't want my product to just sit there and force me to pay warehouse fees. I sell 25% of my FBA orders in the first 2 days after a shipment is received by Amazon. I sell 75% of my items within 30 days and 90% of my items within 90 days. 10% of my items may take a year to sell but that would only cost me .12 cents a year (per item) for the avg. size CD. You control what you put up on FBA, so pick some of your best sellers and test it out.
Those are some of the most common friction points for sellers, especially media sellers.
I know that change is painful, but this FBA thing is really a piece of cake. I spend 6 - 7 hours a week on my Amazon business which is 100% FBA. About half of that time is spent receiving and processing orders from my BuyBack site and the other half is prepping and shipping about 300 items to Amazon each week (I usually do this while I'm watching TV, BTW). This allows me to do my blogging during the week, without having to even think about my Amazon business, except to download my money or reprice items (Yes, I do this manually).
I process my Buyback orders on the weekend and ship to Amazon on Mondays, The shipment arrives in 2 days and is usually received within 24 hours. If you sell full-time you are much more efficient then I am and you probably have employees to do all of this.
Over that last 30 days, I've sold $21,475.15 worth of product, which is 1,421 items in 1,369 orders. I may have received 25 total emails over the whole 30 days. I haven't had to process one return since I started using FBA back in Oct.
I think it is worth a test. It is not an all-or-nothing decision. Just think about how your business would change if your Amazon business was on cruise control. How would that effect the rest of your business. Just select 100 sku's that sell well on Amazon already and ship them to FBA, compare the numbers, customer types and velocity and see if it works for you.
A little bird told me Amazon is running an FBA promotion until Feb 29th, so if you were planning on testing it out, now might be the time. Mention the promo in your email and tell them you heard about it at MY Blog Utopia.
Friday, February 22, 2008
The point of the article is summed up well, in the sub-title "Their online gripes will help you reinvent your business" Now I know this has to be about eBay, right! The funny thing, the article never mentioned eBay once.
"Here's some free advice: Go to Google (GOOG), enter any of your company's brands followed by the word "sucks," and you will see the true consumers' reports. Brace yourself, for it won't be pretty. Googling Wal-Mart (WMT) turns up 165,000 results; Disney, 530,000; Google, 767,000 (DIS). What's your number? Don't get mad at these people. These angry customers are doing you a huge favor: They care enough about your product or service to tell you what went wrong. Others may desert you. These customers tell you what to fix. Listen to them. Help them. Respond to them. Ask their advice. They'll give it to you.You should require everyone in your C-suite to read the missives of unhappy customers that show up in the unofficial Google Sucks Index and to fix every problem they can. It's O.K. to ignore the people who seem to hate you for sport, but listen to the rest."
The writer goes on to describe his experience with Dell, but I could just as easily insert my experience with eBay or PayPal, with this one caveat: "It's O.K. to ignore the people who seem to hate you for sport, but listen to the rest."
Just as corporate executives need to listen to those that hate them, so do online sellers. Isn't this really the point of Feedback, I know it hurts to get criticism, but if you look at the criticism to find ways of improving your business, the benefits can outweigh the negatives.
When I was selling I rarely paid much attention to the negative feedback, most of which I felt was coming from unreasonable customers, but now that I think back, there may have been patterns in the feedback that would have pointed out a problem with my business, maybe I should have paid attention.
While, I believe that large corporations need to listen to their detractors and find the kernels of truth in all the negativity, online sellers would do well to follow the same advice and listen to their unhappy customers. They may identify problems with your business or operations.
As for eBay management; listen to me every once in awhile. I complain because I care.
Just my 12%
Thursday, February 21, 2008
Obvious Reasons to Stay:
- There is no other viable Auction marketplace.
- You can't beat the traffic.
- I can't get into Amazon.
- It is a great liquidation channel.
- It is just one marketing channel in my business plan.
Other reasons for staying:
- I just figured out how to list on eBay and the other sites confuse me.
- I don't have a clue how to advertise through Google or Yahoo.
- I'm afraid to try something new.
- I'm comfortable selling here and I have plenty of margin.
- I'm a hobbyist and only sell occasionally.
- I sell items to get money in my PayPal account so I can buy items on eBay without having to dip into my wallet.
This question is not meant to disparage eBay, I'm just trying to get a gauge on why sellers stay. So please use the comments section to tell me why you stay, or why you think others stay.
Update: This is an opportunity for Suzanne, Cliff, Gary and others to share why eBay is right for them.
Anyway, this whole discussion got me thinking about the new 15% discount on fees and I thought I would do a little exercise on what that discount would have meant to my business had it been in effect, when I was selling.
Stats for the comparison: 200,000 (under $25) store listings generate $300,000 in GMV (I'm using an avg. monthly GMV number and avg store listings from Glacier Bay's good years). When I sold on eBay the FVF for stores was 8%, but I will use the most recent FVF of 10% to calculate my base numbers. The new fees, that went into effect on 2-20, have a 12% FVF for Store sales. (Have I confused you yet.)
Listing Fee Calculation: (200,000 under $25)
- 200,000 items under $25 cost me $10,000 to list with the old fee structure.
- 200,000 items under $25 costs me $6,000 to list under the new structure.
Savings on Listing fees: $4,000 a monthFVF Calculation: ($300,000 a month in GMV)
- Under the old FVF structure of 10% my cost was $30,000 a month in FVF fees.
- Under the new rate of 12% my cost would be $36,000 a month in FVF.
Savings, oops! I mean increase: $6,000
So, if all things are equal and I don't qualify for any FVF discounts I would pay $2,000 more per month to eBay on the same GMV. Let's see what that discounts will get me.
- If I was able to qualify for the 15% discount it would save me $5,400 on my FVF. (It is not likely a media seller will ever qualify for the 15%)
- If I qualified for the 5% discount it would save me $1,800
So let's see how I did before and after the fee changes on $300,000 in GMV and 200,000 listings.
- Prior to the new fees I paid $40,000 in fees to eBay ($30,000 in FVF and $10,000 in listing fees)
- Qualifying for the 15% discount under the new rates, I would pay $36,600 in fees to eBay ($36,000 in FVF, $6000 in listings fees, minus $5400 in discount (15% of $300,000) A savings of $3,400 a month.
- Qualifying for 5% discount under new rates, I would pay $40,200. ($36,000 in FVF, $6,000 in Listing fees, minus $1,800 in FVF discount (5% of $300,000) An increase of $200 a month.
So as it stands, if I want to get my DSRs to 4.8, I can work my butt off in customer service (spend additional money on reps) reduce my S&H rates (give up revenue from shipping) to earn a $3,400 a month savings. I can tell you from experience that I would have to spend close to $3,400 a month to even get close to a 4.8 DSR and if I spent that money and did not qualify for the discount I would be pissed.
The point of this exercise, is that eBay is just playing with the numbers. I can change nothing in my operation and pay $200 more a month in fees, or I can spend at least $3,400 to save $3,400.
Does that make sense?
Update: Before you ask. No, 200,000 store listings did not genreate $300,000 in GMV. The GMV number came from a mixture of CORE and Stores. The numbers just made for an easier calculation.
Perspective: Just in case you were curious - When I shutdown GB in January of 06 the store fees were $0.2 cents per listing and 8% FVF or a total cost (using the numbers above) of: $28,000. How's that for a discount? And eBay management wonders why S&H increased and you can't find a deal on eBay anymore.
Just my 12%
Wednesday, February 20, 2008
Wikinvest, is a wiki for investors and provides interesting information about publicly traded companies as well as concepts around investing. They will even give you the Bull and the Bear version on your favorite stock.
So just for fun I pulled up the Wiki on Amazon and eBay. There is some great information here so check them out.
BidBlocker is a site for eBay sellers to share their Blocked Bidder lists. Here is what the homepage says:
"You have all heard about the changes occuring on Ebay. Sellers will no longer be able to provide negative feedback to buyers.
The only way sellers can protect themselves from unwarranted negative feedback is to block problematic Ebay customers. Customers who have left negative feedback in the past are more likely to do so in the future.
How does it work?
- Ebay sellers add buyers to BidBlocker's database.
- BidBlocker looks at all feedback left by the buyer.
- BidBlocker calculates a Buyer Feedback Rating - a statistic not listed on Ebay.
- Registered BidBlocker users can then copy the list of buyers into their blocked bidder list based on their definition of an "acceptable" Buyer Feedback Rating."
I thought "Blacklisting" went out in the 50's.
This website is a perfect example of why eBay will have a tough time making changes to the site. Have you heard the saying, "for every action there is an equal and opposite reaction"? Blocking buyers, who leave negatives for sellers, defeats the purpose of eBay's feedback changes. Buyers who leave negs, will soon find that they can't buy from a large number of sellers. How will this improve their customer experience?
At first, I thought this site wouldn’t get much traction, but after seeing so much anger about the feedback changes, the "network effect" might give this site a shot. Sellers are always trying to find ways to game the system and this is a perfect example.
Update: Apparently, the point of this post was not clear. I am not suggesting this is a good idea, but is an example of what sellers will do, to get around eBay's rules. That's all folks!
Just my 12%
According to the article, using a 100 point scale, here is a sampling of the "Feedback" ratings for certain industries:
- The online retail industry received the highest rating of 83 out of 100, led by Amazon (the article didn't breakout individual company ratings). That means that 17% of customers shopping online were unhappy with their experience. On eBay, a Feedback rating of 83 would get you kicked off the site.
- The Auto industry received an 82, thanks mostly to Toyota.
- The Airline Industry received a 63
- The Cellphone business received a 62
This is why eBay's Feedback system is so unreliable. There is very little differentiation between sellers in the current system. How is a customer supposed to decide between sellers when just about everybody has a rating of 98% or better?
I know that sellers are upset about the effect that eBay's feedback changes will have on their business, but even a seller that has a 100% feedback did not actually please every customer. On eBay, Feedback is your reputation, and nobody messes with a seller's reputation, but in order for it to be meaningful, to anybody but the seller, it has to be real.
Just my 12%
Don't get me wrong, I care about the sellers who are in the eBay trenches each and every day, but would rather write about how they get out of those trenches, than encourage them to adapt to the bombardment.
So, as I sit here in my underwear trying to decide on what to write about today, I just don't have any desire to write about eBay (I know this post has a lot of eBay in it, but work with me ok). Even on a day when their new fees go into effect.
Maybe this is just a phase I'm going through, that is specific to eBay, because I still enjoy writing about selling online through Amazon or your own website. eBay is just a downer right now. This really ticks me off because it never should have come to this. eBay management has turned the greatest story on the web into "As the World Turns".
Amazon may not be perfect and could sure improve communication with the seller community, but they treat selling online like a business, not a circus. I don't wish for the "Old eBay" to come back. I want a vibrant new eBay, so that online merchants have options.
Of course, I will still write about eBay -- I'm just letting off some steam -- but maybe my focus will change. If selling online is just a hobby then even now eBay may be right for you, but if you sell online to make all or a substantial part of your income, you need to take a hard look at your business.
I know change is difficult and scary but it is so much easier to make changes when it’s on your own terms. If you wait until you are forced to change, it may be too late. Believe me, I know what I'm talking about in that regard.
Sorry for the rant, now back to your regularly scheduled blogging.
Just my 5 cents! (Oh, that's right Store listing fees just went down to 3 cents, maybe I should change my tagline to: Just my 12%)
Tuesday, February 19, 2008
Ina Steiner recently spoke with Paul St. James, the founder of Bargainland, on his plans. "When asked why he suspended his sales on eBay, St. James said, "I can't define it as any one single point. It was kind of the aggregate of quite a bit. It felt like eBay was distancing itself more and more from the large volume sellers and, in particular, the as-is, 99-cent, No Reserve type seller. It seemed like to us they were trying to get more into the sexier, cleaner Amazon-type space."
"St. James ceased selling on eBay - at least for now - and has moved his auction business to his own site at Bargainland.net (http://www.bargainland.net/), which he launched about 3 months ago. "
It isn't likely that they will ever be major competition for eBay but taking control of their business has opened the door to additional revenue streams and expansion of their business model.
Likewise, eBay's recent changes have forced another large seller to take a similar tack. Bruce Hershenson of eMoviePosters has recently announced that he is creating an auction site to sell his own product and is working with other sellers to help them lessen their dependance on eBay.
Bruce wrote a very impassioned letter to Ina Steiner of Auctionbytes explaining why he decided to do this. Hershenson said; "eBay has miscalculated in my case. I have to examine how much I pay eBay per year, and what I received in return for that money. I have concluded that I can do far better opening up my own auction on my own site. Unlike many other sellers, I had my own business for 10 years prior to starting on eBay, so I am now reversing the process I started in 2000! At that time, I moved my entire business ONTO eBay, and in 2008, I am moving my entire business OFF of eBay."
I recently wrote a post entitled "eBay's Death by a Thousand Cuts" and these two stories add to the message of that post. At some point, the best and brightest sellers on eBay, will get smart and move elsewhere, maybe to Bidtopia or maybe to their own sites. After awhile it will take its toll on eBay's business.
Just my 5 cents! (thanks to Tony P. for pointing me to the link for Bruce's letter)
Q. Do I need a merchant account for the Amazon WebStore to handle payments?
A. Nope, Amazon handles all payments and fees are included in their 7% FVF (they call it a commission). So, when comparing prices with other services, make sure and account for the payments aspect of each transaction. With ProStores, Yahoo Stores, Volusion etc. you need to handle your transactions via PayPal, Google Chackout or a Merchant Account and incur additional fees. These are all additional fees over and above the platform fees.
With Amazon's WebStore, the 7% FVF includes all transaction payments. Customers can use their Amazon account to pay for items on your WebStore and they get Amazon's Worldclass A2Z guarantee and you get another little bonus; Amazon's nearly 80 million active users can buy on your WebStore without doing a thing different than they do on Amazon.
Q. What kind of items can I sell in my WebStore?
A. Basically anything that can be sold on Amazon can be sold in your WebStore. Amazon, may not have the exact category for your items but you can use the Everything Else category until they do.
If you have additional questions please go ahead and use the comments section, of this post, to ask them and I'll do my best to post an answer right away.
Please feel free to ask your questions using the comments link and I will do my best to provide the most complete answer. For this post please keep your questions about FBA (Fulfillment by Amazon). I will create additional Q&A posts on WebStore, Seller Central, and other Amazon programs as I move forward.
Here is the most common FBA question:
Q. How much does FBA cost?
A. The simplest way to answer this question, is link you to their website, so open up that page in a different window, as you read my explanation. Here is how it works:
- Inventory Storage is .45 cents per cubic foot, per month (January to Sept.). So, if your item is 1 cubic foot in size and stays in the warehouse for an entire month, you would be charged $0.45 for warehousing it. This fee is actually charged by the day (1/30th of the monthly fee) so if the item only stays in the warehouse for 10 days, your warehouse fee would be 1/3 of the .45 cents or .15 cents. A 1 cubic foot item that stayed in the warehouse for 6 months before it sold, would cost $2.70 in inventory storage fees. Amazon only charges you for the space you use and the time it is in the warehouse, so in my case the average DVD would cost me about 2 cents per month in inventory storage, if it took 6 months to sell, my total inventory cost for that item would be $0.12 cents.
To put this into perspective: I sell media items and roughly 75% of the items I warehouse at FBA sell during a 30 day period. At any one point during a month I may have 800 items sitting in the warehouse. My total warehouse fee for the month of January was under $3.00.
Not: The inventory fee does rise to $0.6o per cubic foot, during the 4th quarter because of the increased demand during that period.
- Shipping - Your shipping charges are broken down into two categories. Amazon Fulfilled (Amazon.com or WebStore orders) and Basic Fulfillment (all other orders)
Amazon Fulfilled orders have an order handling fee, a pick and pack fee and a weight fee.
Let's take an example from one of my orders for a CD under $25: Since I sell media items I am not charged an order handling fee (see pricing schedule), my pick and pack fee is $0.50 and my weight fee is around 7 cents (they only charge you for the raw weight of your item, not the whole pound rate, which is $0.40 per pound) My total FBA charge to ship that item is $0.57 cents. When I shipped items myself with Glacier Bay, an avg. CD would have cost me about $1.56 including packaging, delivery confirmation, direct labor and postage.
Basic Fulfillment shipments are orders that are created outside of Amazon's system and fulfilled by Amazon from your inventory ie. eBay and Website orders. Basic Fullfilment orders have a pick and pack fee, a shipping method fee and a weight fee.
Let's take an example of shipping a CD under $25 to an eBay customer: my pick and pack fee is $0.60 (for media) and I'm shipping it "standard" so my shipping method fee is $1.90 my weight fee is around 8 cents (they only charge you for the weight of your item, not the whole pound rate, which is $0.45 per pound) My total FBA charge to ship that item is $2.58 cents.
Basic Fulfillment is certainly more expensive than Amazon Fulfillment, so do the numbers to determine if it is worth it for you. IMO, it certainly is worth using FBA for all of your Amazon orders and if you sell multi-channel and can control your S&H prices to the customer it may be worthwhile to use Amazon to fulfill all of your orders.
- In-Bound Freight Charges - Since you have to ship your inventory to Amazon's warehouses, make sure to calculate the fees in your cost structure. Amazon does give you the ability to use their UPS rates, which can save you a ton of money. My avg cost per item to ship to Amazon's Reno warehouse is around 10 cents each, using Amazon's UPS rates.
What else would you like to know? Just use the comments section to ask me any question related to FBA and I'll try and get you the answer as fast as possible.
Monday, February 18, 2008
PeSA Partner Call: Safe Payments
"Safe Payments" initiatives recently announced by eBay will "help ensure more buyers are protected," and may "require sellers to offer either PayPal or a merchant credit card to customers... PayPal will hold payment funds until either the buyer has left positive Feedback or 21 days have passed without a claim."What do these changes mean for sellers? Find out on the next PeSA Partner Call:
Tuesday, February 19, 2008
1pm eBay time (4pm EST)
John McDonald US TnS and Jeff Clementz from PayPal will be with us to facilitate the call and to respond to questions.
1. At the specified time, dial the Access Number 1.404.920.6689
2. When prompted, enter your Participant Code followed by #
3. Your Participant Code is 295477#
This should be an interesting call and well worth participating.
eBay announced a $0.20 cent listing sale on the 13th of Feb. and listings shot up to over 15.5 million, according to Medved. On a typical day for eBay, listings normally hang around 12 million, so the promo added roughly 4 million listings to the site. With previous promos this new elevated listing number would stay for 7 days (the typical length of a listing) and then move back to the normal listing range. What is different this time, is that the Medved numbers for today (2-18) show 14.5 million listings instead of the 15.5 million listings from the previous day. This is not normal, so what would explain it?
A one million drop in listings 5 days after a promo is significant and may indicate:
- Boycotting sellers have kept 1 million listings off of the site. We will know if this is the case if the listing numbers on Weds, when the 7-day promo listings end are 1 million less than normal 12 million.
- Sellers, who normally would choose 7 days auction lengths during a promo, decided to choose 5-day listings, so their listings would end prior to the beginning of the boycott.
Regardless of what actually happened, the fact that eBay has 1 million fewer listings today then the previous day, with two more days left on the promo is significant. We will have a better guage on the impact of this listing boycott on Weds when the 7-day promo listings end and the new fee structure begins.
If listings are in the 11 million range on Weds, then I think it will be safe to say this boycott is having some effect. It may not change anything in the way eBay does business but it will be a sign that if sellers join together they can move the needle a little. If listings come back to the 12 million range, the boycott will be considered a failure.
This will certainly be interesting to watch.
Sunday, February 17, 2008
I was looking at my FBA (Fulfillment by Amazon) stats over the weekend and was simply amazed at what I saw. So I thought I would share it with you.
In January, FBA shipped 796 orders for me.
- Amazon Prime Customers- Made up 20% (157) of those orders.
- Super-Saver Shipping - Made up 53% (423) of those orders
- Regular Shipping - Made up 27% (216) of those orders.
Regular, merchant fulfilled, items are not eligible for Prime or Super-saver shipping, so 73% of the orders shipped in January were shipped to customers that would not have bought from me if I shipped my own product.
So far in February (through 2-15) FBA has shipped 765 of my orders and the percentages are basically the same as in January.
Why do I even mention these numbers? Because, if you are not listing and selling using FBA, you are missing out on a huge number of Amazon buyers, who want free shipping (I still sold 27% of my orders to customers who paid for S&H as well).
Here is how my items look in search: (Click on the image for a bigger picture)
My item (user id: inetmediasource) is the top listing in search and is more expensive than the item directly below me -- that is because FBA listings do not include a S&H amount. On Amazon listings sort by lowest Total Price, so as long as my price is lower than the lowest Total Price, I will show-up first in the list.
If a customer wants my item, they will get free Super -Saver shipping because the price is greater than $25. If it was under $25 they could combine it with another item to qualify for free Super-Saver shipping.
Prime customers, pay $79 per year for free 2-day shipping on all of their Amazon orders but merchant fulfilled items do not qualify. According to Amazon: "Prime members buy more items, shop more often, and spend more than the average Amazon.com customer. As the program continues to grow, it will become an increasingly meaningful source of competitive advantage in the online and traditional retail categories and a critical building block to Amazon’s success." (Source: Amazon Job Listing describing Prime)
Online merchants, that do not position themselves to sell to the Prime or Super-Saver customer, will be missing out on a very valuable customer segment.
Thursday, February 14, 2008
I've been thinking about the turmoil surrounding eBay's recent changes and it is clear to me that a large number of sellers are very angry. Most of the small sellers I speak with are very upset, mostly because the idea of establishing their business on another platform or moving to a webstore scares them. My suggestion to them is to re-evaluate why you sell on-line and then get over your fear and work on a solution rather than, hope that things will change.
The larger sellers, seem more determined than ever to find the right mix of product for eBay and segment their businesses between marketplaces and website. As frustrating as it has been to do business on eBay, over the last few years, many of these businesses are finding their sweet spot in each marketplace and future growth will actually come from their website.
I believe this should be a time of reflection and planning for online sellers. Many may decide to stop selling all-together or leave eBay completely. Each seller needs to determine for themselves what they want. Sometimes quitting is the best thing you can do. If the model is broken and fixing it will take way too much effort and not generate a significant enough return, then it may be time to quit. A great book on this subject is "The Dip" by Seth Godin. I recommend it highly for those reflecting on the future of their business.
Just my 5 cents!
Tuesday, February 12, 2008
In eBay News: eBay announced today that they will be holding a .20 cents listing promotion on the 13th, for just one day. Now, normally I would'nt post about a promo, unless I had something to add, but this time I'm just going to mention some things and let you speculate and play blogger:
- Why have a promotion 7 days before your new fees go into effect?
- Is this a response to the proposed boycott?
- Will this be the last promo we see now that the fees have been lowered?
Let me know what you think and I'll check in at some point to comment myself.
Many of my readers, do not trust eBay managers and there is a widening gap between management and sellers. I have written many times about "eBay Speak" and trouble with management, but my motivation has always been, to be like the sand in the oyster, which is an irritant but becomes a pearl. A strong and healthy eBay is good for sellers, managers, employees, buyers and investors. Ultimately that is all I care about.
The eBay family (buyers, sellers, management, employees and investors) is seriously dysfunctional and not even Dr. Phil could fix it, so eBay managers need to learn how to manage the family and its dysfunction. Rather than being aloof and arrogant, as in the past, managers need to do more than just talk. The recent quick action regarding Media pricing is an example of action not just talk, but it is only the first action. eBay Marketplace Execs need to do the same thing with another category and do it quickly, so that sellers begin to understand that things have changed.
eBay is in its own little universe. You never see the turmoil and emotion with the other big ecommerce companies. Amazon, for instance is not a Family, it’s a business and sellers that sell there understand that is the case, so they behave accordingly. With eBay, the dynamics are much different. eBay is much more than just a business, so, as managers try and exert more control over the marketplace, to make it more like a business, sellers will complain and lash out.
eBay's key problem is how they interact with sellers and until they address this, they will always have turmoil. eBay can't be managed like Amazon is, eBay is unique and it is about time that eBay management figured this out. So what can they do?
- Managers can be responsive to the concerns of sellers by acting quickly and decisively. When the new Feedback rules go into effect in May, managers need to act quickly to address any problems the new rules create. Sure, they have built in many seller protections into the new Feedback but nobody has a crystal ball here, if seller feedback takes a hit they need to recalculate their T&S limits and act decisively to protect sellers.
- Managers can stop using "eBay Speak" to communicate with the community. Tell sellers what you are doing and why. Straight talk will get you much farther than "eBay Speak"
- Stop treating sellers like children. Sure, they are vocal and can get emotional but that is because they want to sell on the platform. The emotion comes from feeling they are just numbers on a spreadsheet. The people complaining just want to conduct business on the Internet with the least amount of hassle and the most opportunity for profit. If you treat them as partners, eventually you can turn this ship around.
- I don't believe the divide between Sellers and management can't be bridged, but if management doesn't step-up and start building the bridge the party will eventually be over.
Maybe one of the first things John Donahoe needs to do, is create a new position called CPO, or Chief Psychology Officer. If the new management team does not reach out quickly and decisively to its sellers no amount of Finding 2.0 and Best match changes will help.
Just my 5 cents!
Monday, February 11, 2008
To put this in perspective, I've had Google AdSense on My Blog Utopia, for a year and 2 months and I still haven't reached my $100 payout threshold. Its nice to know I'm earning a little fun money every month for work (it really was enjoyable work) I did a year ago.
Of course I could just spend the money on that Amazon Webstore I've been eyeing!
- Microsoft shareholders are not enamored with the proposed deal and the company’s share have taken a hit. If they say "take it or leave it" the share price will rally.
- No "White Knight" came to rescue Yahoo from "The Evil Empire", so why bid against yourselves.
- I know this is hard to do for the "Sith Lord" Steve Ballmer, but why would you up your offer for Yahoo? As a stand-alone company they are still the same company as before you made the offer. If you withdraw your offer and say we'll buy it at the price we offered or not at all, what happens to Yahoo's share price. It tanks back to where it resided prior to the offer.
- Microsoft has already scared away any other bidders because of the size of their bank account, market cap and ability to borrow. If another bid materialized they would certainly have raised their offer. This deal is like an eBay auction. The ASP is low until you get two bidder who want the item.
So, maybe this idea doesn't hold water, but it sure makes sense to me. Microsoft should tell them to take it or leave it and only get back in if another bidder materializes. My guess is, if they called Yahoo's bluff then they would get an earful from shareholders.
Just my 5 cents!
Lorrie Norrington the new President, eBay Global Marketplace Operations, has just announced category based pricing for the media category. Here is her announcement. I normally only quote from announcements but here it is in its entirety.
"Hello...This is Lorrie Norrington, President of eBay Global Marketplace Operations. By now I hope you've had the chance to watch the Keynote and Executive Q&A webcasts from our annual eCommerce Forum held recently in Washington D.C. I can't think of a better way to start my new role than spending two and half days in discussions with many eBay sellers. I want you to know I'm committed to consistent communication, action and follow through. As a result, I'd like to let you know about our next steps:
1. To make immediate changes where we believe it benefits the health of our marketplace: We heard your comments about the need for media and category-specific pricing. Today, I am pleased to announce we are accelerating our plan to phase-in category-specific pricing for media. This fee cut will coincide with the site-wide pricing changes previously announced to take effect on February 20. In the Books, Music, Movies and Video Game software categories, we will be offering even lower insertion fees for the first three insertion tiers as follows:
- $0.01 – 0.99 (auction-style only)Original Categories Insertion Fee: $ .20New Media fee: $ .10
- $1.00 - 9.99 (auction-style and fixed price)Original Categories Insertion Fee: $ .40New Media fee: $ .25
- $10.00 – 24.99 (auction-style and fixed price)Original Categories Insertion Fee: $ .60New Media fee: $ .35
2. To closely monitor the marketplace to ensure the changes we've made have the intended impact: We heard many of our sellers believe the shipping Detailed Seller Rating (DSR) needs to be re-examined. Also, we heard you when you said you wanted us to be transparent about participation in the PowerSeller discount program. Let me be clear: our goal is to improve the buyer experience so much that at least 50% of our PowerSellers qualify for discounts. We will run these changes as announced in Washington D.C., but we will closely monitor the data. If buyer trust in the marketplace is not improving as intended within the next six months, we will take action.
3. To stick with the changes we believe are right for the marketplace: We will proceed with our plans to evolve our feedback system and with the weighting of Detailed Seller Ratings (DSRs) in search, as announced. They are both central to our plans and will aid in providing a great buying experience from sellers buyers can trust.
Finally, I'd like to take this opportunity to share with you how excited and honored I am to be serving the eBay Community. You have helped us to build an incredible marketplace over the years. I passionately believe that great service will lead to great customer experiences in 2008. I'm very committed to helping the eBay marketplace to become even more successful for you in today's competitive environment.
We literally cannot do this without you. The changes we announced better align our shared interests. By rewarding and differentiating our best partners, we will together deliver more of the great shopping experiences found nowhere else but on eBay.
President, eBay Global Marketplace Operations
I didn't want to analyze the fee cuts in this post, just wanted to get it up on the blog as fast as possible. The key here is that this may be truly a new eBay, the former managers would never have made this change. I know I've been pretty negative, about eBay, over the past two years but I do see a glimmer of hope in this announcement. Again, the hope is not about the specifics but about the change in the way they are doing business. Could this mean eBay is turning over a new leaf? Only time will tell.
With Best Match, sellers will need to become experts at BMO (Best Match Optimization), just as Website owners have had to become experts at SEO (Search Engine Optimization) or hire someone to do the work for them. Just as the SEO business has grown, I see an opportunity here for companies specializing in BMO. The stakes are pretty high. Those sellers who don't get a handle on BMO will be left in the dust while others will start getting a lion's share of the sales. Make no mistake, eBay will still get all of the sales but they will be distributed differently among sellers. Sellers who can get their product in "The Box" more than their competitors will have the advantage.
What is "The Box"? I came up with the term because it accurately reflects the way sales are made on eBay. Basically, "The Box" is the top 5 listings in Core, on any search, as well as the top 5 store listings. So the highest likelihood of a sale (I estimate the majority) on any search term is being in the top 5 Core and Store listings on the first page of search.
Even before "Best Match" was devised, "The Box" ruled eBay. Ending soonest for Core listings and Lowest Price for Store listings put you in “The Box” and this spread the wealth rather nicely; with ending soonest you were always guaranteed to be in "The Box" at some point in the auction period. With lowest price in store listings you could play games to advantage your items there.
Now, being in the box has never guaranteed a sale. You still will have to compete with the other 4 items and a sizable percentage of buyers don't care about "The Box," but being in "The Box" gives you an advantage.
With "Best Match", getting in "The Box" will not be so easy. Sellers will need to improve their DSR ratings to even be included in the "Best Match" club and then they will have to figure out what variables will get their listings in "The Box". Remember, "The Box" still exists as it did before "Best Match" but getting your listing into it just became for complicated.
"Best Match" is a complicated sort of the listings results of a search -- it is not an actual search. A buyer types in a key word, that pulls up all of the data available for that keyword and "Best Match" sorts it according to eBay's algorithm. BMO is a new science for preparing your listings to make the best use of eBay's "unknown" algorithm.
Those sellers that can optimize their listings for Best Match will benefit from being in "The Box" more than other sellers and those that don’t will see their sales fall or remain flat.
Friday, February 08, 2008
When you just get started out and you see a rosy future, the work just doesn't seem too much. The rush you get, the first time you sell one of your items, while sitting in front of the computer in your jammies, is "Priceless". Many small sellers on eBay are in that stage of their business adventure and to them the effort is all very much worth it.
For many of my readers eBay has changed their lives, allowing them to stay at home with the kids and give up the 9-5 "rat race", or maybe retire early and do something they've always dreamed of. Maybe the money is not the same as in their previous life, but the experiences and freedom are worth it.
These are the sellers who are holding onto their dreams; often called “cheerleaders”. They put up with the flaws and issues because eBay is their "first love". Unfortunately, for many sellers on eBay they have moved into the next stage of their business, where it is becoming more work than it is worth.
When I began selling online, there were few options. Amazon had their Z-Shops and eBay had auctions. I enjoyed those early days immensely but today there are even more options available to sellers and the devotion to any one marketplace is waning. Sellers are now calling themselves 3P Sellers or online sellers rather than eBay sellers, or Amazon sellers.
eBay is still "Priceless" to many, but its no longer the only girl at the dance.
Just my 5 cents! (Thanks P.G. for the trip down memory lane)
Amazon is running a limited test for this new program. Here are the details from their website:
"At Amazon, we want our customers to have the best information and selection of products available on the Internet. With Product Ads, as a seller you can participate in this cost-per-click program that allows customers to see YOUR products and price offerings. Customers viewing your products can click over to your website where they can buy directly from you. We are currently running a limited test of this program. If you would like to participate, please follow the link below.
Apply to join Product Ads today!"
Basically, it looks as if online merchants can now display their individual items on Amazon with direct links to the product on their websites. This is a cost-per-click form of advertising and may be a fantastic way for sellers who can't sell directly on Amazon because their category is not open, to get access to Amazon's nearly 80 million active users. It also appears to be another great benefit for Amazon WebStore owners to market to their new WebStores.
Imagine, Yahoo sponsored ads driving traffic from eBay and Amazon Product ads driving traffic from Amazon to your tiny little online business. If your product category is not yet available on Amazon.com, I suggest you sign-up for the program and start driving traffic to your Website.
Now collectibles sellers who have their own independent websites can reach out to the Amazon buyer. You may soon be seeing ads for vintage postcards, Memorabilia, collectibles, antiques and many other types of product that have not been available on Amazon.
I've heard from several sellers, that many of their listings displayed Free Shipping to buyers in Search, even though they do not offer “Free Shipping”. Many of these sellers have been working overtime trying to deal with the customer service problem this presents, as the buyers are still being charged their regular shipping and then complaining that the listing stated “Free Shipping”.
This kind of glitch results in a bad “buyer experience” that sellers had no part in creating , yet they have to clean up the mess. Many will receive Negs (Negative feedback) do to no fault of their own and here is what eBay's response was.
"Some sellers are reporting that their items are showing "Free" shipping costs in search results when they did not add free shipping. The correct shipping costs appear on the actual listing and in checkout; only search is showing the costs incorrectly.
We realize how confusing this may be to buyers and are working to correct this situation as soon as possible."
Thanks to TG for the information.
Now, you would think that if the true shipping costs were reflected in the listing and in checkout, that there wouldn't be much of a problem. Unfortunately with some eBay customers, this becomes a major hassle, which can result in negative feedback for the seller or a NPB (non-paying bidder) for something they had no control over. Will eBay remove this negative feedback? Not likely.
We all understand that glitches happen, but they are becoming so prevalent on the eBay platform you might consider them “new features” instead.
This just adds to seller frustration and impacts the buyer experience.
Just my 3 cents (As of Feb. 20th 2008)
Thursday, February 07, 2008
If I had looked into the future and seen a YouTube out there, maybe I would have kept all of the equipment and produced this spot, rather than writing about it on my blog. Hopefully it doesn't get lost in translation.
Let me set the stage: An eBay seller is dealing with their day to day tasks and is just beat down because of the amount of work be done for the money made.
Selling on eBay - Lower margins, jumping through hoops, high fees, DSRs, Neg Feedback, lots of stress...
Selling on Amazon - Priceless!
To be fair, Amazon has issues as well, but I've sold on both sites and it is definitely a lot less work and you make more money.
One Final Thought: Ultimately, I would like eBay to be "Priceless" as well. Online sellers need eBay to be part of their selling equation, being dependant on any one marketplace is not healthy for your business (believe me I know). Unfortunately, eBay may need to blow things up and start over (which will never happen) A healthy eBay is good for everyone, but until eBay considers sellers, partners in their success, nothing will change.
Wednesday, February 06, 2008
Before you go discounting my opinion in this matter, here are a few facts about my understanding of feedback:
As the owner of Glacier Bay DVD, on eBay from 2002 to January of 2006, I attained a 268,198 unique positive feedback rating, which is calculated by deducting the number of unique negatives from the number of unique positives. Neutrals are not counted in the total. In the summer of 2005 Glacier Bay passed JayandMarie as the top feedback seller on eBay. I was very proud of this accomplishment and it really helped promote the Glacier Bay brand.
To put this number in perspective, Glacier Bay DVD is still the #18 highest ranking seller by feedback ranking on eBay Worldwide and I haven't sold an item in 2 years. We also had a total of 539,703 positive Feedback received, 4590 total negative and 9180 combined negatives and neutrals.
When you realize that feedback is left on only 70% of eBay transactions you can see that Glacier Bay had over 700,000 transactions on eBay in 4 years. During those 4 years we received 3168 unique negatives. This gave us a feedback rating of 98.8%, which is calculated by eBay: "Your Feedback Score is calculated by adding all of the unique positive Feedback comments that you received and subtracting the unique negative Feedback comments you've received. For example, if you have 100 unique positive comments and two unique negative comments, your percentage would be 98 divided by 100, or 98 percent.
Note: Your percentage doesn't include neutral comments."
A feedback rating of 98.8% is considered low in the world of eBay, but unless things have changed since I was in school, it is still considered an A+ by the rest of the world. The rating improves even more if you take my total negatives and total positives and use the formula above, which would have put my rating up to 99.1% and if you took my total negatives and my total transactions that would make my rating 99.3%
Why did I go through this exercise? Because sellers are complaining about losing the ability to neg a buyer, mostly in retaliation for receiving a negative but other reasons being to warn other sellers, etc. Jus to put this reason in perspective, at Glacier Bay we never looked a buyers feedback. The reality is the ability to neg a buyer allowed sellers to control their feedback rating. With the changes eBay is making, this control goes away, at least the perception of that control.
In 4 years of selling on eBay, I maybe gave out 100 negatives. As a matter of policy we gave buyers positive feedback as soon as the items were paid for. For non-paying bidders we just blocked them using our BBL (Blocked Bidder List) and moved on. I believe this policy helped increase the number of positive feedback we received because we rewarded the customer for doing their job --paying us.
Sure getting negatives was not enjoyable, but our customers certainly didn't have any fear about giving us a neg because we might retaliate and our feedback did not take a hit. Feedback extortion was minimal and basically anybody who tried it was added to our BBL and we were done with it. As Donald Trump would say "You're fired" -- we didn't fire everyone who gave us a neg. I know this will be hard for you to believe, but we were responsible for a great many of those negs that we received (not all but a lot). In the 4 years we sold on eBay I never filled my BBL, which I hear was limited to 1,000 and is now being increased to 5,000
Under the new rules, good sellers may see their precious 100% rating go away but really in the scheme of things is a 98.8% that bad. Small sellers will experience the greatest feedback volatility because their numbers are so small. 2 negs in 100 transactions will give them a 98% (still an A+ in my book) so the percentage will move around a lot in the early days of your business and not so much as you add more transactions.
Many sellers are concerned about the drop in Feedback rating affecting their visibility in search and their reputation on eBay, but I believe this won’t be a problem. As feedback ratings decrease across the platform, the rating becomes more useful and a 98.8% becomes, just what it is a very good rating. Unfortunately perfection will take a hit and the sellers with 100% may be a thing of the past.
I know my view of this issue is in the minority on eBay and this post isn't likely to change any opinions, but I thought I would give it a shot.
Just my 5 cents!
I've been following eBay since 1999 and I've seen and heard it all. Still eBay continues to be the 800 Lb. Gorilla of ecommerce. So it didn't surprise me when eBay sellers were once again on the warpath. Granted, this time the unrest seems less about fees and more about the changes to feedback; the perception is that eBay is taking away the ability for sellers to protect their business. In fact, during a conference call yesterday between PeSA members and eBay management, I did not hear one question concerning fees, instead I heard about DSRs and Feedback.
Sellers are upset for many reasons, but in my view, many of them are concerned that they are losing control of their businesses. I believe if sales were great, they certainly wouldn't be complaining (Amazon exerts much more control over their sellers, but they don’t complain as much because they are selling a lot of product). Profitable sales are hard to come by on eBay and sellers are fighting very hard to maintain control of their business. The feedback issue is just a symptom of the feeling of helplessness. By not allowing a seller to leave a negative rating for a buyer, sellers believe the buyers will hold them hostage. This may not mean anything to those outside of the eBay ecosystem, but to eBay sellers Feedback is their reputation and you don't mess with their reputation without a fight.
So, once again, sellers are upset and threatening to strike. I've never felt that a seller strike would be very beneficial; especially a one-week strike. The one difference I see with the seller unrest is, its not just limited to one segment of sellers. In Aug of 2006, eBay raised fees on Store sellers but left Auction sellers alone. Earlier fee increases have affected one group more than another, but this time eBay has messed with Feedback, the most sacred aspect of eBay and it affects every seller.
So what does all of this have to do with “Death by a Thousand Cuts”? February of 2008 is much different than August of 2006. In 2006 the options for eBay sellers were limited to Amazon and a few small upstarts. Amazon was just starting to expand their categories and open them up to 3P sellers, so there were not very many places to go. Today is much different; Amazon has expanded their 3P offerings, adding WebStore and FBA in addition to opening up more categories. Those upstart companies, that were around in 2006, have grown steadily and are much more viable this time around and paid search isn't so scary to sellers any more. Heck, they can even buy paid search ads on eBay that gives them more exposure than eBay store listings.
I came across a great article at Money.CNN.com entitled EBay rivals circle vulnerable auctions kingpin about the many options available to eBay sellers today. What was interesting were the numbers and trends these sites are seeing. Many of these sites saw an increase in registrations around the time of the eBay announcements. Sure most of these sites are not seeing huge numbers in real terms, but the combination of the number of available sites and the measurable increases in registrations for each, begins to add up. Blood is in the water and each of these sites is stepping up their efforts to reach out to the unhappy eBay seller. “Death by a thousand cuts”, just means that not any one cut is fatal. In fact it may take a thousand cuts to finish off the victim and all the while the victim doesn't feel they are in danger, until it is too late.
Lets start to counts the cuts: (Most Data is from the article)
- “OnlineAuction.com, based in Grants Pass, Ore., reports that roughly 7,500 new sellers have opened accounts since eBay announced its new policies last week. That's a 15% jump in the site's user base, within a matter of days.”
- “Another contender, eCrater, has registered 1,400 new sellers within the last few days. That's more than double the site's average weekly total.”
- “Another upstart attracting attention from fleeing eBayers, San Francisco's iOffer, is built around a focus on friendly engagement between buyers and sellers. Sellers can transfer their eBay feedback scores to iOffer. . . iOffer has accumulated 75,000 sellers and nearly 1 million total users since its 2002 launch.”
- Another auction site, Chicago-based uBid, targets bulk sellers liquidating excess inventory. Its 7,000 participants include Sony (SNE), Motorola (MOT, Fortune 500) and Dell (DELL, Fortune 500). All sellers submit to a 10-point financial exam to ensure they're qualified to do business on the site: "That's part of our stringent anti-fraud stance," said uBid CEO Jeff Hoffman.”
- “… the auction site Bidville, which uBid purchased in 2006, does focus on what Hoffman calls "consumer-to-consumer" sales - the market eBay now dominates. More than 350,000 sellers are registered on Bidville, but 25,000 active accounts provide most of the site's 1 million listings, Hoffman said. “
- “Following eBay's announcement last week, the Overstock (OSTK) team worked through the weekend to design a new strategy highlighting its lesser-known auctions space, said Overstock CEO Patrick Byrne.
The result? Overstock, in Salt Lake City, will redesign the header on its homepage to direct more traffic to its auctions tab. It plans to accelerate a software rollout that will beef up its auctions community message boards - and it's laying plans to produce 15-second Internet commercials to get the word out.
"We think the time is right to position ourselves in this category," Byrne said. “
- “Even Amazon has noticed an uptick in new seller accounts in the last week. Best known in its early days as an online bookstore, Amazon (AMZN, Fortune 500) expanded into consumer electronics and other categories, and in 2000 began allowing third-party sellers to list their wares alongside Amazon's offerings. All products are offered at a fixed price.
Today, 26% of all items sold on Amazon come from its 1.3 million third-party sellers, who range from mom-and-pop vendors to Target Corp (TGT, Fortune 500).”
- And the cuts go on: Yahoo Stores, Independant WebStore platforms, eBid.net, Play.com, Etsy.com, Google Product Search, Google and Yahoo paid search and BuyBack sites are going after consumers who may become casual sellers.
Not one of these cuts will be fatal, but when you add them up they are beginning to drain the lifeblood of eBay; the seller.
I'm not predicting the imminent demise of eBay, but if they don't do something quickly, to stop the bleeding, they may find themselves as just another marketplace and my guess is, that 800lb. gorilla is going to weigh a lot less.
Update: CNN/Money did a follow-up with 5 profiles of former eBay sellers and where they are selling now. Most of the profiles are small sellers and one is BargainLand a large liquidator that left eBay this summer.
Just my 5 cents!
Tuesday, February 05, 2008
"Kijiji India, the Indian site for Ebay Inc’s general classifieds business, will now be jointly owned by by the company and VC fund Matrix Partners, as per a release. The terms of agreement and details of the deal have not been disclosed, but suffice to say that Matrix is looking at Kijiji India as an early stage investment. The Avnish Bajaj connection is obvious - he’s the MD of Matrix Partners, and had sold Bazee.com to Ebay Inc. Bazee.com is now Ebay India. Bajaj says that the investment in Kijiji will be used to scale up its offerings, but I wonder why Ebay sold stake in Kijiji India."
I have the same question as the author of the quote; Why is eBay selling a share of Kijiji India? Is this a strategy change for each of the independent Kijiji sites? I don't have a clue, but it certainly is curious.
Anyway, just thought you would like to know.
Well, the old saying goes "the best defense is a strong offense" so look for Google to ratchet up their efforts to derail this deal. Maybe their infamous "do no evil" mantra can be put in the back room for a couple of months, while they pull out the big guns. So what is next for Google?
- Look for Google to continue to press the FTC to take a look at this deal, if for no other reason then to slow it down.
- Google would certainly like to partner with Yahoo for their paid search business but I see this as a last resort for Yahoo, after all other options have been exhausted.
- I think eBay is in play and Google may consider a bid for the company. Now that Meg is gone, this may actually have a shot.
One thing is for sure, Google can't just sit on their hands waiting for something to happen, if the deal goes through they will need to strengthen their business to maintain their position and an acquisition of eBay would make sense on a number of levels:
- Google could integrate PayPal into Google Checkout and instantly become the leader in online payments.
- Google is a technology company and would be able to improve eBay's marketplace business. Can you imagine a Finding 2.0 designed by Google?
- Skype would have a home and finally be able to extend its #1 position in the Internet phone business.
- Google would be able to expand its product search business and become the defacto search for ecommerce on the web -- even before Microsoft and Yahoo figured out what hit them.
Of course eBay could decide to merge with Yahoo in a defensive move, to keep from getting swallowed up by Google.
Google, its your move!
Just my 5 cents!
"Bay Area cable provider Comcast Corp. and San Jose-based eBay Inc. may be potential bidders for Time Warner Inc.'s AOL, as Microsoft Corp.'s offer for Yahoo Inc. threatens to knock out the two most likely suitors for the Internet unit, Pali Research said."
OnlyeBay, TameBay and myself are the only ones to comment on this, as far as I can see, so I would put this in the "Not Likely" category. In fact it looks like Pali Research just added eBay to their quote to make it sound better. They go on to say; "There's a lack of buyers for AOL, Richard Greenfield, an analyst at Pali Research, said Monday in a note."
I think the rumor started because nobody is really interested in buying AOL and with the recent Microsoft/Yahoo deal it seemed like a good time to float the idea.
If eBay is seriously considering this and I don't believe they are, they have certainly lost it. The new management team doesn't want to make their first deal a stinker worse than Skype. It sounds more like Pali research is trying to stoke the AOL fire a little.
Update: Scot Wingo has some interesting observations, regarding the possibility of eBay acquiring AOL. He makes some valid points in regards to the idea, if eBay wants to remain independent, but in my view, an independent eBay/AOL isn't worth it.