It seems to me that a great many serious sellers on eBay fall into it almost by accident. Perhaps taken surprise by a few good sales and the hope they can change how they work and live, they take the plunge. This is one of the reasons why the eBay marketplace is so vibrant: lots of people, perhaps new to running their own business, are learning as they go along and doing business in their own way.
A lot of serious sellers are running their own businesses for the first time and with that comes inexperience. One basic business practice that many sellers neglect is keeping a close eye on their sales and other business metrics.
Why is this important?
Understanding what’s going on with your sales is vital because it’s how you determine how much money you’re making and let’s face it, profit is why you’re in this game. On eBay it’s particularly important because it’s a cut-throat, competitive marketplace. It’s not an advanced skill or practice; it’s one of the fundamentals. You haven’t got time? You have to find it. Next time you’re hunched over My Messages waiting for an email to come in or checking your auctions for the umpteenth time that hour, consider if it’s really necessary and whether you could be spending some quality times with your numbers.
When you know the numbers, you will be able to make informed decisions related to stock, pricing and improving the health of your business.
What numbers matter?
Sales Data: First up, you need to know what you’re selling and for how much. This information can be found in the Sales Report in your eBay Shop. Something else to examine the number of unique buyers you’re selling too. Repeat sales and multiple purchases are a really good health metric: the higher the better.
eBay/PayPal’s ‘Take Rate’: What percentage of your turnover in general, and item by item, are you paying to eBay/PayPal? There’s no hard-and-fast rule but between 8% and 15% is pretty good for most sellers. Most importantly, is the ‘take rate’ changing over time? One way to improve your profitability is to maintain sales but cut what you’re paying. Or you could concentrate your sales on more profitable lines with lower ‘take rates’.
Conversion Rate/Sell Through Rate: What percentage of what you’re listing is selling? Are some of your lines better performers? Improving your conversion is a key way of improving profitability because you’re not wasting fees on items that don’t sell. What’s an ideal conversion rate? It depends. If you sell big ticket items, a conversion rate of 10% can be profitable and even a seller who has 100% conversion might not necessarily be making money.
Average Selling Price: What prices do your lines get? A vital metric on it’s own but more valuable as you track it over time. If you compare ASPs to the previous month, and also the same month the year previous, and they’re decreasing it’s a heads up that the market is saturated or demand has fallen and you might want to look for other lines.
Tomorrow: Know the Marketplace
13 Responses
by the time I have spent a week thinking of a user name then another week altering it to a one that no one has ,so ebay accepts it , downloaded spreadsheeted, data and number crunched , I am too knackered to sell anything
For me the most important figure is the take rate, Dan suggests between 8% and 15% and that’s about right for me, but it’s almost as important to realise that paying too little is almost as bad as paying too much.
If you’re down towards the 8% or lower you may find that increasing your spend increases sales and although you’re paying eBay/PayPal a higher percentage it’s of a much bigger pot so your overall profits are higher.
The other thing I always do when considering eBay fees is to split them into PayPal/FVF fees and listing/listing enhancement fees. The higher your PayPal/FVF fees as a percentage of your overall fees the better as they’re the ones you pay when you make a sale.
If your listing/listing enhancement fees are higher than your PayPal/FVF fees then look at ways to reduce them whilst increasing your conversion rate.
a wise old yank many years ago
gave me some very sound advice concerning ebay fees,
THINK VANILLA
northumbrian why don’t you not sell off ebay then, considering you dont ever have a good thing to say for it. I heard amazon or tazbar might suit u!!!!
??????? whos calling Ebay???????
Abs – North is a staunch eBay enthusiast who just likes to make money. Don’t tell him I told you so though 😛
My Ebay/paypal take rate is about 25%, far too high I know, I know that by spending some “quality time” analysing sales data I can reduce this and be more efficient, however at the moment I am letting the ebay business run on autopilot whilst I use my spare time to look at other sales avenues.
The reason I am doing this is like many sellers of volume products Ebay does not have the appeal that it once had.
I drifted onto Amazon in September, after years of being 100% Ebay and am surprised at the sell through rate there. On the back of this i am spending any spare time I have finalising my website and developing the Amazon side of things.
There was a interesting link on Dans Blog, well worth a read https://bits.blogs.nytimes.com/2007/12/17/the-depth-of-ebays-problems-2-angry-sellers/
Two points of interest, firstly Scott Wingos quote “EBay has gone from the channel of first resort to the channel of last resort,†Mr. Wingo said. Two years ago, he explained, sellers would list all their products on eBay and just put the remnants on their own sites. “Now sellers will put something on their Web sites — that has become the channel of first resort — then Amazon, then eBay.â€
Secondly one of the comments under the article is from a seller called Andy Mowery, if you google his name + ebay you will see what a committed Ebay seller he was, and reading his comments reinforces what Scott Wingo says.
In conclusion i hear what Dan is saying, it is sound advice, but other sales channels are taking up what free time I have.
too right chris,
Ebay is the 8th 9th & 10th wonder of the world.
I have never listed on any other site than ebay and never will [hopefully]
I also think their fees are the best deal in business there is and the most cost effective
I would suggest that you missed a key factor regarding ASP analysis. While you suggest tracking it over time on eBay — the better metric is tracking the current ASP for similar products being sold OFF ebay.
In many product categories, ASPs on eBay are far below (e.g. 20% below) what the product item might sell for on another venue (amazon) or your own web-site.
This is usually a function of either:
1) A large over-supply situation on eBay. As supply increases, prices drop; or,
2) A telling sign that customers have placed a “negative” price premium (sounds weird I know) for the item or category on eBay.
A negative price premium is one where a consumer would say something to themselves like:
“I’ll take a risk and buy this on eBay IF the price is at least $5.00 or 10% lower than what I could buy it on another venue/site.”
In other words, the consumer establishes a negative price premium for the product being sold in that category on eBay.
If you are a seller of the item subjected to either 1 or 2 above, you should consider switching the item off the venue or selling it on your own site with a Google Adwords type campaign to drive traffic. Most often, I have seen instances where the existing lower price on eBay continues to go lower and lower as desperate sellers race each other to the bottom on price hoping to wait out the death of their competitors.
It is critical to also note that the ASP and the eBay take-rate are deeply-interdependent. An example should help make this point:
If an item typically sells off-eBay for $100, but goes for $80 on eBay… and you apply your low-end eBay 8% take-rate to the $80, after accounting for the take rate, the seller is left with $73.60 to cover profit and all other costs.
On the other hand, if the seller sold the item on another venue for $100, and that venue charged, say 15% — the seller would be left with $85 to cover profit and all other costs.
Here’s the point: In the example above, since all other costs for the same item should be the same — the extra $11.40 in the second case would be pure profit to the seller. Thus, the take rate is relevant ONLY when compared to the relative ASP for the same item selling on different venues.
Brian
there are way too many data and statistics available,
I feel many are bogged down and blinded by numbers and statistics,
this numbers data percentages game might be fine for the big boys and corporations, business school graduates etc
joe soaps like me , need to worry over little other than to flog it for a profit ,then worry about what pigeon hole to bung it in afterwards
apologies then north, i guess your scarism went over my head. my fault. I believe that you cant put all your eggs in one basket. im a small seller too. selling stuff from my garage, but i do have other avenues as it would not be good business sense to pile all my interest into eBay.dont get me wrong, eBay is great and I love its format, were else in the world would you get the audience that is attracted to eBay. but i am buliding for the future, so i believe its viable to have your own website, along with eBay and maybe 1 or 2 more hands in other pies!!! again apologise north, didnt not mean to be rude or offensive with last comment.
no problems no offense taken at all its so easy to take comments out of context,
I am always being misunderstood LOL. of course its good business to have your fingers in other pies, though you haf got to make sure their nice fresh edible and tasty ones,
We have lots of other outlets and business venues, though we decided some time ago , to use ebay only for online, transactions
but thats us, we are certain ours is not the only way
if your selling stuff from a garage your much bigger than us, we have a shed at the bottom of the garden, and even then we fight for space with the spades forks and guinea pigs