Learn to buy and sell antiques and collectibles

Some Observations On My 2013 EBay Efforts

While doing my taxes, I started thinking about last year's results. This article just has some quick lessons based on my results.

ITEM: 12% of my sales by dollar were international sales. That means that 1 out of every 8 dollars came from a buyer outside the U.S.

Now, I'm sure there were many times an international bidder came in second when bidding.

ITEM: I now make money on shipping. In the past I broke even or lost money. I raised all my shipping rates, and spent quite some time figuring out how to make shipping into a profit center.

The biggest shipping change is I'm now shipping everything that weighs less than 13 ounces by First Class mail in boxes that I buy.

A 13 ounce package by priority mail will cost $2-3 more than a First Class package. I buy the small boxes for about 50 cents each so I lowered the shipping cost paid by buyers on my lighter items and still get a little profit.

For example, I used to charge $6.77 shipping for a small light item by Priority mail. The box would cost me about $6.00 to mail, and with the eBay/PayPal fees on the shipping I was getting maybe a dime to cover the cost of the packaging materials.

The same lightweight box by First Class mail costs about $3.00. Add in the cost of the box and my cost is about $3.50. If I charge the buyer $5.27, after all my costs including the eBay/PayPal fees I make about 80 cents on the package.

The buyer pays $1.50 less, and I make 80 cents more. We're both happy.

ITEM: I was losing money on shipping was on international packages. If the Post Office website said it would cost $20.00 to ship the package, I charged the buyer $20.00. This seemed like the right way to do it, until I remembered the eBay/PayPal fees.

I'm paying 11.9% in fees as a store owner. (Sellers without stores pay 12.9%.) That means on a $20.00 shipping charge, I was losing $2.38. So now I'm adding 15% to the quoted postage cost to cover the fees.

Now, last summer I wrote about making money on shipping and got complaints from some readers. A few even said they send buyers refunds on the shipping if the postage cost is less than they collected. This is wrong headed thinking.

The best way to help you come to an understanding of this is a thought game.

Think about this. . .

If when I'm packing a box, I see it will weigh 8 ounces so I cut part of an internal flap off to lower the weight to 7.6 ounces. This time spent weighing and cutting the box as I'm packing will lower the shipping cost by 20 cents.

The first question is what has the buyer done to earn the 20 cents?

Secondly, if I give the buyer the 20 cents why even bother weighing and cutting the box? After all, I'm just making more work for myself, especially when you factor in the additional time spent logging in to PayPal and doing the refund.

What happens at higher weights?

I'm using the First Class rates in my example above, but the difference is much greater for heavier packages. Shaving a box to keep the weight from going over the next pound increment can lower postage costs by $1-2.

I just did one of these to PA. The box weighed 16.08 ounces (0.08 over a pound) and cost $8.95 in the eBay shipping calculator. For a 15.9 ounce box the shipping is $6.25. A savings of $1.70

Here's another example. . . I shipped a box this morning that cost $8.95 for postage. If the buyer was closer, I would have used a regional rate box that would cost much less. The buyer doesn't care which box I use. He just wants the item he bought to get to him in a reasonable amount of time in the same condition as the pictures show.

In this case, I know the buyer doesn't care because he has been buying from me for 15 years.

Actually, I can look at my Detailed Seller Ratings report to see what all buyers who left DSR reports think about my shipping rates.

Last year, I got 3 DSR reports that were ones or twos for shipping charges. Last year, I did about 1900 transactions on eBay. That means one transaction out of every 675 resulted in a buyer leaving a DSR score below 3. That's meaningless.

To hammer home how meaningless the DSR reports are, I got 2 low DSR reports for each of the other categories except shipping time which I got ratings of 5 on because eBay doesn't allow anything less than a 5 if I meet my stated handling time.

I still think the DSR system is just a way for eBay to offer a discount on fees without having to actually give the discount to many sellers.

Even further, I think the system is set up so buyers will leave lower numbers just so eBay can take away the fee discounts. EBay is now sending messages to buyers reminding them to leave feedback.

During the feedback process eBay shows the title of the item, the first image, and the shipping cost. The buyer doesn't see the total amount paid, or the time in transit. This skews the feedback towards lower numbers.

But it gets worse. . . eBay shows the total for combined shipping on each item a buyer wins.

Here's an example. . . I sell small lightweight items. I charge $3.87 to ship the first one, and 43 cents for each additional item. If a buyer wins more than 7 auctions, he pays only the cost of 7 items.

A buyer who gets one car sees a shipping charge of $3.87, but a buyer who buys 3 cars sees a shipping charge of $4.73 for EACH car.

ITEM: While I'm on the subject of DSRs and discounts, I talked with Paul Alan Levy of Public Citizen about a lawsuit he's involved with in late January. This is the Med_Express_Sales lawsuit against a buyer who left negative feedback because her purchase came in postage due.

Mr. Levy is representing the buyer, and they are now in the trial phase. The seller claimed on the stand that he looks at his feedback every day so he can see who is leaving poor DSR numbers.

Evidently if you only get one feedback a day and you check your DSR stats on your seller dashboard every day you can see when a new low number is recorded. When a new one shows up, it must be for the feedback left that day.

This sounds like a waste of effort. I couldn't do it - not just because I don't have the temperament, but because I have days where I get 20-30 new feedbacks.

I'm sure that there would be less effort and even cost less to put the right postage on the box.

ITEM: Did you know that you can ask a buyer to change feedback? There is a form on eBay you submit, and eBay will send the buyer a note about the feedback and offering the buyer a chance to change the feedback.

I've been harsh with the guy from Med_Express, but he did refund the buyer the postage due, and then request that she change her feedback. She refused to change her feedback because she felt it was accurate as the box was delivered postage due and she had to deal with the inconvenience.

So really the Med_Express story is two $#&^%&*s fighting.

ITEM: How much is fair? I was at a coffee shop talking with some other small business owners recently. During the conversation, I mentioned that I try to pay about 50% or less of the expected selling price when buying items.

A retired hospital maintenance man sitting at an adjacent table overheard our conversation and interrupted to say that I was ripping people off. Usually I just politly ignore this guy but instead I asked him how much I should be paying.

"More" was his only answer. When I asked him how I should account for my costs - things like advertising, eBay/PayPal fees, packaging supplies, and gas, he had no answer.

Now that I've done my taxes, I can say with certainly that if I had paid 60% of the expected selling price last year, I would have LOST MONEY.

ITEM: Overall profits. This is depressing, I'm only making about 15% of my gross sales before taxes after all expenses are figured.

Two reasons this number is so low are I spent thousands of dollars running ads that generated no purchases, and I made a large number of single purchasing trips.

I can't get the money I spent on worthless ads back, but now I know better. I'm not sure why a $1500 run of bus bench ads in one area generates lots of purchases, and the same ad in another area generates none, but now I know to ignore some areas.

I've also changed the way I go to look at stuff. Rather than making many single trips, I'm going out and looking at 2 or more sets in one trip. I can do this because the sellers car calling from ads, and there is little chance of them selling to someone else in a few days.

ITEM: Minimum deal sizes? I know now that going out and buying something for $50, and then reselling it on eBay for $100 doesn't result in much pretax profit. I'd rather avoid this effort, but if I didn't do these deals, the larger and more profitable deals would have to pay more of my operating expenses.

ITEM: Most profitable sales. We tend to brag about our great deals. For example, the $10 item that sells on eBay for $600.

Looking through my sales for last year, I spotted a surprising thing. The majority of my income comes from the mundane boring deals.

Now, I want to be clear here. The surprises are fun. Last month, I sold something on eBay for $550. I got this from a man I was buying trains from who had it in his garage, and had him throw it into the deal when we were negotiating.

While it is a fun story, over the course of the year, the money I made on the deal will be nothing compared to the total from the mundane boring deals.

ITEM: Multiple sales. Looking through my tax information, I did almost 1900 sold listings on eBay, but only had 851 payments through paypal. Buyers who didn't pay, and buyers who paid on pickup or with a check, are less than 10 for the year so I'll ignore them. The difference between the number of sales, and the number of transactions is from buyers winning multiple auctions in the same week.

This means over the course of the year, my average buyer wins 2.2 items each week. I think this means I'm doing a great job of listing similar items together, and doing a good job cross promoting my listings.

I have an article about this I'll send out in a future newsletter.

ITEM: Refund rates. During last year for every hundred dollars in sales I refunded about 25 cents. Most of what I sell is sold as is with no returns, but sometimes I make mistakes that result in a partial refund or even a return.

There is one item I sell that is prone to breakage in shipping. This single type of item is responsible for 80% of my refunds.

I don't want to mention what it is because I don't want to let people know they can get one for free by claiming it broke in the mail. I test them, and if they fail I throw them out. If they work and will bring more than $40 on eBay, I sell them with a 14 day return policy.

Last year, 20% of them worked when tested, but didn't work when the buyer received them. I know it's not about how I'm packing them, because I've sent them out in their original boxes packed in a larger box and had them fail.

I think it's just that they are shaken so much that they fail.

I can't sell them locally so my options are to just throw all of them out, or sell them on eBay and accept the refunds. Last year with 20% returns it was smart to sell them. (The buyers don't get upset so that's not an issue here.)

Recently I started telling the buyers to just throw out them out, and refunding their entire payment. This saves me the return postage since I'd only be throwing it out when I got it anyway.

In the first three months of this year, I've sold ten of them, and done 3 refunds. I can live with that, but will continue to watch them.

ITEM: Lowering buyer complaints. Speaking of refunds, last year I only had one buyer complaint case opened on eBay. That's great when you consider that eBay has the system rigged so a buyer looking to contact me through eBay is pushed towards opening a complaint.

Some of this is because I put my phone number in every box, but I think it's mostly because I do a good job with my descriptions.

In fact, I actually get more calls from buyers thanking me for their purchase, than I get complaints. I like these calls because they give me a chance to sell items off eBay and avoid the fees.

ITEM: Buyer complaints. Buyer complaints are one area that scares me. Today, I'm really reliant on eBay to sell the stuff I buy. I hear stories about eBay sellers being thrown off eBay for too many complaints. I'm running 1 complaint about every 8-1200 transactions. I have nothing to worry about.

On the one buyer complaint case I had last year, I lost initially. I appealed because the item was not returned. He'd shipped by UPS to my PO box, and UPS doesn't deliver to PO boxes so it disappeared in transit even though the tracking said it had been delivered.

I got my money back from eBay because it wasn't delivered and thought the matter was over. I'd thought the buyer also got his money back and eBay took the loss. I guess not as the buyer then claimed it was counterfeit. EBay then found in my favor and deleted his negative feedback along with the record of the complaint.

After that episode, I was told by an eBay representative that I should immediately escalate any buyer complaint that is unreasonable to ebay for judgment. I was told the reps can see the buyer's past behavior and might make me look better.

That's enough for now. . .

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