Reasons why eBay sellers fail, and how to avoid them UK

9 Reasons why eBay sellers fail

Over optimism

Ebayers often don’t take into account their hidden fees, as well as direct fees. What are “hidden selling fees” ? Hidden selling fees are things such as: Overheads, time, packaging materials, tax, cost and loss of money on returns. They’re the hidden costs of packaging/ shipping. Although, on a product to product basis, they are likely to be your lowest fees, they still need to be considered.

Direct fees are the fees that you can see on your ebay account eg: insertion fee, final value fee, promotional fee.

Right now, let's test your optimism. Think of the last thing you sold. What profit do you think you made? Now, get a piece of paper. Write down your selling price, and find out the following costs:

• Exact product cost (see supplier invoice)

• Ebay final value fee (12.8%)

• Ebay insertion fee

• Ebay promotional fee

• Monthly rent, divided by, monthly products sold

• (Monthly returns, divided by, Monthly total sales) X average product price

• Shipping cost

• Difference in VAT between buying & selling

Now that you have worked out and added up those costs together, subtract it from your selling price. Is it the profit you thought it would be? Or have you fallen into the over optimism trap?

Poor product selection

Any eBay business is built on the products that they stock. If you stock products with little demand, you will get disappointing results. How can you avoid this? 2 words… Market Research. One of the best way’s to conduct market research on eBay is by using Terapeak. You can find it in the seller hub research tab.

Find your edge. Many other blogs on this topic will tell you not to sell products that you have an interest in, as you will be more likely to ignore demand and competition. At Pink Liquidation, we disagree. By selling products in a niche market, that you know and understand. You would be more likely to understand what sells well and what doesn’t. When you back this knowledge up with data, then you will be able to find your edge.

Inadequate pricing strategies

The money is made in the buy, not the sale. If your buying price is too high, you may find it difficult to sell a product at a profit, especially if ebay is your only way to sell stock, as ebay is predominantly a price game. If you want to buy cheap, liquidated products to sell on eBay, you can find them here.

Next time you are looking to buy a product, reference the direct costs and hidden costs listed in the first paragraph to see how much money you will actually make, rather than playing a guessing game.

Inadequate marketing methods

The majority of eBay sellers rely solely on eBay’s organic traffic, and neglect any external marketing. Maybe you have a brand on ebay? Or you sell products in one type of niche? Why not build a website & brand. That points directly to your ebay listings. This way, generating more traffic to your listings.

Maybe you sell consumables? Why not build an email/ sms campaign? Let’s say that your consumable needs to be replaced every 6 weeks. Why not send out an email/sms offering your previous customers a “special discount” to reorder from you. This system is something that’s very easy to setup and automate, adding to your top line.

Ignoring selling performance metrics

Ebay does all the leg work for you, compiling metrics for you to improve your listings. But yet, a large proportion of people choose to ignore these! In larger ecom businesses, there are people taking £40/£50/£60k+ Salaries for compiling and analysing data. Ebay gives you these for free, but yet people still ignore them?!

The main metrics that you should monitor are: click through rate, sales conversion rate, negative feedback, late shipments or cancelled orders. Some of these metrics can even lead to account termination or suspension, if not kept within an acceptable range.

Lack of passion

Many eBay seller’s fail, especially new sellers. This is because they treat eBay as a short term money grab, rather than pursuing it as something to genuinely care about. If you do not genuinely care about your store, you may see a reduction in customer satisfaction. Such as late shipments, not solving issues for buyers. This will lead to a decline in sales.

Poor listings

Without the listing, you can't sell the product, but yet people place little emphasis on their eBay listings? To have a great listing, you need to be: clear, concise, descriptive and have high quality images.

To put your listings performance into overdrive, you should utilise eBay SEO (Search Engine Optimisation). In brief, you need relevant keywords in titles and descriptions.

Here is another blog from us, going over eBay SEO click here

Desperate to sell “something”

Selling something, is better than selling nothing…Right?... Wrong. Whilst high revenues may make you feel warm and bubbly inside, the real numbers you need to get the same feeling for are your gross and net profits. These are the numbers that will determine your eBay success. Without them, you have no margin. Without margin, you do not own a profitable enterprise. You can’t buy new stock, reinvest in old stock, or access cheaper stock by buying higher qty’s. Your business will simply flat line, without margin.

How do you calculate your eBay gross & net profit?

eBay gross profit = selling price - cost of landed product - fees - shipping to buyer

eBay net profit =sum of eBay gross profits for the month - fixed costs for the month (overheads, staff and any other costs not included in gross profit).

Here’s Jimmy’s story, for more context.

Competing with others “race to the bottom”

Many eBayers fall into the trap of racing to the bottom. To explain further and show you how to avoid this, I have a personal story to tell:

Around 4 years ago, when we used to sell on eBay. I had imported kitchen utensil sets from China on Alibaba. Our landed cost including duties was £15.30, we were selling them for £44.99. Our shipping was £3, so after fees our gross profit per unit sold was £20.59. We were selling around 2-3 a day, which at the time for us, was awesome! As we did not have many products. Now, this was great whilst it lasted… On eBay there was 1 other person with the exact same product, one day, our sales slowed down. Turns out, they had lowered their price. So I lowered mine. 2 Days later, they lowered theirs. This went back and forth until we had sets listed for £25. Making a total gross profit of £3.20/unit.

How could this have been avoided? For an extra £0.50/unit (or free on orders over £5,000), we could have had custom boxes made. With custom boxes, and custom images, we could have differentiated ourselves from the other seller’s product by being seen as the highest quality set on eBay. Whilst yes, they could still compete with us on price. By having a differentiated premium product, we would minimise the impact of this.

If you would like to learn more about differentiating yourself from your competition, not just on eBay, but in all realms of business. Read this book - Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne

In summary, the reasons why most eBayer’s fail are:

• Over optimism

• Poor product selection

• Inadequate pricing strategies

• Inadequate marketing methods

• Ignoring selling performance metrics

• Lack of passion

• Poor listings

• Desperate to sell “something”

• Competing with others “race to the bottom”

Want to read our recent blog on “11 Proven tips and tricks to increase sales on eBay”? CLICK HERE