Friday, September 18, 2009

eBay Powerseller Myths Debunked

This originally appeared on my web site, then on eBay. I am re-posting it here with the consent of the author (me) because both buyers and sellers tend to find the information valuable.
Ebayers make assumptions about sellers and powersellers that are absolutely untrue.
For example: MOST POWERSELLERS make six figures in gross income, right? ::snort:: Gimme a break. We're online retailers, not Bill Gates. The few who make this kind of money are the exception, not the rule. The requirements for becoming a powerseller are pretty low. Sellers needs to average $1,000 a month in gross sales over a three-month period, which means $12,000 a year gross. (This rule has been modified. More on that below.) If they run a very streamlined business, find merchandise at low cost, sell it for double what they paid, sell most stuff from an ebay store with minimal effort or through eagerly sought-out auctions in which customers clobber each other to buy goods... and that's asking a lot... best case scenario would be to take that $12,000 and subtract at least 60% to cover ebay and paypal fees and cost of goods. Net income is now $4,800 per year. Now deduct taxes based on household earnings tax bracket. At 25%, that leaves $3,600 a year. Ouch.
A $3,000/month average minus 60% fees is $14,400 net, which leaves $10,800 after taxes. Ouch again.

IS THAT TYPICAL? I can't say for certain, as most powersellers do not want to talk about this. It's personal and embarrassing. But I've conducted informal surveys and gathered estimated sales figures on closed auctions for specific sellers. To the best of my knowledge, powersellers tend to be in the $12K to 36K gross income range. Assuming they sell goods acquired honestly, live in the US, have operating costs (as opposed to services they gain "free" at the office) and pay income taxes, they could be making as little as $4,800 to $10,800 net per year or worse.
Why am I telling you this? Because buyers accost me as if I were stingy and wealthy--which gets tiresome--and keep asking me for discounts and deals. And because would-be sellers are dying to know if they can quit their day jobs and make a living at this. I found a statistic somewhere saying 420,000 Americans support themselves on ebay without additional income. That number is lower than I thought it would be. Can you become # 420,001? Well, I've tried as hard as anyone I know to achieve that, yet I failed. So my advice to you is to give it a try for a few years before you commit full-time. I'm giving you realistic facts and educated impressions, but your own experiences will give you reality.

My husband made a valid observation that helped me put eBay in perspective: they take a percentage of your earnings. That means as you thrive, so do they, in geometric proportions. If you own a bricks and mortar store and business is going well, your rent, utilities, advertising, printer ink, etc., will not rise in proportion to your increased income. But if you sell more on eBay, they take a big percentage that rises in proportion to your gross income. You are actually paying a heavier penalty for doing well. I think this is why the most lucrative sellers (if there are any!) use eBay as a promotional vehicle to draw new customers into their online store.

WHAT ABOUT ARTICLES ABOUT MAKING HUGE INCOME on ebay? I'm sure there are exceptions to what I am telling you. But when were these articles written? Competition on eBay is fierce. According to medved.net, at the start of the year 2000, there were 2.5 million auctions running. January 2007 showed roughly 12-19 million running per day. Newbie sellers on the eBay blogs wail, "Why didn't my item sell? I started bidding at 99 cents and it's worth way more than that! What am I doing wrong?" The answer is: probably nothing. But you have FAR more competition than you realize.

SO HOW CAN YOU MAKE POWERSELLER STATUS? Study the email tutorials, the methods of other sellers, ended listings, articles about ebay on the internet and books about ecommerce. Tinker with headline wording, categories, prices, different products. Make sure your product is searchable in any search engine. Develop a little business savvy and a lot of patience. Be friendly and go the extra mile for customers. And be willing to devote months or years just to reach $36K gross ($10K net) depending on how popular your chosen merchandise is. If you want to earn Big Bucks, i.e.: more than the figures I have given, you will probably need multiple online venues, some social networking programs such as Facebook and Twitter, plus more smarts and perseverance than I have. I work my butt off and have little to show for it.
THEN WHY ARE EBAY SELLERS selling books and tapes revealing secrets of making huge money? Because those products sell better than their original merchandise did. Those sellers will be mad I said that. I don't care.
WHY AM I TRASHING EBAY? Whoaaaaa, hold it right there. I am absolutely NOT trashing ebay. I enjoy selling stuff. I am only debunking the notion that all powersellers are wealthy and a few other stereotypes. Take for example this belief that powersellers are arrogant. Okay, I am. But the other powersellers are super nice because if they weren't, their feedback would be lousy and no one would buy from them. Trust me on this. The powersellers are good people. Your bias against them, if you have one, is ill-founded. If you are biased against them because of wealth, that is ill-founded. If you are biased against them because they seem arrogant, I suggest to you that you have not rubbed elbows with enough of them to figure out that they are very nice, professional, conscientious people. Arrogant, mean sellers go out of business FAST on eBay.
However, I admit that an ambitious seller can reach powerseller status quickly, rake in too many negative feedbacks, get shut down by eBay or simply close up shop, then turn around and open a new shop under a new name. To avoid that sort of person, read feedback and be wary of the newest sellers.


WHY DO SOME POWERSELLERS ACT AS IF THEY NEVER EVEN READ YOUR LAST EMAIL? It's nothing personal! Larger businesses have more customers and more red tape. I am not one of the largest, busiest powersellers, yet I receive an onslaught of emails on eBay.
WHY DO SELLERS TAKE FOREVER TO SHIP? Short answer: they don't.
Long answer: Take a look at the date your payment cleared. No, not the date you sent payment. The date it CLEARED Paypal or the two weeks it took your personal check to clear the bank. Allow for mail delivery, too. Don't cheat. Come up with an honest date.
Now compare that date to the date the seller shipped, which appears on the shipping label. By federal law and according to ebay protocol, these two dates should be less than 30 days apart. I can practically hear you choking. Yes, 30 days. That's a huge window, isn't it? And that's why you will usually find the two dates are closer together than that. If you think the gap is too large, check the bottom of the seller's listing for the words "Usually ships within _ business days of cleared payment." If seller met that time frame, meaning you (the buyer) was told in advance what to expect, then the buyer is wrong to leave negative feedback or a low star ranking for shipping time. Normally, this is the part where I pause while standing on my soapbox and say, "Feel free to disagree." But in this case, I won't, because you have no right to disagree. Wipe that look off your face. Look me in the eye. Your bid signified your willingness to follow terms. If the seller fulfilled the terms and you ding their feedback anyway because you WISH the terms had been different, you are morally wrong. And so is your dog.

PARADOX: buyers who ask for Media Mail or Parcel Post tend to believe the seller shipped slowly, whereas those who ask for Priority Mail think the seller shipped quickly. My feedback confirms this perception and it is wrong. I tend to ship everything within 48 hours. It's just that one arrives faster than the other BECAUSE OF THE POSTAL SYSTEM. It has nothing to do with anything I did. Yet time and again, my orders that were shipped Priority Mail receive great feedback and my orders that were shipped Media Mail show a more tepid response. In essence, customers judge me and rate me for the performance of the U.S. Postal Service, even though their performance is completely outside my control.

HOW COME THE POWERSELLER SAID they no longer have this thing in stock? Why did they even list it if they don't have it? [I'm pausing for you to spew some swear words, cuz I know that makes you feel better.] No, sweetie, it's not a scam. It's hard to keep track of tons of merchandise. You will never understand this until you become an online seller with more than 100 listings. Go fill up two spare rooms in your house with $20,000 worth of merchandise and keep exact track of what you sell and what you ship for a year. It's more difficult than you might think. Do this for a year and then we'll talk about. --dj runnels (c) 2007 but edited periodically since then.

NOTE added September 17, 2009: eBay's powerseller criteria, rules and terms are changing rapidly. I don't mean for this guide to be out of date, but it will be from time to time. Currently, it is far easier to become a powerseller and remain one if you provide excellent customer service. I applaud that change, because the buyer doesn't care about doing business with the seller who makes the most money; the buyer wants the most reliable seller and the newer criteria reflect this. When you shop on eBay, look for Top-Rated Sellers. You will more likely get the best service from these people. Again, there will be exceptions, but as I said, read the feedback and scrutinize new sellers.

NOTE to crafters: I do not recommend selling on eBay. The shoppers do not normally seek, appreciate or value handmade goods. But craft supplies sell pretty well since eBay gets HUGE traffic and buyers tend to search on name brands.

Hope you found this info useful. I love sharing information with professional crafters, craft hobbyists, buyers, sellers, SAHMs, artists and/or anyone with just enough creativity to paint their own toenails. Please consider following Life's an Expedition on Instagram.  Happy crafting, sweetie!

dj runnels

Life's an Expedition on Etsy
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