Wifasso.com
Henry’s Random Thoughts
The
ideal items to sell have a high value relative to their weight. That is because
you are going to be shipping the items, and people will only pay what an item
is worth to them. If something is only worth ten dollars and it will cost eight
dollars to ship, you will only net two bucks, and that is before the fees ebay
charges. Such an item isn’t worth selling online. It is best sold by a store
like Wal-Mart, which can cut the cost of shipping by bringing it to its stores
on semis and making the customer take it home from there.
Ideal
items are collectibles and small crafts. A baseball card in a plastic holder
and a bubble mailer can weigh only two ounces or maybe three. It can cost a
dollar to mail. Books and other media can also be surprisingly shippable due to
favorable postal rates for such items.
However,
there are a lot of shippable items nobody wants, so you need to be sure you do
your homework and trade in items that are in demand.
What
Profit Margin is Right?
Obviously,
you’d love to buy things for a quarter and sell them for a thousand bucks. You
would have to be pretty lucky for something like that to happen. More than
likely, especially at the beginning, your profits will be thin to nonexistent.
Just remember that ebay and Paypal charge fees to the seller. These fees take
about 15% of the sale price for moderately priced items. That means if you buy
something for $17 and sell it for $20 plus shipping, your profit is about zero.
It is important to think about this, especially if you plan on trying to make a
living at it. If you need to make $500 per week and think you can move 100 $20
items per week, you should have no more than $12 total into the item. Also, if
you anticipate lost or broken items, you have to price accordingly because any
refunds will come straight out of your pocket.
The
main focus should be on making your auctions as customer-friendly as possible
without giving the items away for too little. This means accepting as many
payment methods as possible, particularly Paypal. Many people on ebay refuse to
accept Paypal, ebay’s in-house electronic payment system. Paypal charges a fee
equal to 2.9% of the value of the transaction plus thirty cents. This cuts into
profit margins. Also, Paypal payments funded with a credit card are vulnerable
to chargebacks, which are refunds demanded through the buyer’s credit card
company. These chargebacks can result from outright buyer fraud or just from
crabby buyers who are too impatient to work out disagreements. Either way, the
money leaves your account and unless you can navigate the dispute process, it’s
gone for good. In the case of outright fraud, recovery is hopeless. But the
benefits of accepting Paypal usually outweigh the drawbacks. Most importantly,
other sellers will usually accept it, so unless your product is truly unique,
Paypal fans will pass your listing by. Also, the chargeback risks are modest
for small-time sellers. Most crooks won’t bother trying to steal a $20 item via
chargeback fraud. The cranky customers will be few and far between (provided
you are an honest seller), so those rare issues will be a manageable cost of
business.
Paypal
speeds up shipping. I was on ebay before Paypal, and the two or three weeks you
waited for goods went with the territory. But now, I get my Paypal-paid goods
in a week, and that same waiting period that was fine in 1999 feels like an
eternity now.
If
you think you will sell some valuable items from time to time, you might want
to stipulate that you refuse Paypal for orders over a certain amount, such as
an amount running into the hundreds of dollars. This might be the point where a
chargeback will cause more than a little pain.
Money
orders and cashier’s checks are no-brainer payment methods to accept, since
payment is guaranteed. Just remember that anything made out of paper can be
counterfeited, so if you sell something expensive, deposit it right away and
wait a couple days for it to clear.
Personal
checks are a time-honored payment method that I have never had any trouble
with. Normally, I ship even before I deposit low-dollar checks. I don’t think
many people would bounce a $25 check, but the risk is there. If you do want to
wait for checks to clear, you only need to wait a few days. People who wait 10
to 14 days are overdoing it and causing the buyer to wait an too long for their
goods. Even if you told them in your terms that they would have to wait this
long, it’s still an unpleasant experience.
No
other methods of payment are worth bothering with besides the ones above,
unless your items sell for amounts into the thousands of dollars. If you do
have such listings, consider offering an escrow service. Just be clear as to
who has to pay for such a thing.
People
will send you cash in the mail on occasion, even if it isn’t a listed payment
term. This happens more frequently for items that are under ten bucks including
shipping. I always loved getting cash payments, since they are the least
troublesome to deal with. You just stick it in your pocket and spend it. If
someone asks about sending cash in the mail, tell them you don’t recommend it
and it is at their risk. But don’t refuse to accept it, unless the amount is
large and it smells like the beginning of a scam.
Shipping
options depend largely on the type of goods being sold. As a general rule, your
main shipping option should get the product there in good shape and reasonable
time, as cheaply as possible in a way that is convenient to you. For the most
part, this is through the postal service. There are so many post offices,
mailboxes and other ways to drop off mail. Also, they give you many affordable
options. However, UPS and FedEx have established storefronts that make shipping
convenient. You might want to consider those services, especially if your goods
tend to be heavy and are not books or other media.
Ebay
shoppers tend to be bargain hunters, and they consider the total cost of what
they are buying, therefore you want your shipping costs to be as low as
possible. This will probably be US Postal Service book rate for books, media
mail rate for other media, First Class for items 13 ounces and under. For items
that do not fit into those categories, offer USPS parcel post, UPS Ground or
FedEx Ground. Keep it simple and uniform. This makes it easier on you. All that
shipping does is get the item to the buyer. They are all of about the same
quality, so stick to one way. If a customer requests special shipping, it is up
to you to offer it, but be clear that the buyer will bear all additional costs.
Some
bidders will request local pickup. If your lot is enormous and the shipping is
very expensive, allowing this might increase interest. Sometimes, people will
request it even if the shipping cost is small. Some people are just tightwads.
My attitude has always been that if they will come to me and work around my
schedule, I will allow it. It’s one less thing to box up, after all. Obviously,
if you are afraid of creeps, you need to take the same precautions you normally
would with meeting strangers. Also, don’t inconvenience yourself. You are
saving them money, after all.
International
shipping is a complex subject. Beginners might not want to mess with it at
first. You can set up your listings to forbid foreign bidders. But as a general
rule, you want to offer your item to as big a market as possible. The world
outside the USA is getting richer, and the weaker dollar provides foreigners
with even more purchasing power. English-speaking countries share tastes
similar to Americans, and to a lesser extent, Continental Europe also shares
our culture. The Japanese are obsessed with certain parts of American culture.
I have shipped many baseball bobblehead dolls to Japan, and have had no
problems with the sales.
My
advice is that if your goods are relatively cheap and/or utilitarian, skip the
international part. It makes no economic sense to sell a $100 used Dell
computer to Germany. If you sell something that you think foreigners might
want, try to ease into it. Watch out for huge orders early on, as a mistake or
a fraud might be costly. Also, learn all the rules about shipping and get
actual quotes before giving someone a rate. If you guess, you will probably
guess too low. There are some good options out there. If your item can fit into
a Global Priority Mail flat rate envelope, it will help a lot. Paperwork will
be minimal, cost is reasonable and delivery is fairly fast. If it is bulkier,
options can be expensive. The old Airmail Letter Post or Surface Letter Post
are cheap options, but are very slow and have no tracking. See the postal
website for options.
Written
by Henry Grimmelsman starting in 2007. Please do not use without citation and
linking to my website.