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eBay Sellers Coping With The Summer Slowdown on eBay

June 24th, 2009 by Skip McGrath

Tips for cutting your eBay fees and expenses during the annual summer slowdown

It’s not new.  The summer slowdown has happened every year about this time.  The weather is better, parents and teens are focusing on graduation, people are spending more time in their gardens, and in general, there are more things pulling people away from their computers.  What is different this year is that the economy continues to slow.

Yesterday, Warren Buffet gave an interview where he said the economy still stinks and will continue to do so for some time.  Then this morning, unemployment figures came out higher than expected. This of course affects shopping habits. In the past, Americans went into debt and spent as if their incomes would always increase.  The savings rate in the US was actually negative for the past few years. Now the savings rate is over 5% –higher than it has been in 20 years. Consumers are not only saving more they are reducing their debts. All of that translates into lower spending and eBay is not exempt from that.

So what to do?

Well first of all, don’t give up.  Yes, sales are down but there are still sales. They haven’t gone to zero.  My sales are way off from last year but still profitable.

Here is the strategy I am using to cut my costs and keep my profits up:

1. Reduce the number of listings – The first thing you notice during a slowdown is that your conversion or sell-through-rate (STR) falls.  This means that fewer listings close with a sale. When that happens your fees go up. Remember, you pay a listing fee whether something sells or not. So if fewer of your listings are selling then you need to reduce the number of listings to reduce those fees.  The trick is figuring out which ones to cut.

The simplest way to do this is to stop listing items that are not selling.  This doesn’t mean you have to stop selling them. Instead of paying expensive auction-style listing fees, you can move them to an eBay Store or Fixed Price Listing format where the listing fees are very low. Then concentrate your auction-style listings on your best selling products.

2. Raise Your Prices on Prime Merchandise – This may seem counter intuitive. When business is slow, most people cut prices and for some products you may have to do this.  But, when you raise prices in general you may get fewer sales but you make more money on each sale. I would rather have fewer more profitable sales than lots of unprofitable sales.  If there is one thing I have discovered is that there are always people who will pay for quality and good service.  If you can convince those buyers you can deliver that, then they will buy.

3. Cut Prices and Get Rid of Nonperforming Inventory – If you are like most eBay sellers, you have stuff that sells well and stuff that doesn’t.  In a period like this cash is king.  You want put raise as much cash as possible and put that cash into inventory that is selling well.  If you have nonperforming inventory (i.e. stuff that sells slowly or just doesn’t sell at all), then cut the price to the bone and get rid of it.  Yes, you may take a loss, but if it’s just sitting on a shelf in your closet and you are paying listing fees over and over, then you are already losing money.

4. Cut Your Optional Feature Fees – If you look at your eBay statement at the end of the month you will see that all those little optional feature fees (extra photos, bold, subtitle, scheduler, listing designer, etc.) can really add up fast.  Many of these features can help but you need to really look at your auctions to see if they are working. I find that they do help for some products but don’t for others.  I was able to save over $60 per month by removing them from listings that weren’t performing.

5. Use an Auction Management Service to Save Time and Cut Fees – There are about a dozen auction management companies that all provide a different level of services and fees. I have been using Vendio for a number of years, but am slowly switching over to InkFrog. Another good on is Auctiva. And if you use a Mac, give Auction Genie a try.

Here is how they save you money.  If, for example, you use InkFrog you will pay $9.95 per month for the service. But you will save the 15¢ per photo for extra photos, 10¢ per listing if you schedule your auctions (which most people do) and 10¢ if you use listing designer.  All of these features are included in the $9.95 month InkFrog fee.  So in my case, I list about 200 auctions per month –each with at least three photos.  So that saves me 30¢ per listing X 200 listings = $60 per month. I also use a template to make my listings look good. That saves another 10¢ per listing or $20 per month. And then I also save another $20 when I schedule my auction listing times instead of paying eBay.  That totals $100 month savings less the $9.95 fee, so my total savings are $90.05 per month or $1080.60 per year. On top of all that, these services save me a lot of time. They are much faster than listing items through eBay.

There is one caveat. eBay is running a temporary promotion, whereby you get your first five listings per month for free when you list using the eBay Sell Your Item Form. If you are listing an expensive product (one with a high starting price), then I would list those five items directly on eBay and use InkFrog or whatever service you use for the rest of them.

I talk about these tips and many more tips to increase your eBay sales and profits in The Complete eBay Marketing System.

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