In one of my first books when I wrote about wholesale dealer auctions, I said that if you have a desire to be mugged, you can walk in Central Park after midnight or you can attend a wholesale dealer auction.

Wholesale dealer auctions are held various locations around the country but most of them tend to be in the Southeast.  Essentially they are auctions of liquidation and surplus merchandise, factory seconds and returns and warranty items.  There is no question that there are great bargains and profits to be had. Personally I have purchased goods for as little as 10¢ on the retail dollar and been able to triple or quadruple my money on eBay.  But I have also been burned.

As with my article yesterday about buying at small local auctions  –this is an area where experience counts (See that post below for more advice about buying at auctions).  The only way to get that experience is to dive in  –but make sure you aren’t jumping off a diving board into the shallow end of the pool.  Here are some tips to help you prevent getting mugged and to insure you only buy profitable merchandise.

1. Visit at least one dealer or closeout auction where you just observe. Don’t buy anything at your first auction no matter how tempted you are. Look at the people. See how they dress, how they act, which ones hang out together. Look at what the professional dealers are buying and the prices they pay. Take a small notebook and jot down information to review later. You will be surprised at what you can learn by just watching.
2. Look out for shill bidders.  If you observe carefully they are actually pretty easy to spot and they tend to congregate together during the breaks
3. Never buy a “lot” of boxed mixed merchandise[1]. It has been picked over and all the premium goods have been removed. If the seller or auctioneer swears it hasn’t been picked through (called cherry picking in the trade) – run the other way.
4. Buy only new merchandise (they are called “shelf pulls” in the trade). This is typically merchandise that didn’t sell during the season, or didn’t sell well at all. Sometimes that means it was not a saleable product, but it could also mean the store just bought too much of it, or another hotter product came along and the storeowner needed the shelf space.
5. Be careful with items described as “returns,” or "store returns." Ask if they are "shelf pulls" or "customer returns." There will almost always be some damaged or non-working items in a “customer returns” lot. It is ok to buy returns from established closeout dealers who will tell you the mixture. If you can buy returns at 10 to 15 cents on the dollar you will probably do okay because there will be enough good stuff mixed with the bad.
6. Stay away from freight damaged goods unless you can visually inspect all the products in the box. Some times it’s just the boxes that are damaged. If this is the case, and you can be sure, then go ahead and bid.
7. Never buy merchandise you cannot physically and visually inspect. Buying goods at a closeout auction is a case of Caveat Emptor (Buyer Beware).
8. Never buy “damaged returns” unless you are capable of repairing the items yourself. If something looks great but is not attracting any bids, leave it alone. There are a lot of professionals at these auctions. If they are not bidding there is usually a reason.

See Also

• Learn How To Start and Run a profitable eBay Business with The Complete eBay Marketing System
  Printed training manual written by an eBay Power Seller who sells on eBay every day

When we owned an antique shop, small town and country auctions were one of our leading sources of merchandise. Thousands of small (and large) eBay sellers who deal in art, antiques,  collectibles and used and vintage merchandise use auctions as a great source of goods to resell on eBay. Large, big city, auction houses are somewhat problematic. You are bidding against professional dealers with deep pockets. But country and small town auctions are a whole different story.

There are dealers at the smaller auctions, but they are typically local dealers who can’t afford to pay the big city prices. When an item goes up for bid at a small-town auction it might be seen by 50 – 100 people and attract four or five real bidders. But the same item on eBay will be exposed to millions of potential buyers.

If you take the time to do your research, learn what items are worth, and learn how to bid at these auctions, there are some huge profits to be made on eBay.

When we first started in the business and started going to auctions, we made a lot of mistakes. We often overpaid for merchandise, got the goods home and then discovered something wrong with them, inadvertently bought fakes and so on.  It turns out that buying at auction is like most things in life –the more you do it the better you get at it.

Over the years I learned a lot.  I developed some personal strategies and a checklist that you may find helpful.

1. Arrive early and carefully examine anything you plan to bid on. Remember: auction sales are final. Wear old clothes and dress warm in the winter as many auction houses are cold and drafty. Some are even outside in tents.
2. Carry a flashlight, a magnet (for checking brass), a small battery operated black light (for spotting cracks and repairs), and a notebook. Also bring your sales tax number, and plenty of business cards.
3. If an auction is scheduled and the weather is really bad – always go! Bad weather can keep up to 50% of prospective bidders away from an auction. Less competition means lower prices.
4. Carry Cash! Many auction houses don’t accept credit cards and some won’t even accept traveler’s checks. (I carry large amounts of cash in one of those passport wallets that you wear under your clothing).
5. Be prepared to haul your goods away on the spot. Many auctions won’t store goods until you return or they will charge you storage.
6. Before the bidding starts, set a limit of what you plan to pay and stick to it. I like to actually write it down in a notebook. When I look at the book, it helps to keep my ego in check and I am less likely to overpay.
7. Sit towards the back of the room. You can see all the bidders without turning around. I like to know who is bidding against me.
8. Never make the first bid, unless no one is bidding and the auctioneer cuts the opening bid down to a ridiculous price. I like to enter the bidding about half way through.
9. Make your first bid by raising your hand. Make subsequent bids by looking at the auctioneer and nodding your head. If an item goes past your bid limit make the “cutting throat” sign with your hand. This tells him you are finished bidding.
10. If the item is being bid in large units such as $20 per bid and is close to reaching it maximum, make the “half-bid” sign (a chopping motion with your hand to your arm), this will add $10 to your bid instead of the $20 the auctioneer was asking for. The bids now move in $10 increments.
11. Never bid when more than three or four people are bidding at the same time. Adding to the bidding can start a frenzy that drives the price up. Wait until the action slows down.
12. Whenever an item sells for a really high price, the very next item usually goes very cheap. I don’t know the psychology of this but I have personally witnessed it many times.
13. These auctions can move incredibly fast. Pay attention and remember what your bid was. If the people sitting around you are chatting and noisy, get up and move. It is important to hear and to concentrate when you are bidding.
14. Most of all don’t let your ego or your pride drive your bidding. Remember your pre-set limit.

Tomorrow I will cover Wholesale Dealer Auctions. They are an entirely different animal.

See Also

• Learn How To Sell on eBay from an eBay PowerSeller Who Sells on eBay Every Day
  The Complete eBay Marketing System is a complete printed training manual that shows you how to start and run a profitable eBay business
• The eBay Seller’s News ~ The Free twice-monthly newsletter for professional eBay sellers
  The eBay Seller’s News is the oldest and largest FREE NEWSLETTER for eBay and online sellers. News, tips and free wholesale sources delivered to your computer twice a month.

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.

See Also

• “The Insider Secrets to Selling on eBay” by the Internet Marketing Center’s Advanced eBay Mentoring Team
  Learn eBay fast and easy with the complete soup to nuts training course from The Internet Marketing Center

Here are the details:

 Regardless of your start price, your first 5 Auction-style listings will have NO Insertion Fees when you list with eBay’s Sell Your Item form or Simple listing form.

The Final Value Fee for these 5 listings with $0.00 Insertion Fees will be 8.75% of the sales price or $20, whichever is lower. Any additional items sold during the same 30-day period will have the same Insertion Fees and Final Value Fees as they do today. Learn more.

Choose the option that works best for you, based on how you list:

• eBay’s Sell Your Item form or Simple listing form – If you’re currently using one of these forms, you can either take advantage of the 5 free Insertion Fees every 30 days, or opt out by listing your items via an eBay tool or third-party listing solution.
• eBay tool or third-party listing solution – If you’re currently using one of these tools, you can either take advantage of this new pricing structure by listing your first 5 Auction-style listings every 30 days through eBay’s Sell Your Item form or Simple listing form, or continue with your current practices at the current pricing.

 The 5 listings with $0.00 Insertion Fees are especially helpful if you don’t sell a high volume, but offer the kind of unique and hard-to-find inventory buyers expect to find on eBay. I am also using it to list expensive items with a high starting price.  For example, I usually use Vendio or InkFrog to launch my listings, but once each month, I go into the eBay sell your item form and list five of my firepit barbeque grills at $227 each. Not only do I save the listing fee, the final value fee is also lower than on a regular sale.

See Also

• The Complete eBay Marketing System by Skip McGrath – Complete printed business manual – money back guarantee
  eBay Printed training manual by a Gold PowerSeller who sells on eBay every day.

Auctiva’s complicated and pricey fee schedule announced a couple of weeks ago had upset users and was driving business to competitors InkFrog, Vendio and others.

Jeff Schlicht, CEO and founder of Auctiva, the largest eBay auction management service, started out his message to users with an apology: “I am very sorry and humbly apologize for any frustration and anxiety we caused you to experience about the future of your business over the past week and a half. I know that these recent events have greatly upset our community and I take full responsibility for that. I am asking you to give me a chance to make it right.”

Jeff then went on to announce the new pricing strategy. Auctiva will move to flat monthly pricing of $9.95/mo .to include:

*         1GB Image Hosting

*         A Faster, Easier-To-Use, One-page Lister

*         Bigger Supersized Images

*         Better-looking Templates

*         eBay’s Most Popular Scrolling Gallery

*         Free Scheduling

*         24/7 Customer Support

*         plus all of our other time and money saving tools

In addition to their Standard flat-rate plan, they announced a special Starter flat rate plan for ultra-casual sellers: $2.95/mo., up to 15 listings, 500MB image hosting.

Auctiva also announced that their marketing tools like the scrolling gallery will remain free for now.

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See Also

• Learn to sell on Amazon. Selling on the River is the best selling book for eBay sellers wanting to learn how to sell on Amazon
  Easy, step-by-step instructions and short videos show you how to move into what is now the largest online selling site.

eBay announced a really neat program today called the Sellers Challenge.  New or existing eBay sellers can submit a business plan. The Sellers Challenge asks entrepreneurs to answer a simple question: “How would you use $25,000 to grow – or start – an eBay business?”  Four winners will each receive a $25,000 business grant, along with marketing advice and assistance from eBay.

Entrants are encouraged to submit a business plan and an accompanying video in one of four categories:

• Current or former members of the Unites States armed forces;

• Individuals or small businesses who have not sold on eBay;

• Part-time sellers who want to go full-time on eBay; and

• Full-time eBay sellers who want to grow their business further.

 Submissions will be evaluated by eBay and the Ewing Marion Kauffman Foundation, the world’s largest foundation devoted to entrepreneurship.  Working with eBay, the Kauffman Foundation has also made available a wealth of information and resources for entrepreneurs – including tips for success, guidance for starting and growing an online business and advice on business plan development – at the eBay Sellers Challenge Web site at http://sellerschallenge.ebay.com.  I thought this was pretty cool when I saw it.  I wished I had something like this around when I started my business.  The neat thing about this is even if you don’t win, you end up with a business plan.  I looked at the materials on the Seller Challenge site and the Kauffman Foundation and this is some pretty good stuff.

You can also get some help in writing your business plan from the 2009 edition of the Complete eBay Marketing System.

See Also

• Learn How To Make Good Money Selling Used Books on eBay, Amazon and The Internet
  Complete training program shows you how to start this low-cost, low-risk, high-profit business

eBay’s decision to cut partner program benefits for auction management companies roils the market.

Last month eBay announced that third party service providers such as auction management companies Vendio, InkFrog, Channel Advisor, Auctiva and others would no longer be allowed to earn commissions through eBay’s Partner (affiliate) Program on sales they made through the eBay check out process.

The process is a little complex to understand, but let me try.  When an eBay seller uses a third-party auction management company, those services have a feature where buyers are exposed to other items selling on eBay as part of the check-out and payment process.  Those companies were members of eBay’s affiliate program called the eBay Partner Network (ePN) that would pay commissions on the sales made during that process.   This income represented a substantial segment of the revenue of these companies.

eBay reasoned (correctly I believe) that these buyers were already engaged with eBay since they bought something. The purpose of the ePN was to bring people off of eBay into eBay to buy. Affiliates who did that are rewarded with commissions. But if someone is already on eBay including those who arrived via another affiliate, should eBay pay commissions when the purpose is to bring new sellers in?

I have not been active in the ePN since they switched over from Commission Junction, but I always wondered: If I send a customer from my website to eBay and they bought something from a seller who uses a system like Auctiva, does the Auctiva cookie replace my affiliate cookie if they also buy something during the checkout process? I don’t really know the answer, but since most affiliate programs credit the most recent cookie, I suspect I would lose my position.

The reaction from the companies has been interesting.

Auctiva –I think the largest auction management company in terms of users, went from a free platform (that earned their income from ePN and selling insurance to sellers) to a fee system that will cost $29.95 month for their most popular service.

InkFrog –stunned the market when they announced today that they would hold their $9.95 per month fee for three years for current customers and anyone who signs up before December 31^st of this year.

Vendio – Vendio which normally charges $10/month plus commission fees, will be completely free for Auctiva users through the end of the year, and will stay at $10/month with no commission fees for the full year, 2010. The Vendio platform allows sellers unlimited listings on eBay and Amazon and also includes the company’s Vendio Store offering, which is currently free for all users.

Other third-party providers will soon be making changes as well.

Skip McGrath

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Learn all about how to use auction management systems to make more money on eBay and reduce eBay fees with The Complete eBay Marketing System by Skip McGrath.  Complete printed training manual shows you how to start and run a profitable eBay business. Written by an eBay Power Seller who sells on eBay every day.

See Also

• Learn how to make good money selling used books on eBay, Amazon and The Internet
  Complete step-by-step system shows how anyone can make money with this low cost, low risk business.

Forrest Smith, an eBay seller from Reading, PA  plead guilty in federal court in Philadelphia today to a book fraud. He was forging famous authors’ signatures and selling the books on Ebay as signed original First Editions.

Prosecutor Mark Dubnoff says there were at least a thousand victims over several years and that Forrests scam netted over $300,000.

The scam was simplicity itself.  Smith would buy first-edition books by famous authors including Anne Rice, Truman Capote, James Michener, Norman Mailer, Tom Clancy, Tom Wolfe and others. He would then forge their signatures, and sell them at inflated prices on Ebay.

For example, Dubnoff says, Smith bought Anne Rice’s Interview with the Vampire for $46:

"He sold that same book, this time with a forged signature by Anne Rice in the book, for $566. His profit was more than 500 dollars on this one book."

He would purchase first-edition books by famous authors on his account and sell them on his wife’s account so buyers could not make the connection by looking at his feedback comments.

The prosecutor did not charge his wife. Although the prosecutor didn’t say, it looks like Forrest made some kind of plea deal.  We will have to wait until sentencing to see what this creep gets.

One of the stories the media has missed over the past couple years is eBay and PayPal’s success at reducing fraud on the site.  Fraud is now far less on eBay than any time in its history but I haven’t seen that anywher in the media.  Perhaps eBay’s new PR firm should start promoting that fact.  Stories like this don’t help but eBay could use this as an example of how they are having success cracking down

See Also

• You don’t have to sell fakes, You can acutally make good money selling used books on eBay
  Low cost – low risk business. Learn how to sell used books on eBay and Amazon

I have been fairly critical of eBay lately as they seem to be ignoring new and small sellers. But here is a great promotion that will benefit this group.  

Here’s how it works: Regardless of your start price, your first 5 Auction-style listings will have NO Insertion Fees when you list with eBay’s Sell Your Item form or Simple listing form.  Note:

This means that is you now use a third party service such as Auctiva, Vendio or InkFrog, you will not get the discount unless you log into eBay and use their form.

The Final Value Fee for these 5 listings with $0.00 Insertion Fees will be 8.75% of the sales price or $20, whichever is lower. Any additional items sold during the same 30-day period will have the same Insertion Fees and Final Value Fees as they do today.

The 5 listings with $0.00 Insertion Fees are especially helpful to sellers who don’t sell in high volumes, but offer the kind of unique and hard-to-find inventory buyers expect to find on eBay. This is exactly the type of seller eBay needs to attract and keep.

Be sure and use your 5 listings strategically.  Don’t waste them on items with a 99-cent starting price.  Use them on items with a higher starting price. This way you get the most bang for your buck.

Skip McGrath

See Also

• Complete eBay Marketing System teaches you how to start and run a profitable eBay business
  This printed training manual is written by an eBay Gold power seller who has been selling on eBay since 1999
• Learn How To Make Good Money Selling Used Books on eBay, Amazon and The Internet
  Complete training course on a low cost, low risk, high profit business –and it’s fun to do

eBay is considering creating a new category of sellers called eBay Certified Sellers. Sellers in this category would be identified with a eBay Certified Seller icon displayed on all their listings.

In order to be included in the new eBay Certified Seller category on eBay, a seller would have to meet ALL of the following criteria:

• Maintain a sales level of 100 items per year; AND

• Maintain an average of 4.6 or better (1 to 5 scale) on each Detailed Seller Rating (DSR): Item Description, Communications, Shipping Time and Shipping Charge; AND

• At least 99% of buyer ratings on each Detailed Seller Rating are 3 or higher (1 to 5 scale)

eBay recently sent out a survey to members asking them about the service levels they would expect from an eBay Certified Seller. Some of the criteria they looked at include:

·        Product knowledge

·        Shipping packaging

·        Accurate listing descriptions

·        Responsiveness to buyer questions

·        Attractive pricing

·        Trustworthiness

·        Dependability

·        Courteous and helpful

·        Item quality

·        Overall customer service

·        Resolves Issues

·        Shipping rates

·        Shipping promptness

·        Inspires confidence

·        Product Guarantee

·        Authentic products

The survey asked eBay members to rate sellers on a scale of 1 to 10 on each of the attributes asking the question. Here is how the question was phrased:  

Considering your experience with eBay to date and just the category name, please indicate what level of performance you think eBay sellers in the eBay Certified Seller category would typically provide. Please rate each attribute below using any number between 0 and 10 that best represents your impression.

Rumors about the program have been floating around for quite a while. I think this survey makes it pretty likely that eBay has decided to go ahead with the program and is now trying to fine tune it.  What impact this will have on new and small sellers is still unclear. You will still be able to sell on eBay if you are not an eBay certified seller, but non-certified sellers will be at a clear disadvantage.

See Also

• The Certified Seller Program makes The Complete eBay Marketing System more Important than ever
  Our complete eBay training program shows you how the professionals sell on eBay and how to run a great eBay business