Archive | June, 2009

eBay Auction Vs Fixed Price Fee Structure – The Best Way to List

3 Jun

Other than opening an eBay store and using store inventory listings, there are two ways to list on eBay.  The first is the standard online auction listing with a set starting price, duration of one to ten days, and an optional reserve or “Buy It Now” price.  The second way to list is using the fixed price format.  With fixed price, you set the price you want to sell the item, decide how long you want the listing to last
(between 3 days and forever), choose the quantity available, and decide whether or not you want to accept “Best Offers.”  For my guide on deciding what starting price to set for your eBay item and other considerations about auction and fixed price formats, see my guide on pricing strategies.  This guide will focus on the eBay fee structure and which method will be cheaper to list.

There are two types of fees on eBay.  The first type is added at the time of listing.  These fees include the listing fee based on the starting price and optional fees like listing designer, subtitle, and scheduled listing.  These fees are set and will be stated before submitting your listing to eBay. The second type is the final value fee.  Final value fees are based on the price the item sells for and are added after the listing ends.  Final value fees vary greatly between auction and fixed price listings and within different categories within fixed price as well.  Deciding which format you want to sell with can be a complex decision.  You have to take into account the item’s popularity, how many like items you have, what price you want to get for the item, how quickly you want to sell the item, and how much the eBay fees will be.  Here’s how eBay’s fee structure can impact that decision.

EBay fees have changed dramatically over the years.  Now, the fee structure for auctions and fixed price listings are significantly different.  Fees for online auctions are front loaded, meaning the insertion fees are higher and the final value fees are lower.  Fixed price listings are back loaded, meaning the insertion fees are lower and the final value fees are higher.  EBay went to this format about two years ago with the rationale that insertion costs were too high for fixed price items that weren’t selling. The story that was picked up by the media was that fees on eBay were going down because the upfront cost of fixed price listings decreased. In reality, the total fees went up in almost all situations. To see the full list of eBay fees, visit eBay Listing Fees. There are also fee calculators that can help you figure out how much it will cost to list and sell an item, including Paypal fees and listing upgrades.  I recommend, eBay Fee Calculator.

For the sake of argument and ease of calculation, let’s assume your auction ends at $100 and your fixed price item is also listed at $100.  The fee breakdown for auctions is:

eBay Auction Listing Fees

eBay Auction Final Value Fee

If you start your listing at 99 cents and it sells for $100, the insertion fee would be 15 cents and the final value fee would be $4.82 ($2.19 for the first $25 +.035 * the remaining $75) for a total of $4.97 in eBay fees.  If you started the listing at $100 and it sold for $100, your insertion fee would be $2.00 and your final value fee would be the same $4.82, for a total eBay fee of $6.82.  You can add a “Buy It Now” price on your auction to give buyers an opportunity to purchase the item immediately, just like a Fixed Price listing.  The cost for the But It Now is 25 cents and you pay final value fees based on auction listings rather than fixed price, making the “Buy It Now” option an attractive investment. You get all of the benefits of selling the item at the price you want and you pay much less in final value fees compared to the Fixed Price format.  If you run an auction meant for a specific bidder, you should start the item at 99 cents and add a Buy It Now for the price you want to sell the item for you and you will save a significant amount on fees compared to what you would pay if you created a Fixed Price listing with the same selling price.

The fees for fixed price are a bit more complicated and vary depending on what category you list in.  They look like this:

eBay Fixed Price Insertion Fee

eBay Fixed Price Final Value Fee

eBay Fixed Price Final Value Fee 2

eBay Fixed Price Final Value Fee 3

As you can see, the listing fee is either 10 cents or 35 cents depending on the category.  In an attempt to keep video game, book, CD, and other similar sellers listing on eBay, eBay lowered the listing fees in that category and runs constant promotions trying to compete with Amazon.  EBay makes up for the slightly lower listing fee by charging the highest final value fee of any category.  Notice that the fees drop 10% for amounts over $50 in video games, DVDs, and music. This is significantly more than the drop in other categories where the reduction is only three or so percent.  EBay knows that most video games and DVDs will sell for $50 or less, so they have a much lower fee for amounts exceeding $50 to make it appear as though the fee is reduced, even though most sales won’t benefit from the drop.  Listing fees are lower in the computers and photography sections because those items usually have much higher prices.  If eBay was charging the 9% they charge in clothing for amounts over $50 in computers, then the final value fee on a $1000 laptop would exceed $100, which is excessive even for eBay standards.  EBay might get slammed for ridiculous policies and hating sellers, but you have to give them credit for being particularly good at setting and collecting fees.

For our fee breakdown, let’s first assume you’re selling a $100 pair of pants.  The insertion fee would be 35 cents and the final value fee would be $10.50 ($50 * .12 + $50 * .09) for a total fee of $10.85.  Notice that this is more than twice as expensive as the fee for auction listings.

Next, let’s assume you’re selling an item in the cheapest fixed price category, computers and networking.  Your $100 item would cost 35 cents to list and $4.88 ($50 * .06 + $50 * .0375) in final value fees for a total fee of $5.23.  This fee is slightly more than the auction that started at 99 cents and less than the fee had you started the auction at $100.

Finally, let’s assume you’re selling a DVD box set for $100.  The insertion fee would be 15 cents and it would be an additional $10 (.15 * $50 + .05 * $50) in final value fees for a total fee of $10.15.

For a $50 item, the total fee at auction would be between $3.22 and $5.07, in fixed price computers and networking it would be $3.35, in clothing it would be $6.35, and in video games it would be $7.65.  Combined with the Paypal fee, a sale of $50 in video games will only bring in $40 for the seller after fees.  When sellers complain about the high fees on eBay, this is what they are talking about.

So to recap, the total fees for a $100 item at auction is between $4.97 and $6.82 depending on the starting price, fixed price computers and networking is $5.23, video games and music is $10.10, and clothing and accessories is $10.85. For a $50 item, the online auction fee is between $3.22 and $5.07, $3.35 in fixed price computers and networking, $6.35 in clothing, and a whopping $7.65 in video games. 

Keep in mind that relisting fees can begin to add up if you try to list your item at auction with a high starting price and it doesn’t sell. There are many other considerations to take into account when deciding how to list as well. Be sure to read the pricing strategy guide linked at the beginning of this article. Just because the fees are higher on fixed price doesn’t necessarily mean that fixed price listings are never the best way to list. With fixed price you have more control over the selling price of the item. With an auction you have much less control over what the selling price will be. If your item would sell at auction for $50, but would sell for $100 in a fixed price listing then the $50 different greatly exceeds the extra fees. Nonetheless, it’s important to be aware of how eBay calculates fees and it will be helpful to keep track of the fees you’re paying so you can make more informed decisions in the future.

How to Remove Paypal Limitation and Restore Account Access

2 Jun

Other than a permanent eBay suspension, the Paypal limitation is by far the worst thing that can happen to an eBayer.  At any time, for any reason, Paypal can limit access to an account.  If your account becomes limited you will not be able to send or request money, withdraw funds to your bank account, close your account, and in some cases receive additional funds.  If you are unable to complete the steps to reinstate your account, Paypal will keep all of the money in the account for 180 days. The Paypal limitation catches many sellers by surprise and most can’t believe Paypal can hold funds that don’t belong to them for 6 months.  Nonetheless, this fact is outlined in Paypal’s User Agreement that everyone agrees to before using Paypal. Paypal will also permanently limit your account if you get suspended on eBay. If that happens, there is very little chance you will see any of the money that’s in the account for 180 days.

Why Does Paypal Limit Accounts and How Can I Avoid Them?

The main purpose of the Paypal limitation is to reduce Paypal’s risk of loss.  As I explained in my Paypal verification guide, very little information is required to sign up for a Paypal account. In addition, that information can be completely fraudulent.  Paypal wants as many people as possible to sign up for accounts and they know that if they started requiring Social Security numbers and utility bills that far fewer people would open accounts.  The Paypal limitation usually requires the account holder to provide a Social Security number to confirm identity, a land line phone number to verify location, shipment tracking numbers to prove items have been shipped and delivered, and supplier information including invoices to prove that the items sold are genuine and authentic.  Paypal will also run a credit check on the Social Security number to see if the account holder has past problems with debt.  If an account holder’s balance goes in the negative or there is another reason Paypal needs to track down the user, Paypal can use the information gathered from the Paypal limitation to do this.

According to the Paypal User Agreement, Paypal can limit accounts if any of the following things happens:

  • Reports of unauthorized or unusual credit card use associated with the account including, but not limited to, notice by the card issuing bank;
  • Reports of unauthorized or unusual bank account use associated with the account;
  • Complaints received regarding non-shipment of merchandise, non-delivery of services, merchandise not as described, or problems with merchandise shipped;
  • Initiation by a buyer of a reversal process through the buyer’s issuing bank without first pursuing the Buyer Complaint process described below;
  • Receipt of potentially fraudulent funds;
  • Excessive disputes or reversals, or attempts to “double dip” by receiving funds in a dispute both from PayPal and through a reversal or a refund from the seller;
  • Refusal to cooperate in an investigation or provide confirmation of identity when requested;
  • Initiation of transactions considered to be cash advances or assisting in cash advances;
  • Sending unsolicited email or posting referral links on websites where they are not permitted;
  • Opening multiple Personal accounts;
  • The account has been used in or to facilitate fraudulent activity;
  • Violations of this User Agreement;
  • Name on the bank account associated with the PayPal account does not match the name on the PayPal account;
  • Return of an incoming Electronic Funds Transfer for insufficient funds in the bank account, incorrect bank routing number, or incorrect bank account number;
  • Use of an anonymizing proxy;
  • Participating in prohibited transactions and activities, including but not limited to multi-level marketing programs, gifting clubs and other pyramid schemes, and listing items for sale that have a delayed delivery date of 20 days or more after the transaction list, and other activities that are prohibited in Part II of this Agreement;
  • Reports from credit agencies of a high level of risk;
  • Receipt by PayPal of excessive complaints regarding your account, business or service; and/or
  • Logging in from a country not included on PayPal’s permitted countries list

As you can see, this list is fairly exhaustive.  Paypal really can limit an account for any reason they can dream up. When I say Paypal, what I really mean is Paypal’s computers. Paypal has one of the most sophisticated computer systems in the world and their fraud detection software is just as complex. Doing various things will cause the system to flag your account. This includes adding and removing addresses or accounts, inputting the wrong password, signing in from a computer that isn’t normally used, receiving an unusually large amount of money in a short time, withdrawing too much money at one time, receiving complaints, and the list goes on forever. The trick to getting Paypal to leave your account alone is raise as few red flags as possible. Here’s how:

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The Limitations of USPS Delivery Confirmation

2 Jun

You may also be interested in Utilizing USPS Priority Mail Flat Rate Boxes For Your eBay Business and The Perils of International Shipping With eBay and Paypal – A Guide to Successful Shipping Practices

According to the USPS website:

“Verify delivery with Delivery Confirmation. Our low cost Delivery Confirmation service gives you the date, ZIP Code™ and time your article was delivered.  If delivery was attempted you will get the date and time of attempted delivery. You can easily access this information with our Track & Confirm tool.”

Adding Delivery Confirmation to your package is absolutely imperative to selling on any e-commerce platform.  If you are unable to prove that the item was delivered to the buyer’s address you might as well not have shipped anything at all.  When accepting payments with Paypal you must input a Delivery Confirmation number or other proof of delivery that Paypal can search for online for every transaction or you are opening yourself up to potential buyers who “didn’t receive the item.”   If you do not have proof that the item was delivered, the buyer can simply say they did not receive it and they will receive a refund from Paypal every time.  Delivery Confirmation’s biggest asset is that if you print postage online it’s included free and if you ship your packages at a retail location the cost is 75 cents for Parcel Post or 65 cents for Priority Mail which is still inexpensive compared to other carriers.  Delivery Confirmation also works well for what it was designed to do – provide proof that the package reached the recipient.

Unfortunately, USPS Delivery Confirmation has a number of downsides.  First, it is only possible to track the package to the Zip Code of the buyer.  It is impossible to verify that the item was delivered to a specific address.  For example, if you ship a package to 12345 Main Street Seattle, WA 98105, when you “track” the package online it might say, “Your item was delivered at 10:58 AM on April 9, 2009 in Seattle, WA 98105.”  This can present a problem if the buyer says they did not receive an item but your Delivery Confirmation number says that the item was delivered.  The buyer could simply be mistaken as sometimes postal workers place oversized packages in locations the buyer is not expecting, the buyer could be lying that they did not receive the item, the package could have been delivered to the wrong address, or a number of other scenarios could have occurred.  Usually, the buyer will find the item or the issue will otherwise resolve itself, but if they don’t it puts the seller in a difficult position where they have to decide if they want to trust the buyer and issue a refund or risk receiving negative feedback.

Second, the lack of a specific address can open the buyer up to fraud.  If the seller ships an item to a different address in the same Zip Code as the buyer, it will say that the item was delivered, but the buyer was actually never shipped the item they purchased.  If a buyer opens a dispute with eBay and Paypal saying they did not receive the item, it is enough proof for the seller to input a Delivery Confirmation number that shows a package was delivered to the buyer’s Zip Code even if the buyer never received the package at their address.  For this reason, if you are buying something on eBay and find a seller with free or economical UPS or similar shipping you might consider it even if UPS Ground is usually a few days slower than USPS Priority Mail.

4/17 Clarification: My point here is that with USPS Delivery Confirmation it is impossible to check the intended address.  With UPS and Fedex, it is at least possible to check what address the shipper used when they shipped the item.  If a seller on eBay (or any other e-commerce site) is out to purposefully defraud the buyer, they can simply ship an item to an address in the same Zip Code as the buyer and as far as Paypal is concerned the buyer received the item as advertised.  It is a serious flaw in Paypal’s dispute resolution system.  I would not advocate any seller switch from USPS to UPS as UPS is too expensive, too slow, and too incompetent to meet the demands of even the most basic business.  But it is something to keep in mind as a buyer on eBay.

Third, many buyers expect Delivery Confirmation numbers to work like Fedex or UPS tracking numbers that are constantly updated at numerous points during the transit process.   Delivery Confirmation numbers are rarely updated more than twice during transit and often only once, when the item is delivered.  If you sign up online, USPS will pick your packages up.  The postal worker who picks up these packages almost never scans them in as being picked up.  In addition, when you bring your postage paid package to the Post Office to ship many times the package will not be scanned either.  This presents a serious problem because the buyer will input the Delivery Confirmation number into USPS.com and it will say that the Post Office is expecting the package for shipment but it has not yet been shipped.  I’ve received the same email hundreds of times: “It says you printed the postage for the item I bought, but it hasn’t shipped yet.  When will it ship?” I then explain what I explained here and the item usually shows up the next day.  Still, it can make buyers uncomfortable when they are unable to use their “tracking number” to track the package.  If you receive this email from buyers assure them that the item was shipped and that the Delivery Confirmation number will likely not update until the item is received.  Knowing that the item will show up within a day or two, I usually tell them that if the item does not arrive in the next few days I will issue a refund or ship a replacement item, whichever they prefer.  This usually makes buyers calm down.

Finally, one of the worst case scenarios is when the postal worker does not scan the package at the time of delivery.  This is uncommon when you print postage online because the Delivery Confirmation number is attached right under the address making it hard to miss.  However, when you bring your package to the post office and pay for Delivery Confirmation separately, the Post Office attaches a small rectangular Delivery Confirmation bar code that the postal worker is more likely to miss.  This can put you in a pickle if you have a buyer who is particularly intent on trying to rip you off.

I should say something positive to make you feel better about the Postal Service after all this negativity.  I’ve shipped over 50,000 packages via USPS Priority Mail with Delivery Confirmation and I only know of one that may not have been scanned properly and I was forced to refund the buyer.  One out of 50,000 isn’t too bad, so if you do things properly and keep following these guides you should find yourself knowledgeable and more adept at fighting potentially fraudulent buyers and sellers.

The point of Delivery Confirmation is to do exactly what it says – confirm delivery.  Unfortunately, many buyers and sellers alike misunderstand it as a full featured “tracking number” that they can check to see how the transit process is progressing.  Delivery Confirmation is simply not designed to do this.  If you want full featured tracking you either need to choose Express Shipping from USPS or another carrier like UPS or Fedex.  Despite its lack of features, Delivery Confirmation is a necessary tool when selling items on eBay and accepting payments through Paypal or other payment processors as confirming delivery is one of the most important aspects of running a successful business

If you found this guide helpful, check out the site index by clicking here for 75+ more guides including how to get around eBay selling limits, enabling PayPal’s merchant rate to save money on fees, and raising your auction and fixed price visibility in best match search.

What Should My eBay Payment and Shipping Terms Be?

2 Jun

Many sellers make the mistake of not listing clear payment and shipping terms in their listing.  Other sellers include information that is either inaccurate or potentially harmful to sales.  I recommend stating what payments you accept as well as how and when you ship within the listing description.   If you look at the top sellers on eBay by feedback at SellerDome you’ll notice that almost all of them include this information within the listing.  At the risk of sounding like a broken record, the best way to conduct business on eBay is to emulate those who are successful.  The inclusion of clear, concise, and correct payment and shipping terms within your listing will make you stand out as a professional seller, cut down on buyers asking questions about your policies, and decrease post-transaction issues from buyers who didn’t read all the little boxes at the end of your listing.  The good news is that you should only have to write the terms out once and then use an insert to include them in all of your listings (How to Use Inserts in the Item Description to Save Time Listing on eBay).

First, it’s easier to point out what you shouldn’t do in your payment and shipping terms.  This is not the place to list all the things that could go wrong during the transaction, threaten nonpaying bidders, or tell people that you aren’t responsible for lost packages (You are).  Nothing makes me shake my head more than seeing a seller with, “PAYMENT IS DUE WITHIN 24 HOURS OF AUCTION END.  NONPAYING BIDDERS WILL BE LEFT NEGATIVE FEEDBACK AND A NONPAYING ITEM STRIKE.  DO NOT BID IF YOU DO NOT INTEND TO PAY.”  You aren’t going to scare away nonpaying bidders by including something like this.  Nonpaying bidders fall into only a few general categories – those who don’t understand that eBay isn’t a place for them to have fun bidding on stuff they have no intention of paying for, kids using their parents account without permission, people who get caught up in a bidding war and then regret the price they paid, and those who end up with a payment issue like a Paypal limitation that makes them unable to pay.  A disclaimer like this isn’t going to make any of these people not bid on your item.  The only people it is going to affect are buyers who have every intention of following through with the transaction.  Buyers don’t want to see a list of all the things the seller is planning to do to them before the auction even ends.  Imagine if you walked in to Best Buy and someone was there yelling at you about all the things you shouldn’t do in the store.  It wouldn’t make for a particularly pleasant experience.  Listing a bunch of things buyers shouldn’t do in your listing is the same thing.  Just like customers at Best Buy know what’s expected of them, bidders on eBay know as well.  And those that don’t are never going to know and there isn’t much you can do about it.  I’ve spoken with sellers who thought they had to say in the listing that they would file for fee credits on items that weren’t paid for.  I assure you this is not the case.

You want to list clear instructions to the buyer without including any negative language that would cause a bidder not to bid.  I recommend using clear bold headings with a larger font at the end of your listing with “Payment” and “Shipping” along with “Return Policy” and an “About Me” if you like.  Something that looks like this:

eBay Payment Shipping Terms  

It’s simple, clear, and bidders are more likely to read something that’s short rather than extremely complicated.  In your shipping terms, make sure you say what service you use (i.e. USPS Priority Mail) and how soon after receiving payment you usually ship.  Say whether or not you ship internationally.  If you do ship internationally, you may want to say that you only ship via USPS Express International (International Shipping on eBay for Sellers) and do not make any exceptions.  Include what kind of tracking or Delivery Confirmation number will be made available to the buyer.  State how long it usually takes after shipment to receive the item.  That should be about it.  For payment terms, list your accepted forms of electronic payment.  It’s now against policy to state that you accept money orders, checks, and the like so you shouldn’t mention anything about it or your listing will get flagged by eBay.  You don’t need to go into much detail about Paypal as bidders will know what that entails.  If you use a third-party checkout rather than eBay’s checkout you’ll want to make a note of that.  If you accept some of the less common payment services such as Moneybookers or Paymate you would likely want to say something about how easy they are to use and how they work so there won’t be any surprises when buyers try to pay and they can’t figure out why they can’t login to Paypal. Keep it short and include only information that would benefit buyers and make you seem like a caring, professional seller.

The major problems with a lot of sellers’ terms of sale is that they simply aren’t enforceable, are unclear or too long, or scare away potential bidders with threatening language.  Like I’ve said before, sellers are responsible for lost packages and buyers aren’t responsible for purchasing shipping insurance to protect the seller.  If a buyer makes a complaint that the item was not as described, Paypal doesn’t care if you have a hundred terms of sale that say the buyer can’t return the item.  Paypal is still going to grant the claim and allow the buyer to return the item.  For this reason, it’s best to shorten your terms of sale and make them in line with how eBay and Paypal actually operate. Buyers will be more likely to read and understand the terms and keeping a positive and informative tone will increase the amount of bidders that trust you and ultimately purchase your items.