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2 November 2006
Selling on eBay Part 1
We started selling on eBay as partzfinder in May or June of 2000. At that time Eric was selling mostly used parts picked up at swap meets, taken in trade or laying around the shop. The prices he got for some of that stuff was unbelievable. Guys stuck out in remote areas or with no local swap meets could shop on eBay and find what they were looking for. Suddenly, your market wasn't just the guys coming around or showing up at local swap meets - it was the world at your doorstep.
The competition back then wasn't too stiff either. Few had internet access or saavy and fewer ventured onto eBay. Man, has that ever changed. Now the competition is fierce and few people are without internet access.
eBay was different then, too. eBay Motors was just getting started and its development lagged behind the mainstay eBay site by years. Of course the fees were at least reasonable then, too. Now the fees are outrageous. A survey of recent eBay sales shows that a hair under 15% of the revenue from a sale goes to eBay/PayPal/credit card processor. 15% for a 7 day listing. I'd like to be making 15% on every sale I make on eBay. With the listing fees for unsold items factored in over time that percentage only gets higher. eBay needs some competition. Google is the only dog big enough for a fight with eBay. Considering Google's fee philosophy - Google would overtake eBay in no time.
I see items listed on eBay and I know what the seller pays for that item yet his/her selling price is so low. Do they know if they are really making money? I use a free fee calculator to evaluate my price point and that of the competition. You can find it at http://www.pmphoto.to/ListCalculator.htm. It tells me that some sellers don't know that they are making almost no money on their sales. That's just poor business. You can't sell on price alone.
As of today, you can find Chevy HEI distributors selling on eBay for as low
as $39.99. For giggles I put this listing through the fee calculator I
mention above and this is what I found out... This seller is paying a
whopping $7.05 in listing fees for things like Buy It Now, Highlight,
SubTitle, and Gallery. When one sells there is an additional $1.76
final value fee. If the buyer uses PayPal it costs the seller an
additional $1.46. For this $39.99 sale the seller nets $31.18/$29.72
(w/o PayPal/w/PayPal). Subtract out what he paid for that distributor
(probably $26-$29 because it is not polished) and he's not making
squat. There is overhead to consider and a 10% return doesn't leave
much room to cover overhead. You have to be smart and avoid the price trap. Sure, this guy may sell $10,000 in distributors this month but what will he have to show for it after that huge eBay bill hits?
We try to focus on two areas to avoid pure pricing wars: Service and Value-Add.
Service
PartzFinder has a good reputation for delivering what we sell. We're not perfect and we can't please everyone all the time. When we make mistakes we try to acknowledge them immediately and fix what can be fixed. We bust our butts getting orders out quickly. We have been consistent in our efforts and the results are a very high rating on eBay and many return customers. With all the flim-flam taking place on eBay, a solid reputation really helps especially when our price is higher. Maintain your integrity and stay within what you can deliver.
Value-Add
This is one area when you can minimize pricing differences. We bundle products. For instance the price of Chevy HEI distributors has dropped through the basement. For the most part these distributors are all coming from China in whole or in part; essentially they are identical. Even the formerly MADE IN USA manufacturers like Mallory and MSD are having their low end distributors built in China yet commanding a heftier price. They are banking (literally) that the consumer will assume that these distributors are built in USA as they have been in the past and will continue to pay a premium for them.
To hide the price of any one item we bundle a distributor with things like a plug wire set, wire looms, distributor hold-down, etc. We try to think about what a customer is doing when they replace their distributor and encourage them to one-stop shop for everything at once. That's one way to avoid price wars.
Sell Smart, Suzanne
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