Common Sense eCommerce

It’s now been a few weeks since I posted a piece about UBid (Link Here). Since that time, I’ve had the chance to actually try selling on the site and for the most part am a bit disappointed. My disappointment stems from what I consider to be 2 rather serious shortcomings:

Buyers Don’t Know the Seller
The seller’s identity is hidden from the prospective buyer. From the buyer / bidder / shopper perspective, they are purchasing from UBid itself. UBid handles the payment and bears the risk of the transaction, so in their business model, the seller’s identity is insulated from the buyer. The buyer can contact the seller anonymously, but that’s all. It isn’t until after the purchase has been made, that the buyer will know anything about the actual seller. Compare this to eBay, where the seller’s feedback hangs out for everyone to see. I see this is as a problem for any business who desires to build a brand. This flies in the face of brand building for the seller; the seller is essentially helping to build UBid’s brand.

Missing Features
UBid has been around since at least 2000 and it surprised me to see that some very basic features are missing. One example is calculated shipping. All UBid offers is flat rate - you’re supposed to choose an average catch-all flat rate for your product. Everyone has real time shipping calculators nowadays and there is little excuse for UBid not having one. Another example are the date fields. When setting up a listing, you must type out the dates (starting date, ending date, and so on). There is no calendar applet. I know from my experience as a programmer in a past life, that a calendar applet is one of the easier things to whip up and I see no excuse for this omission either.

There are good points about UBid. As I mentioned, they take care of the fraud problem. Also, your listings are automatically fed to other sales channels like Froogle - that’s kind of a nice feature. But overall, I don’t see UBid as serious contenders to eBay. Still I did manage to sell one item, so my testing (and blogging about it) is not yet complete.

Well it happened again today.  An IT telemarketer called and started reading to me from a script. Nonstop. I mean I could really tell he was just reading from a script.  You can always tell - when a person reads, it always sounds different.  Different nuances and different ways of speaking when a person is reading that gives it away. 

Furthermore, he didn’t pause to take a breath or ask me if I understood what he was talking about until he was finished babbling (about 3 minutes). I have some bad news for him - during that time I tuned him out and just continued working on the thing I was working on.

I wonder if those scripts work at all?  Perhaps they might be better looking at an outline or some such thing rather than something they have to read word for word.  Something to make them sound like we having a conversation rather than a sales pitch.

I often run across a lot of disclaimers in website and auction listings.  I ran across this gem on eBay:

‘We are not responsible for typographical or other errors within our listing’

I’ve seen things like that before and often wonder if the seller is not willing to take responsibility for errors in their listing, then who is?  Is the buyer supposed to be responsible for those errors?  And why would I want to buy from a seller who has this disclaimer in place?  When you really think about it, it has the potential to get them off the hook for just about anything that does not come up in their favor.

For example, what if shipping is $12.95 and someone accidentally put in $8.95 when they set up the listing?  Would such a disclaimer give them the right to say “Oops sorry buyer, the shipping is really $12.95″? 

I think sellers SHOULD take responsibility for errors in their listing and correct them accordingly. Of course, that’s my way of doing business and if my competitors want to lean on such disclaimers, I suppose I should say go ahead.

Trading Assistants are those people who are in the business of selling other people’s stuff for them - for a profit. Sometimes this involves providing pickup services, other times, they have a drop off location. Skip McGrath at the Auction Sellers Resource blog has a blog post (Link Here) in which he chastises eBay for having an out of date Trading Assistant list. Among other things he says:

What usually happens is that I get a follow up phone call or email telling me that over 50 names came up in their area and no one will return their calls or emails. This happened today to a gentleman who called me today. (What’s sad is that he has some really wonderful, expensive and highly saleable merchandise). The problem is that so many people got excited by the TA program and signed up for the program, but in fact, most of them are not even active sellers, let alone eBay real trading assistants. eBay needs to send every trading assistant an email and ask them: 1) are an active? 2) do they have a storefront or will they pick up goods? and 3) do they still want to be in the program?

That shocked me to read that the man contacted so many Trading Assistants and no one returned his call or email. If the current batch of Trading Assistants are doing that lousy of a job, then perhaps there is opportunity there? Opportunity, that is for sellers who don’t mind working hard and are willing to take the responsibility seriously. And you can bet that running this type of business will be hard work and very time consuming.   But it can be potentially rewarding, too.

If that interests you, see the eBay Trading Assistant page (Link Here).

We have an eBay store and we also run eBay auctions.  Mostly we use auctions to entice people to look at our eBay store.  For example, we have a thing in our auctions that says “If you don’t feel like waiting for the auction, there’s more of these in our store” (with a link to the store listing). 

I’ve noticed in our seller panel, under the column “# of Watchers”, that on some store listings, we have watchers.  There are always lots of watchers for auction listings, because people want to watch them to snipe or have their sniping software do the last minute bidding.  But what possible purpose could there be for watching a seller’s store items?

I mean eBay store items are GTC (good til canceled) and they’re fixed price. I suspect that these ‘watchers’ are competitors or other sellers watching to see whether and how many of the items sell. In other words, these watchers are doing research. 

On one hand, it would be nice to delete watchers like that, but on the other hand, I sometimes do that too!  :-0

I was working with a company who was obsessed with comparing the current year to the previous year.  For example, if they wanted to know how they were doing sales-wise in the 2nd weekend in November, they would compare that November weekend sales figures to that of the 2nd weekend in November for the prior year.  If they were above last year, they were doing well.  If not, they were not doing that well.

A lot of businesses large and small seem to do this, but there is one huge thing wrong with this type of comparison.  There will be exceptional years and there will be lean years. When you are only comparing to one year (the one before) is it that meaningful? Say for example, the prior year was one of those exceptional years.  It is that horrible if your current year sales are down from that?  Conversely, what if the prior year was one of those awful years. If your sales are up compared to that year, is that all so great?

So the point is, don’t get too hung up on comparing to last year. It’s fine to do, but take it with a grain of salt.  A far better approach is to look at an historical trend over say the past 3 or 4 years.  That type of comparison is far more meaningful that simply looking at last year.

– Frank Ross

Vitamix has a blender called the TurboBlend 4500; it’s been around for a few years and is well known.  Let’s look at who’s selling this on eBay and ‘blow the lid off it’ shall we?   An eBay seller - we’ll call them ‘BlendersUnlimited’ - is selling the TurboBlend 4500 for $279.99 at BuyItNow with $22.95 fixed price shipping.  The seller has 30 of these for sale at the current time. This case study is based on a real seller, by the way but to keep myself out of hot water, I’m not naming them and I’ve adjusted the figures slightly for illustration (you could probably do a little detective work to figure out who I’m studying here).

The TurboBlend 4500 has 3 dealer cost levels with a minimum order of 3.  If you order between 3 and 9, your cost per-unit is $280.  If you order between 10 and 49, your cost drops to $262.  If you order 50 or more, your cost drops even further to $251. Since the seller has 30 for sale, we know they must be buying at least in the 10-49 level, if not in the 50+ level.  Given the fixed sale price, how much is this seller making on these?

To answer that, we need to look at the seller’s transaction costs.  You might look at the shipping price and think that’s excessive so you might be tempted to think the seller is doing the ’shipping jack up’.  But the TurboBlend 4500 weighs in at 15 pounds and comes in a fairly large box, so it’s probably about right as an average.  For the sake of keeping it simpler, let’s just say shipping is break-even and leave it out of the picture (although in practice, I would usually never try flat rate shipping on a heavy oversized item like this).

Based on the BuyItNow, this seller’s transaction cost will be about $22.00.  This takes into account listing fees, final value fee, and assumes a PayPal payment.  So what happens when we add $22 to the cost?  We know now that the seller is probably buying the product at the 50+ level or else they would be loosing money ($262 + $22 = $284).  But even at the 50+ level, the seller is only making about $7 per unit ($251 + $22 = $273).  That translates into a profit margin of only about 2.5%.

Yikes - that’s narrow! We don’t know what kinds of other costs the seller has, but at $7 per unit, BlendersUnlimited had better be selling loads of these every day or they WILL be losing money.  You might wonder if there would be another price level that I don’t know about.  There probably is - if you’re Wal-Mart! But for regular businesses that want to sell this product, that’s what there is to work with. 

This illustrates the problem created by Competing on Price.  This seller has attempted to lock everyone else out of the market by making it difficult for others to get attention to their listings at higher prices.  In the big picture, eBay enables this — especially with Ebay Express where you see the listings side by side and not much else to guide the buyer.  And BlendersUnlimited is doing this by accepting a less than adequate profit margin.  What happens when you have someone else that comes along and is willing to take a 2.4% margin, 2.3% margin and so on? 

In the end, the low one wins - or do they lose?
 

– Frank Ross

I found it necessary to switch hosts (already).  The former host (Dot5) had some serious downtime issues to the point where I figured I should cash in my ‘30 day trial’ before it went too far.  I guess you can take that as a ‘thumbs down’ for that hosting company.  I’ll reserve judgment about the current host until I’ve been with them awhile. 

I saved all the posts and links, and reposted them on my new host with the WordPress platform. One thing I didn’t save (because I was not sure how to do it) were the comments. For those of you who commented and no longer see your comments, my apologies - just know that I didn’t delete them.  Just one of those casualties of changing web hosts.

I love WordPress a lot and hope to have that ‘thoughts’ template back soon (in case you’re reading this with the ubiquitous blue WordPress default theme). So far, I have used Blogger and Moveable Type for blogging and WordPress beats them both by far, IMO.  OK, back to business now.

– Frank Ross

A lot of people think of success as wealth. But it’s amazing the number of fellow entrepreneurs I speak with who sell online and who have never taken the time to think about what success might mean to them.

It may be wealth, it may be fame (or both), or it may just be things like independence of the ‘Dilbert Cube’, doing something you truly enjoy, setting yourself up financially for retirement, raising children to be well adjusted adults, and so on. Whatever it is, we can only get it if we set our sights on it.

One of the definitions of the word “success” is ….an event that accomplishes its intended purpose. If we don’t define what our idea of success is, it will be difficult to set up the goals needed to reach it.

– Frank Ross

Selling on eBay, I sometimes get frustrated with the repetitive ‘dumb’ questions I seem to get from users. Whenever I start to feel this way, I remember the saying: There’s no such thing as a dumb question.

For example, one question I was getting over and over was “How much is shipping to Canada?”. My response was always the same: “Which province are you in?” I mean, Canada is a huge country and with me in Seattle, it’s a lot different cost-wise to ship to British Columbia than to say, New Brunswick.

That repetitive question prompted me to do 2 things. 1st, I enabled Canadian shipping calculations in the listings and made sure to add enough handling to make up for the time it takes to fill out the customs form, etc. 2nd, I put instructions for Canadian users in the listings (prior to that, there was something vague like ‘contact us for a shipping quote’).

If you get what seem like dumb questions on eBay, maybe it’s because you could be doing something better in your listings. I always ask ‘what could I have done to avoid that question?’ when I get one. Sometimes, they really are dumb questions, but most of the time I find that there is some way I can provide the information to the users so they don’t have to ask.

– Frank Ross

PEBKAC used to be kind of an insider acronym used only by and between I.T. Professionals. It is meant to refer to ‘user error’. Wikipedia defines it best:

PEBKAC is an acronym which stands for “Problem Exists Between Keyboard And Chair”. Also used is PEBCAC, which stands for “Problem Exists Between Computer And Chair”, or PEBCAK (”Problem Exists Between Chair And Keyboard”). Other variations are PIBKAC (”Problem Is Between Keyboard And Chair”) or EBKAC (”Error Between Keyboard And Chair”). It is most commonly used by experts to describe to one another that the problem was not in the computer but was instead caused by the user operating it.

And all this time, I thought PEBKAC was a well kept secret among I.T. Professionals! I.T. Professionals, after all, seem to love acronyms and this one was commonly giggled over at the conference table. Now Intel is using it in a series of ads. I have not seen TV ads (I don’t watch much TV so I have no idea what kinds of ads are on now), but I see them popping up in news sites and other authority sites.

It certainly made me take notice. I’m not sure if people who do not know what PEBKAC is will appreciate the ads, but at least Intel will attract the geeks!

You can select from their full selection of PEBKACs at the Intel PEBKAC page. Link here.

– Frank Ross

If you sell products on eBay, and use core listings (core listings as opposed to eBay store listings), how do you choose a starting price?

Let’s say for example, you’re selling a product that costs you $180 and you have determined through research that it will sell anywhere between $200 and $250. You’ve determined that your break-even point is about $195 given eBay’s final value fee, PayPal fees, and misc. Do you start the listing at $200 to ensure the that you get at least some profit out of the product or do you start the listing much lower? What about starting the listing at 99 cents?

The benefit to starting listings at 99 cents is the savings in the eBay insertion fee. In our example, it would cost 3.60 to start the listing at $200, but would only cost 20 cents to start the listing at 99 cents. That difference of $3.40 may not sound like a lot, but if you’re selling loads of those items, that difference adds up quickly. You can see eBay’s core listing fee table on their fee page (link here).

The downside to the listing something at 99 cents is the risk that the item will not sell for your target $200 or even your breakeven of $195 (as in above example). This is where your research comes in. If you have researched the product thoroughly and / or have tested listing the product until you’re confident of the ending price, then it only makes sense to start the bidding at 99 cents. if you’re not confident of the ending price, then perhaps a higher starting price is in order.

But it’s a well known fact (and even eBay will tell you this) that lower starting prices generate more bidding interest in your product. Conversely, higher starting prices will deter some bidders from your listing.

An alternate way to approach this is to use a 99 cent starting price with a reserve price of $200 in (referring to above example). Perhaps that’s another blog post, but either way, 99 cent listings can save you lots of money in the long run for the items you sell.

– Frank Ross

Everyone is buzzing about Google’s purchase of YouTube this week. So I may as well add my 2 cents to the web echo chamber. When I first heard the news (or as it was first reported: a rumor), I thought - hmm don’t they already have their own video system (Google Video) in place?

Not only do they have Google Video in place, but it occupies one of the cherished front page slots on the Google home page. Google has also spent a lot of time and money promoting Google Video. It does essentially the same thing as YouTube.

Or does it? Google Video was not one of their stunning successes. It simply has not drawn the video community the way YouTube has. According to this article at ZD Net, it has a 10 percent share. Not bad I guess, unless you’re Google.

They may have seen 10% share as a failure. They probably realized Google Video was never going to compete with the huge community of YouTube. So in buying YouTube they acknowledge (although not publicly) that their Google Video was well…not so successful.

A lesson in taking a ‘failure’ and turning it around. Now Google has gone from 10% share to almost 70% and essentially owns the online Video market. Now that is yet more to make Microsoft and Yahoo say “I wish we’d thought of that!”.

– Frank Ross

Everyone knows that eBay is certainly the 800 gorilla of online auctions, but I think other auction sites might be gaining some ground. Just for kicks, I googled ‘online auction’. As you might expect, eBay came up first in organics. But 2nd was UBid followed by Yahoo! Auctions. By the way, Overstock.Com which is commonly considered a contender to eBay was not the first page of SERPs for this term.

UBid is quite different than eBay in a lot of ways and seems to have gone after eBay’s apparent Achilles Heel - fraud. A lot of experts think that fraud is a large part of eBay’s acceptance problem in the minds of many buyers.

I don’t have a lot of experience on UBid, but I did go through the signup process.

The biggest difference there is that in order to sell on UBid, you must have a business license / resale ID. You must also provide 3 trade references (one of them can be your eBay user if you elect to do that). This means that unlike eBay - who let’s anyone sell if they have a bank account and credit card - only legitimate businesses can sell on UBid.

This alone may go a long ways in making buyers feel more confident about buying on UBid. If only they can get that message across to the online buyer community, eBay might have some actual competition.

– Frank Ross

I have been following the story of Randy Smythe formerly of GalcierBayDVD. He was one of the top eBay powersellers and had to close his business earlier this year due to a variety of reasons which are too numerous to go into here.

But one thing he does mention in is his post mortem revelations is that he wishes he would have started selling in other channels outside eBay sooner than he did. He did actually have a website, but according to him it was too late to dig the business out of its hole.

Anyway, he is back and thankfully willing to talk about his experiences over at Associated Content. In this article, he talks about how eBay threw him out of the seller forums for discussing the need to get the eBay customers to buy outside of eBay. One of the things he said was:

Sellers should be able to promote their outside eBay business in light of the reduced visibility in stores.

Indeed they should, in light of other things too — such as sky high eBay fees and overhead. The tradeoff of fees used to be worth it, just enjoying the flow of eBay buying traffic. But it’s no secret that eBay buyer patterns are changing and that the eBay selling landscape has become more competitive.

The bottom line for eBay, whether they like it or not, is that in order for sellers to build a truly profitable and growth oriented business, they will need to use their eBay buyer list for external marketing purposes. As just about any marketing expert can tell you, it’s more profitiable to sell to an existing customer than to sell a brand new one.

But as Mr. Smythe discovered, it’s a subject best not discussed under ‘the eBay roof’.

There’s a lot of talk and speculation going on right now about eBay. “What’s going on with eBay?” is one of the most asked questions on the web nowadays.

They’ve made some seemingly bizarre moves in 2006. First, they raised fees when they had previously said they wouldn’t. More specifically, they raised the fees for eBay store owners, not for auction listing. But for all I know, there was fine print in the original statement or someone at eBay was doing this:

Secondly, they made seemingly diametrically opposed agreements with Google and Yahoo! for advertising. All this lent to the speculation that eBay is might be struggling.

Let’s face it: the only revenue growth model they have is seller fees. The aforementioned Google/Yahoo! thing might produce some revenue down the road, but it’s too soon to tell. Last year’s acquisition of Skype has yet to show that it can produce revenue.

With eBay, all revenue roads still lead to seller fees. Fee-based businesses have been around forever and many of them work just fine. But in the case of eBay (a publicly traded company), they must please the ever-hungry-for-growth investor community. And the only way they know how to do this with seller fees.

Is that a sustainable revenue model in eBay’s case? Obviously they can’t keep raising seller fees forever. At some point (if that point has not already been reached) there will be a diminishing return where sellers simply cannot afford to sell on eBay at all. I’m fairly certain that eBay sees this; I just don’t know if they’ve found any other viable future revenue streams yet.

– Frank Ross

Earlier this year, I purchase Robert Kyosaki’s Rich Dad Poor Dad and his corresponding Cash Flow Quadrant books. They were digital download in PDF format. I loved the books! Of course these are books that every entreprenuer in the room has already read so I felt I really needed to knuckle down and read them. I read RDPD in whole, and had just started on CFQ when I got sidetracked by various issues.

One of them was a computer issue which forced me to reload Windows and restore all my files. Apparently there are now new procedures to be followed when backing files up for restore that have to do with DRM (digital rights management).

I reached the point last night where I thought - hey! I need to get back to that book. But I got a rude surprise when I tried to open CFQ which I had just started. The DRM kicked in and told me I would have to re-claim the digital download. When I did that, the Adobe DRM then informed me that until I released it from the “other computer”, I could not use it.

I can only assume the ‘other computer’ was the computer prior to the rebuild. I assume there must have been a registry entry which controlled that or some hidden file. Adobe’s official instructions are:

1. On the other computer, run Acrobat or Adobe Reader and use the menus to navigate to the Adobe DRM Activator site as follows:
If you are using Adobe Reader Version 6, select Tools > eBook Web Services > Adobe DRM Activator.
If you are using Adobe Reader Version 7, select File > Digital Editions > Authorize Devices.
If you are using Acrobat Version 6, select Advanced > eBook Web Services > Adobe DRM Activator.
If you are using Acrobat Version 7, select Advanced > Digital Editions > Authorize Devices.
2. On the Sign In page, sign in using the same Microsoft .NET Passport or Adobe ID that you used to activate Adobe Reader or Acrobat on this computer. Note: If you have forgotten your Passport or Adobe ID password, both systems offer a password recovery option.
3. After you sign in, activate Adobe Reader or Acrobat by clicking the Activate button.

Arrgh! Forget it I said. It was only $20 and I’ll spend probably much more than that trying to get someone at Adobe customer service to give me another way to retrieve the books. So I just bought them again - this time in physical form! Moral of the story: DRM (at least how Adobe has it implemented) may not be ready for prime time.

– Frank Ross

I knew it. I keep a daily Google news alert for the terms ‘home business’ and ‘home-based business’. Approximately one half of what I get are limp press releases announcing the latest and greatest home business opportunity.

On name that kept coming up (over and over) under this category was Prosperity Automated System. Now it looks like the long arm of the law is finally catching up to them.

The Securities and Exchange Commission is seeking to shut down a network of 25,000 websites, accusing operators of running a $15-million pyramid scheme that promises to shower participants with easy cash. Prosperity Automated System, which bills itself as a marketing network, “is destined to collapse and leave the vast majority of investors with substantial losses,” the SEC said Wednesday.

Visitors to the sites fill out forms and are later called by representatives selling memberships for as much as $3,895, the SEC said. New members are issued their own websites and eventually can receive a share of the money when more people buy memberships via their sites, according to the allegations. “Websites that come with the memberships do nothing but sell more memberships,” said Stephen Donahue, an SEC enforcement official in Atlanta.

Article here

I stand behind pursuing the uphill road less traveled in ecommerce home based businesses, because these schemes always come crashing down at some point. A house of cards such as this is precarious but a well structured business will have a strong foundation. At least their press releases should stop now.

– Frank Ross