Understanding online shopping

Selling on Ebay is not really difficult. You find something you want to sell, take a photo, write up a description, decide on a price and post it on ebay. If someone buys it, you receive the money electronically and you go to the post office to mail it.

Many people make a business out of Ebay. Some people use Ebay as their only source of income. Even in Israel, this is possible. This is a brief guide to let anyone know what they need to consider if they want to start selling on Ebay. I can't tell you if you will be successful or not, but there are things to consider before spending time and money launching a business.

First things first: understand online buying behavior. People buy stuff online for 2 reasons:

1. because it's cheaper

2. because they can't find the item anywhere else.

Aside from these situations, why would someone pay a bunch of money for shipping, wait weeks for delivery and take a risk of getting scammed and not receiving what they ordered? People love online shopping because you can do it from home, but there are also hassles. As much as the computer gurus 10 years ago predicted that we'd be buying everything online, most average people would rather shop in real stores. Think of yourself and your family and friends.... do you buy everything online? No, of course not. If someone can't find what they're looking for locally or if they are a cheap-o and want to pay bargain basement prices, then they will go online.

As an Ebay seller, you are competing with all the malls and Wal-Marts and craft fairs for customers. To succeed, you have to give customers a reason to buy your stuff over what's locally available. Either you are selling something rare and hard-to-find or you are selling something common and you're selling it for cheap.

Understanding Ebay...

What is the mental picture you get when you hear the word 'Ebay'? A huge rummage sale in cyberspace? An e-swap meet? An online garage sale where everyone can set up a table? That was true 10 years ago, but in recent years, Ebay has seriously been trying to 're-brand' itself as a serious retail venue and to lose their reputation as a huge online garage sale.

Open up www.ebay.com right now and look at what kind of products they are featuring on the front page. In general, they are marketing themselves as a place to buy NEW items, BRAND NAME items, and MASS MARKETED items. I will tell you that there IS definitely a place for unique items, handmade crafts and artsy things, as well as used items, but if you look around a little bit, you will find that the majority of ebay sellers are selling new, brand name, mass-marketed stuff.

There is a myth that Ebay is a great place for collectibles, antiques and rare items. It's true that you can find many wonderful rare finds, but the majority of Ebay shoppers are looking for a good price on everyday things (socks, cake pans, screwdriver sets) and that these buyers are easier to capture than the buyer who is searching for a handpainted spice-rack with gold-leaf applique. There are other sites (like Etsy) that cater to artsy one-of-a-kind items or antiques (Ruby Lane) and draw buyers who are interested in that kind of thing. Ebay is trying to re-market themselves and wish that all of its sellers were offering Ipods and Wiis.

First of all, realize that Ebay is a big crowded place to sell. Think of a random item you might want to sell on ebay and type a few keywords into Ebay's search bar (ex. Ladies Gap jeans) and you will see how many sellers are offering that particular item and what their prices are. Chances are, if you have something to sell, then someone (or many people) are already selling it. You have to give customers a reason to buy from you. (hint: cheaper prices!!!)

If you click on “advanced search” beside the search bar, you will get the option to search completed listings (there's a “search completed listings” box to check) which looks at the last 2 weeks and tells you how many people were trying to sell a particular item and what it sold for. By far, this is the best predictor of your success. You are wasting your time and money if you're trying to sell something that nobody's buying, or selling something for much higher than the going prices. I'll say it again, people want CHEAP. They want something cheaper than they can find it at their own mall. They want the cheapest price off ebay as well. That's an obvious one, right? If 10 people sell the exact same item, the guy with the lowest price gets customers.

Understanding the costs of everything...

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Second, Yes, Ebay costs money. You will probably not pay an up-front fee to post the listing, a commission fee when it sells and also a commission to Paypal for receiving the money. It's easy enough to make an excel spreadsheet and figure out all your fees for anything you want to sell. If you don't know these numbers, you might work hard to sell something and end up making a profit of 25cents... or worse. You will lose money.

http://www.pages.ebay.com/help/sell/fees.html

There is a myth that it's fun to go and list every piece of junk in your house on ebay “just to see if it sells” because there's no risk. That's wrong. Ebay makes money every time you list an item on ebay (whether or not it sells) so they like to cultivate the myth that you should try to sell your old shoes, cassette tapes from the 80's or Pokemon trading cards “just for fun”. It's only fun for Ebay because you are paying them money.

Every listing will probably cost you nothing. Ebay used to have a fee (15cents, 25cents) to list everything, but now they have wised up and offer free listings. This is great, but remember that your time and effort are not free. 

There are two ways to sell on Ebay, either you post something as a fixed-price listing (you set a price and the buyer buys it immediately for that price) or as an auction (you start at a certain price and whoever bids the highest at the end of the auction gets it) The advanced search will tell you approximately what you should expect to get for an item. Sometimes you will get lucky and get a crazy bidding war between buyers, but this is rare. (especially if someone else is selling that item)

If you are selling a very popular item (ex. ipod) then you can expect a lot of bids on your auction and it's ok to start it low. If you are selling a less popular item, setting a fixed price is a better idea. Either that, or start the auction at the minimum that you would be willing to take. If you start your auction at 99cents and you only get one bid, then you are obligated to sell it for 99cents.

Ebay also charges a commission when you sell stuff. This is based on what kind of item and what kind of listing it was (for example, books, CDs computer games get charged 15% but clothing is charged 12%)

When buyers go to pay you, they will use Paypal, which charges a commission on the money you receive. Ebay won't let buyers pay with checks, money orders or bank transfers (besides, this would take forever if you are in Israel and they are in America) You can use your Paypal money to buy things on Ebay or you can transfer it to your bank account in Israel. There is small fee for transferring money to your Israeli bank account. If you have one, you can also use your US bank account, which is actually easier than going through an Israeli bank. Israeli Paypal is more complicated than US Paypal.... they only recently started allowing transfers into Israeli banks.

https://www.paypal.com/cgi-bin/webscr?cmd=_display-fees-outside

Open up an Excel spreadsheet right now. Make a column for “insertion fees”, one for “Ebay commission” and one for “Paypal commission” and one for “postage”. When you see something you think you want to sell on Ebay, run your numbers and make sure that you're making a profit.

Understanding shipping

You will also need to tell buyers how much shipping will cost. Find a cheap kitchen scale, weigh everything you are planning to sell, and go on the Israelpost website and figure out your costs. This is part of your spreadsheet math. You might even find that you can make a little profit on your shipping.

Ebay encourages sellers to have 'free shipping' which really means you include the shipping costs in your price. (Ebay makes higher commissions that way) Or you can set a separate price for shipping and offer a discount if someone buys several of your items. Either way, buyers want CHEAP, so they won't buy from you if your shipping is higher than the competition. Also, there are some items that are super-hard to sell on ebay because they are difficult and expensive to ship. For example, used books. The shipping costs are prohibitively large in relation to the price you will get for the book. You can sell a hardcover book for $5 and end up charging the buyer $8 to ship it. This might be the real price the post office charges, but the buyer will not like it.

The Israeli postal system is cheaper, faster and more efficient than you would think. Before you list anything, weigh it and find out how much shipping will cost you. It's all on the Israelpost website. Small parcels (under 2 kilos) can ship relatively cheaply and get to the US in a week and a half or so. Tracking costs an extra 4nis. Parcels over 2 kilos require more expensive EMS shipping. EMS is fast and has tracking, but it is pricey. Regular airmail shipping is actually quite fast and reliable and your buyers will probably be amazed that something came all the way from Israel so quickly.

http://www.israelpost.co.il/npostcalc.nsf/calculator2?OpenForm&L=EN&menu=1&hidec=1&mo=1

When you give buyers a shipping quote, it's OK to add a little for supplies (envelopes, tape) as well as for your time, just as long as your shipping price is comparable to other people selling the same item. Also, since we're in Israel, the postage label is in sheckels, so buyers don't know what you really paid for shipping. Most sellers make some profit on shipping. As long as you are charging the same as everyone else, your buyers won't notice that you've made some money. And yes, you will have to shlep everything to the post office yourself and stand in line behind all the savtas paying their gas bill and buying 3 stamps.

What should I sell?

And finally the million-dollar question “What should I sell?”. The best answer I can give you is that you should sell whatever you can find cheap. There are people who have made successful businesses selling socks, paper clips, screwdriver sets, cake pans, plastic bags, pet supplies, airplane parts...etc. Again, I will reiterate that people are looking for a bargain, so whatever you sell, you will need to find is at a super-super-cheap cost to you..... so that you can sell it for a bargain-basement price and still make a profit.

Of course, you should always search completed listings and see how popular something is and what is considered a good price for it.

You can never predict 100% which things will sell, but you increase your odds of success by going with what is popular. (Like I said in the beginning, new, mass-market and brand name items)

New: Buyers like new stuff better than used stuff (obviously) and especially since everyone is trying to undercut eachother and have cheap prices, you will find new stuff selling for very cheap. If you have a used item to sell, you might be able to sell it, but your price will have to be cheaper than the new items on ebay.

Mass Market: Although someone might buy a one-of-a-kind artistic hand-painted spice rack, this is a one-time purchase and for every one of these buyers, there are 100 buyers who are looking for a plain, boring Rubbermaid or Tupperware storage container. Especially in a tough economy, people are shopping for basics and not luxury items or fancy stuff.

Brand Name: Buyers like brand names because they know they can trust the quality of the item, since they can't pick it up in their own hands. Also, this has a lot to do with search results.

Am I telling you not to sell jewelry, hand-made judaica, crafts...etc? No. I am just saying that you should seriously investigate your Ebay competition and determine if your beautiful and unique items are getting buyers (and if they're fetching a decent price). You will likely find that Ebay is not the best venue for these kinds of items. The kind of buyers Ebay attracts and the kind of buyers a site like Etsy.com attracts are quite different.

Another thing to consider is that most buyers are in the US/Canada and Europe and to think of what they would want and what they would search for. This means looking out for well-known brand name items that people in other countries would know, which is not necessarily the Israeli brands that we have here. The other reason to sell brand name stuff is that there is so much on ebay that someone searching for almost anything can get overwhelmed easily.

The big question to ask is WILL MY LISTING BE SEEN??? If no one sees it, then no one will buy.

Go on ebay and look at all the search results for “womens jeans” (piles of them, right?) and compare that to “womens Levis jeans” or “womens Abercrombie jeans” (still a lot of results, right?) Buyers first have to find you and if there are way too many listings that pop up when they use general search keywords (“womens jeans”), then they'll start using more specific keywords (“womens Abercrombie jeans” or “size 26 womens Abercrombie jeans”) because they won't look through 20 pages of search results. Maybe if you are selling an uncommon size of jeans, then your buyers will only get a small amount of search results and they'll see your listing. The key is getting customers to find you. After that, you can think about the other stuff like taking beautiful pictures of your items or deciding what the best way to describe them is.

It's against ebay rules to use keywords in your titles that don't actually apply to your item. Of course, you should use keywords that would attract the most searchers – it's OK to describe something as a “Handbag Purse Pocketbook” and use synonyms, but if you're selling a purse from Castro, putting “Gucci Fendi Coach” in your title might get you more exposure for a little while, but it will also get your listing removed.

Ebay has a secret search algorythm (sorta like Google) which gives some listings preference. It's called “Best Match” and you can find sites with tips on how to optimize your Ebay search placement. Usually, when an auction or fixed-price listing is ending soon, it'll be at the top of the list. Also, new items get better placement than used items and stuff from established sellers gets better placement. If you are selling something where 10,000 people have the exact same thing for sale, there is little you can do to put yourself at the top of the list.

There is a wonderful free ebook that explains 'Best Match' which is free.

http://www.auctioninsights.info/bestmatchbook

Where do I find stuff?

How you find the stuff to sell on ebay is up to you. Look in stores, shuks..etc. Use any contacts you have (friends who own a business that makes something) to find a wholesaler or factory who can get you stuff cheaply. If you are a good bargain hunter, you will find stuff in stores selling for cheap that you can re-sell on ebay. If you are creative, you can make your own stuff.

I'll say the obvious thing here; you can get into a lot of trouble selling fake purses, fake clothing, bootleg computer games..etc. Ebay can shut down your account and Paypal can hold any money you've received. And it's tacky.

The most important thing is to do your research first. Don't list an item if you don't think it will sell... it's just a waste of time and money. Don't list an item for such a low price that you aren't making any profit... also a waste of time and money.

You can also set up a “we sell your stuff on ebay” business. If you have friends/family that want you to sell something on Ebay for them, it's a good idea to charge them for your time (and the listing fee) up-front and then take a commission if it sells. If you are making a business out of this, you should get paid for your time and efforts, even if the items you list do not sell.

Most people have no idea of what Ebay fees cost and how cheaply people sell their stuff for on ebay. When they ask you to sell something for them, they oftentimes have overinflated expectations of what someone will pay for their stuff. Be realistic and do your research and give them the market price for their item on ebay... or explain to them that there are sellers who are selling 10,000 items exactly the same as theirs and that it's super-unlikely that their item will sell.

A little Ebay math

Before you go out and buy a bunch of stuff to re-sell on ebay (or list everything in your house...or everything in your grandmother's house as a favor to her), run the numbers and run them again. Make an Excel spreadsheet and double-check anything you are thinking of selling.

Let's say that you sell an item. Let's say it's a jacket that you find for 20nis ($5.26US) which sounds like a good deal. Let's say you charge $6 for shipping (real price is 20.40nis if your jacket weighs a pound and a half or 681 grams)

Let's say you sell it for $20.

You pay ebay for listing it (35cents)

You pay ebay 12% commission on the final price ($2.40)

You pay Paypal their fees of 2.9% + $0.30 USD for receiving the payment of $26 ($1.05)

You have $26 but all your fees total $3.80. Your shipping costs $5.38. Your item costs $5.26. You make $11.26 in profit.

If your jacket only sold for $10

You pay ebay for listing it (35cents)

You pay ebay 12% commission on the final price ($1.20)

You pay Paypal their fees of 2.9% + $0.30 USD for receiving the payment of $16 (76cents)

You have $16 but all your fees total $2.31. Your shipping costs $5.38. Your item costs $5.26. You make $3.05 in profit.

If you're making a serious business on ebay, you will need to find a cheap enough source for the jackets that you can buy the jackets (and mailing supplies) and pay all the fees and come out with a decent profit at the end. Sure, your profit might only be $5 or $10 for each one, but if you can sell enough of them, then you can make some good money in return for your time and effort in taking pictures, writing descriptions and standing behind savtas in the post office.

If you are spending your time (and money) listing items that don't sell or getting such low bids that you make $1 profit on each item you sell, it might be a better use of your time to get a job in a bagel shop and be happy making a consistent salary for every hour you spend slicing bagels.