Only ebay wins ever

fairestcape

The demise of Babz highlights the plain truth that eBay (for sellers) is a race to the bottom. Speaking to an online retail guru several months ago, she said "The only people who make money on eBay, is eBay..."

eBay cares not a hoot who sells what, or for what price - they get their fees either way. While eBay "tells no lies" about how they operate, or how quick and easy it is for practically anyone to sell online (in a matter of minutes), eBay relies on the mass ignorance of most aspiring business people who have the idea that by making sales, one is in business. Making a sale is vastly different from making a profit.

eBay has learned that in the online ecommerce world, they key is hanging onto customers' eyeballs. Once someone is browsing eBay, the sole objective of eBay is to keep them there - and they encourage this by a range of clever visual enticements, such as comparative listings on eBayers' product pages. With a little drilling down, a shopper can find what they want at an extremely low price - and eBay vigorously encourages this - because at the end of the day, all eBay wants is a sale through their system. It matters not what price the customer pays, eBay will get their (not insubstantial) fees.

So people who shop on eBay do so for one reason only - find the lowest possible price... There will always be some poor ignorant soul on their portal selling at virtually no margin (or, in many cases at a significant loss).

The eBay customer is delighted - he/she gets what they want at a really good price. eBay is happy (they get their cut) but the merchant loses money.

Happy customers result in good reviews, so the more good reviews one has (for selling at a loss, or close to it) the more sales will come their way, contributing to further losses across the board as those who are not getting sales drop their prices to remain competitive.
The facts are simple... the vast majority of sellers on eBay are not making money. Most are lucky to break even, while a substantial number are trading at a loss.

This is not a criticism of eBay. It is a superb business model and has made billions for them - but practically all of it at the expense of others.

I buy a LOT of stuff off ebay - for personal as well as business uses - and in so doing I've probably saved myself many thousands of pounds, so yes... I LOVE eBay (as a customer).

But would I ever sell something on eBay? Only if I need to get rid of stuff that would otherwise go to the dump (for which I would be paying a fee).

When people realise that making sales is not the benchmark in business, and that margins and profit are the critical issues, eBay's business model may falter - but there are so many greenhorns out there who will not see this until it's too late - after they have contributed to eBay's profits rather than their own.

soolin

The facts are simple... the vast majority of sellers on eBay are not making money. Most are lucky to break even, while a substantial number are trading at a loss.

I am sure I've seen this exact post before!

However I would suggest that you do not rely on the politics of envy and instead do some actual research, the argument that the majority (ie more than the mean) people merely break even is just daft- I would agree that some sellers occasionally sell at a loss either by design or by accident but to suggest it is normal is so naïve as to make the rest of the post appear to be written by someone who has no grasp at all of business or ebay.

Does the author of this post truly believe that businesses carry on year after year selling at a loss merely for feedback- seriously?

I would suggest that someone, perhaps the original author has been unable to compete and envy has now driven them to write a nonsensical explanation why they can't sell and others can. As a seller I would stop selling immediately I did not turn a good enough profit to make it worth my time, I'm not even the cheapest in many categories and indeed I still very often buy on one ID and resell on my business one and make a very good profit just by listing differently, adding 'value' to the product.

fairestcape

We run ten highly successful ecommerce shops on Zencart and Magento platforms, all selling products that are also being sold on eBay. My prices are 5 to 6 times higher than similar products on eBay - and we get (across all sites) 300 to 400 orders a day (30 to 40 average on each site).

We're 24/7 (like eBay) and had nearly 200 orders on Christmas day alone!

We sell to customers all over the world - both private consumers and B2B. Our corporate customers include some of the world's largest companies (Royal Dutch Shell, Serco PLC, G4S Security, Capita Business, KLM Airlines, Virgin Airlines, Landrover, Imperial War Museum, The National Gallery in London, various NHS Trusts, BOC, Milan Fashion Week, The Ministry Of Defence, Princess Yachts PLC, RSPCA, Royal Coastguard Services, Oxford University, Institute of Directors, Brand Union, TBWA... and about 200 others - many in the Middle East, France, Germany, Denmark, Sweden, Canada and the USA.)

In addition, we have nearly 50,000 private customers - most in the UK, but about 15% in 22 other countries around the world.

And we are a business of just 3 people...

Even though our prices are higher, our margins are quite slim, but we sell on a platform and ethos of better quality and attention to detail.

We aim, therefore, at a slightly different customer - people who don't generally shop on price alone, but look for other factors that cement the sale.

As I said in my earlier post, I am not criticising eBay or its business model. eBay is a fantastic business idea and a very successful operation - but it relies on people's business naivite (which will always exist) for its success.

But our approach means we keep our profits - we don't give them to eBay...

fairestcape

soolin wrote: »

I am sure I've seen this exact post before!

Not not from me... I've only posted 5 times on this forum

soolin wrote: »

However I would suggest that you do not rely on the politics of envy and instead do some actual research, the argument that the majority (ie more than the mean) people merely break even is just daft- I would agree that some sellers occasionally sell at a loss either by design or by accident but to suggest it is normal is so naïve as to make the rest of the post appear to be written by someone who has no grasp at all of business or ebay.

Er... We started in business in 1999, building internet sites for small businesses. Over the ensuing 10 - 12 years, we built over 300 webshops (starting this element in 2002), MOSTLY for small operators who had nearly exhausted their capital investments on eBay ventures. About 80% of the people who approached us had eBay stores on the brink of failure. On average, these people (companies) had spent 14 - 16 months giving their cash to eBay. None had made any profit and had come to us looking for an independent alternative.

It was good business for us for nearly a decade, but by watching the developments in eCommerce - the emergence of easy cloud-ecommerce and cheap IT developers in Asia - we moved into online retail ourselves in late 2012 and stopped building websites for others.

soolin wrote: »

Does the author of this post truly believe that businesses carry on year after year selling at a loss merely for feedback- seriously?

Yes... they do... Babz is a high-profile case in point... At some stage (and it differs for different operations), the cash dries up and the bottom falls out of the operation. Any business takes 2 to 4 years to consolidate - so most people hang on tenaciously. They raise funds through loans or other means, knowing that it is important to sustain the business. But unless the operation turns a net profit situation at a point where investors or lenders want to start seeing a return, the venture remains vulnerable. Some hang on for quite some time (it took Amazon 14 years before it made any meaningful profits) and other fade in a matter of months. The point at which things fall apart differs for everyone, so yes... people will tend to throw good money after bad. The length of time they do this for depends on individual circumstances.

soolin wrote: »

I would suggest that someone, perhaps the original author has been unable to compete and envy has now driven them to write a nonsensical explanation why they can't sell and others can.

Why so presumptious? (and spiteful)... We launched our first retail site (for ourselves, not someone else) in April 2013, after spending six months on the business plan (THE CRITICAL BIT). It went live at noon on 5th April 2013, and sales started coming in ten minutes later. Within 3 months (after very careful monitoring and tweaking), we "cloned" the site and added a few more, basing these on what was working well on the original site. Practically all profit was ploughed back into the business for the 1st 18 months. We lived on spaghetti bolognaise most of the time. Even coffee was considered a "luxury".

soolin wrote: »

As a seller I would stop selling immediately I did not turn a good enough profit to make it worth my time,

Well, first and foremost, you are a businesspereson... obviously with a good head for it (like me) - but most start-ups and newbies fail to get the numbers right. They get mesmerised by the idea that business is just selling, whereas business is about profit. so when you say:

soolin wrote: »

I'm not even the cheapest in many categories and indeed I still very often buy on one ID and resell on my business one and make a very good profit just by listing differently, adding 'value' to the product.

... you are demonstrating a business acumen.

To sell on eBay is quick and very, very easy... and this is what clouds people's judgement. On Friday they decide to go in business, and on Saturday morning they have an active eBay shop... and they may even start selling by Saturday afternoon...

(Have they taken 6 months to formulate their business plan? In the majority of cases.... no.)

... BUT ... are they profitable? Most aren't... that's why between 2002 and 2012 we developed independent webshops for over 300 traders... 80% of whom originally started out on eBay. It may have taken each of these traders different lengths of time to make the switch, but many of them (certainly not all) survived in their business ventures only by abandoning the eBay "race to the bottom".

soolin

Obviously I don't know what your market is, the only fairestcape I am aware of are wine merchants- but then of course our user names here are unlikely to be anything like our trading names . Different sites though suit different products and to assume that because your sales work better elsewhere everybody that sells on ebay must therefore be making a loss is frankly a naïve statement.

I'm glad you are doing well I just question the need to rubbish ebay sellers with such a generic assumption that we can't make money. You will find many sellers on here that use other platforms, as you appear to do yourself, Many regulars here have moved to Amazon with a lot of success- but then of course Amazon fees are usually higher than ebay ones.

fees are not the only thing to consider when selling, any business that works purely on where fees are lowest is, in my opinion, showing poor business sense. If we all believed that we would be on ebid where headline fees are low- OK there are no buyers at all, but if one works purely on fees charged then ebid would have to come out top.

My main sales lines do not sell on Amazon, nor do they sell as well on private websites - I've tried.

Business is not 'one size fits all' , ebay works for some and not for others, the same applies to Amazon or etsy or even own websites and shops. This thread concerned babz media who it transpires may have had some dodgy practices - they did not however sell solely on ebay, they also had sales elsewhere as well as a private website so I do not see why an example of an allegedly dodgy company means no one makes a profit on ebay.

RFW

I'd agree with several points on both sides above.

There are businesses on Ebay that don't turn a profit, I doubt they're in the majority but it must be possible.

However, take Ebay out of the equation and there are lots of businesses everywhere that don't turn a profit.

Ebay is hard work, as is Amazon and they are the two easiest sales platforms. They are both good incubators for new traders wanting to set up an online business. If you can't sell a product on Amazon or Ebay, chances are you won't be able to sell it anywhere online. The advantages of Amazon and Ebay as a starting point is the minimal outlay to get started.

I don't think Babz Media is a good example of businesses failing on Ebay, they appear to have had other problems arising from some unusual business practices.

fairestcape

RFW wrote: »

I'd agree with several points on both sides above.

There are businesses on Ebay that don't turn a profit, I doubt they're in the majority but it must be possible.

Our experience in this (since about 2004) indicated a very high proportion of failing eBay ventures. We never counted the number of approaches made to us - it ran into many hundreds (perhap a few thousand) over the years, with the rate increasing since about 2007 - as we did not take on every case. But as mentioned, about 8/10 webshops we built in that 10 years were for people who started on eBay. A lot of approaches were not viable for us. So we probably took on 1 in 5 clients in this genre. In a lot of cases, we allowed our clients to fund their independent websites out of on-going gross profit - so we had an incentive to make sure they worked. We provided a LOT of backup support, especially with PPC advertising strategies and general web marketing.

RFW wrote: »

However, take Ebay out of the equation and there are lots of businesses everywhere that don't turn a profit.

Absolutely true... About 88% of online retail ventures will fail within 18 months - irrespective of the platform.

RFW wrote: »

Ebay is hard work, as is Amazon and they are the two easiest sales platforms.

Yes... they are super-easy SALES platforms... and this is the point I make... while they may make SELLING easy, being PROFITABLE is a very different story. The way both Amazon and eBay market themselves (and no criticism) is they promote this idea that SELLING is easy with them - which is absolutely correct. Inexperienced (and hopeful) start-ups get mesmerised by this and fail to look at the hard and often complex realities of getting the bottom-right-hand corner of the balance sheet being written in black ink.

RFW wrote: »

They are both good incubators for new traders wanting to set up an online business.

Up to a point... Cash-flow must translate into profitability.

RFW wrote: »

If you can't sell a product on Amazon or Ebay, chances are you won't be able to sell it anywhere online. The advantages of Amazon and Ebay as a starting point is the minimal outlay to get started.

The "selling" bit is quite easy. And this is the USP of eBay and Amazon... Virtually anything will sell if it's cheap enough. Look at the mountains of junk people sell through the auction side of eBay. A decade ago, 90% of this stuff would go to the tip, eBay has made it possible to get someone else to take your junk away - and pay for the privilege of doing so. Not a bad thing at all - if anything, this is a great recycling boon, so there are environmental advantages!

RFW wrote: »

I don't think Babz Media is a good example of businesses failing on Ebay, they appear to have had other problems arising from some unusual business practices.

It's unfair and inappropriate for any of us to speculate, but I do think that many of Babz's business decisions may have been a consequence of being trapped by the eBay "technique"... In a quest to get to the top of the selling tree, Babz may have felt compelled to cut corners elsewhere, with things snowballing over time. I bought a lot of stuff from Babz and often wondered just how they managed to sell this stuff at the prices they did. As a commercial trader, we are entitled to trade prices from many manufacturers and there were several instances where Babz was selling stuff cheaper than what we could get it directly from the manufacturer.

Also, eBay LOVES to wheel out these super-traders as examples of "how you too can be successful", and they impress newbies with figures like £19,000,000 in sales. What eBay doesn't tell you (and why should they) that £19,000,000 in sales amount to nothing if the costs are £19,000,000.01 .

These traders' eBay profiles are peppered with shiny stars and customer accolades - all dressed up to look impressive. But they are "the Emperor's clothes".

The quality of "the meat in the burger bun" can only be measured in terms of a business's profitability - and that's a word you won't see in any of eBay's marketing.

The word "selling" appears countless times...

sequence

The big question is: When do we get the link to your product ? Can't need too many more posts surely ? There are plenty of successful, profitable businesses on ebay including my own. The ebay fees are almost neglible in this comparison, you'll expend a similar amount on marketing anyway.

soolin

I have to say, and forgive me if I'm wrong, but this is beginning to sound like product placement. Can we all please remember the MSE rules about advertising or promoting your own businesses- however subtle it is.

As it has nothing at all to do with The Babz media thread I'lol seperate it out onto its own thread.