eBay private seller buyer protection fees

GSTAR

Hi all,

I was looking to help my wife sell stuff on eBay as a part-time venture. She is a stay-at-home mum and it was mostly going to be a hobby for her but of course the money side of things is a driving factor too.

I was advised to start off as a private seller to test the waters really. Once she has got the hang of things and is getting regular orders we would look to switch to a business account. This method allows her to get a bit of a head start and to not have to go all-in straight away, in case it doesn't work out.

The kind of stuff she would be selling is clothing fasteners. We're talking things buttons, zips, hooks, etc. I've done the calculations and here is an example of the cost and selling price for a bag of 25 buttons:

• Raw material cost: £0.34
• P&P cost: £1.60 (RM 2nd class)
• Selling cost: £2.76
• eBay fees: £0.00
• Profit: £0.82 (30% margin)

As a private seller, this is reasonable I think, but I've just been made aware of the new "buyer protection" policy by eBay. My understanding is, eBay will automatically add £0.75 + 4% to the item price. So for the above example, the price of the item will become approx. £3.61.

That kind of price point makes no sense for the items we are selling and plus being a new seller we were hoping to keep prices low in order to attract buyers and gain reputation. We'd have to list the item at something like £1.95 to "absorb" the buyer protection fee, which literally gives us 1p in profit! 

Not really sure where to go from here now. We were really looking forward to starting this venture but now we've been dealt this huge body blow. I also don't think starting with a business account is any better, because based on a selling price of £2.76, eBay will charge fees of £0.77, giving us a grand total of £0.05 profit! I'm really not sure how business sellers are doing this, but I was hoping to cross that bridge a bit later on!

Would appreciate some advice on how I can navigate this situation, or is all hope lost for us?

swingaloo

You are a business seller anyway and so should have a business account if you are buying to sell. You are only a private seller if you are selling items you already own.

RFW

GSTAR said:

The kind of stuff she would be selling is clothing fasteners. We're talking things buttons, zips, hooks, etc. I've done the calculations and here is an example of the cost and selling price for a bag of 25 buttons:

• Raw material cost: £0.34
• P&P cost: £1.60 (RM 2nd class)
• Selling cost: £2.76
• eBay fees: £0.00
• Profit: £0.82 (30% margin)

Would appreciate some advice on how I can navigate this situation, or is all hope lost for us?

Not to put a dampener on enterprise but that area is overrun with Chinese sellers. I used to sell in that field and I can't post items for what some of the Chinese sellers are selling including postage. If you're starting from scratch you won't be getting good wholesale prices and any postage deals so you're well behind before you start. On what you've said above, I can almost guarantee that there's a Chinese seller selling the same thing for £2 including postage.
Have a look at bundling and see if you can work any £8-£10 lots that may have a chance of selling.

Debbie9009

You should definitely be setting up as a business seller, it’s not fair to other business sellers to undercut them by starting out as a private seller.

soolin

GSTAR said:

Hi all,

I was looking to help my wife sell stuff on eBay as a part-time venture. She is a stay-at-home mum and it was mostly going to be a hobby for her but of course the money side of things is a driving factor too.

I was advised to start off as a private seller to test the waters really. Once she has got the hang of things and is getting regular orders we would look to switch to a business account. This method allows her to get a bit of a head start and to not have to go all-in straight away, in case it doesn't work out.

The kind of stuff she would be selling is clothing fasteners. We're talking things buttons, zips, hooks, etc. I've done the calculations and here is an example of the cost and selling price for a bag of 25 buttons:

• Raw material cost: £0.34
• P&P cost: £1.60 (RM 2nd class)
• Selling cost: £2.76
• eBay fees: £0.00
• Profit: £0.82 (30% margin)

As a private seller, this is reasonable I think, but I've just been made aware of the new "buyer protection" policy by eBay. My understanding is, eBay will automatically add £0.75 + 4% to the item price. So for the above example, the price of the item will become approx. £3.61.

That kind of price point makes no sense for the items we are selling and plus being a new seller we were hoping to keep prices low in order to attract buyers and gain reputation. We'd have to list the item at something like £1.95 to "absorb" the buyer protection fee, which literally gives us 1p in profit! 

Not really sure where to go from here now. We were really looking forward to starting this venture but now we've been dealt this huge body blow. I also don't think starting with a business account is any better, because based on a selling price of £2.76, eBay will charge fees of £0.77, giving us a grand total of £0.05 profit! I'm really not sure how business sellers are doing this, but I was hoping to cross that bridge a bit later on!

Would appreciate some advice on how I can navigate this situation, or is all hope lost for us?

As has been said that is the absolute definition of a business, so your account should be a business account and therefore not subject to these changes.

Also for a small business those figures are just not high enough to give a proper profit, and it is unlikely the business is viable. You haven’t accounted for unsold items, or returns and losses. 

the_lunatic_is_in_my_head

GSTAR said:

. We're talking things buttons, zips, hooks, etc.

• Raw material cost: £0.34
• P&P cost: £1.60 (RM 2nd class)
• 
  

I'd imagine sellers of buttons run offers to get buyers to add more than one thing to basket, if you save 4 x £1.60 postage when someone buys 5 different colours of buttons in one go and you only pass 80p of that on to the buyer as a multi buy/order volume discount there's your profit (you'd also save 4 x 36p on the fixed aspect of the seller fees). 

Tiny margins requires volume, stuffing jiffy bags all day isn't that hard, isn't that interesting either  

GSTAR

soolin said:

As has been said that is the absolute definition of a business, so your account should be a business account and therefore not subject to these changes.

Also for a small business those figures are just not high enough to give a proper profit, and it is unlikely the business is viable. You haven’t accounted for unsold items, or returns and losses. 

Thanks, I appreciate that feedback. To be honest the selling prices I have come up with are low enough to remain competitive. We are starting off very small - so that means we aren't going to be buying huge amounts of stock at low prices - all of our stock will initially be coming from local retailers, but the long-term plan - if it gets that far will be to purchase directly from suppliers. So, as it stands, in order to increase profit margins I would need to increase the selling cost and that would make us uncompetitive.

I appreciate the point about having a business account and clearly it seem that is the direction we will need to take. I was only considering the private seller route as that was the advice I was given literally on this forum.

danny69

So you’re talking profit margins and buying wholesale. You’re therefore a business and wouldn’t be eligible to sell on a Private Account. Your customers would be entitled to protection that a private seller account doesn’t offer. 

forgotmyname

With a new account or low selling feedback your more at risk than an account that sell a lot of feedback.

I know that accounts have been reported for copyright issues and every single account with sub 1000's of feedback got
into trouble but sellers with hundreds of thousands were still active mostly not selling that product but one or two
returned to selling them.

Copyright issues will not affect you but trading as a private seller could see your account reported to ebay and also the HMRC
especially with competing sellers.

Making 82p per sale, but your forgetting those buyers that claim the item was not received or received damaged or you only
posted one button not 25.  You are likely to get some losses.

With the likes of AliExpress posting to the UK faster than ever you may struggle. I have had stuff arrive from China faster than
an item bought from the UK on the same day.  Previously it was the speed of delivery that would have people buying from
a UK seller.

I bought an item from China on the 23rd with expected delivery of the 7th Jan. It arrived on the 28th. And some other items
for resin art for £1.30 inc tax. on the 3rd and it arrived yesterday on the 8th.

You need to be making more than 82p profit unless selling a huge amount daily.

Olinda99

you should consider dealing in rare or hard to find buttons / fasteners - if there is such a thing ?

caprikid1

Willing to sell at near Zero margin is not a competitive advantage.  Items go missing etc you have not factored in the time and costs of running a business.

I genuinely cannot see how you can build a profitable business buying from local retailers and selling at those profit margins.