Because of its low cost and widespread use, eBay is a popular e-commerce solution for not only individual sellers, but also businesses. But is an eBay store worth the cost and time to manage?
What’s Great about eBay: Novelty Items, Electronics and a Huge Customer Base
A large portion of eBay’s customers are looking for used or one-of-a-kind items, which is a huge advantage for secondhand stores.
Some of the top-selling items on eBay are smartphone accessories and Xbox consoles, making it an ideal channel for selling those quickly-depreciating electronics that businesses so often need to move quickly.
Active registered users, including both buyers and sellers, were measured at 171 million in the second quarter of 2017. Check out these quick stats to see why having a presence on eBay is a good idea:
Another great thing about eBay is that it is more seller-centric than other e-commerce channels like competitor Amazon. Whereas Amazon allows individual sellers, it doesn’t cater to them as much as eBay. This is why if you sell on Amazon, your greatest competitor will be… Amazon. eBay, on the other hand, focuses on sellers like you as its primary customers.
What’s Not So Great: Trying to Compete with Amazon
While eBay has established its reputation as an online marketplace for vintage or novelty items, in recent years it has begun to resemble its competitor Amazon—selling cheap products, often from overseas, in bulk to United States customers. In fact, 80% of products sold on eBay are new, not used. This can be a great thing if selling cheap goods in bulk is your business model, but it’s not so great for thrift or secondhand stores trying to establish a presence online.
However, CEO Devin Wenig wants to turn this trend around. “The world doesn’t need an almost-as-good Amazon. They need a better eBay,” he said in an interview. “I’d rather have a billion unique items that arrive in three days than a billion commodity items that arrive in an hour.”
If eBay retains its popularity and its focus on unique/used items, it will continue to be an ideal e-commerce channel for individual sellers and resale shops. If it makes the mistake of “Amazonifying,” we expect its suitability for secondhand sellers to diminish as other more localized online channels, such as OfferUp and letgo, grow in popularity. We’re also not sure eBay would ever be able to beat Amazon at its own game.
How to Sell on eBay
Think of selling on eBay as renting a space in a mall or a booth at a flea market. They provide the space, but not much support in marketing and selling your goods. That part is up to you—figuring out the system, marketing, advertising, integration and more.
Businesses that are serious about selling on eBay should take advantage of eBay Seller Hub. It’s no additional charge on top of what you are already paying.
You can create listings and orders, get insight to help optimize your listings and see detailed sales information including how buyers find your products. The site also provides marketing and promotion tools.
With eBay Seller Hub, you can learn how many buyers are seeing and visiting your listings, your daily costs and how often visitors are able to see links to your listings. With a feature called Selling Manager, you can manage listings, track sales status, and follow up with customers.
Automation of Posting Items
If you sell primarily new items, you can take advantage of eBay’s “Sell Again” feature, which will greatly reduce time spent listing items. You can also take advantage of eBay’s automated inventory management tools.
Tools like eBay File Exchange allow high-volume sellers to list and manage items in bulk. eBay File Exchange works with .csv files generated by applications like Excel and Google Sheets.
Already using another application, like QuickBooks? QuickBooks also uses .csv files, so eBay + QuickBooks can be a good integration option.
The Cost of Selling on eBay
Up to 50 listings per month are free. Once over 50 items, you are charged one insertion fee per listing, regardless of the number of items. However, your insertion fee will be larger or smaller depending on the size of your eBay store.
Important note: The above insertion fees are nonrefundable, even if your item doesn’t sell. Then, if you sell outside of eBay but use its platform to exchange contact information, you are charged a final value fee.
It’s easy to list item after item on eBay without weighing the costs vs. benefits. Although listing is cheap, you can quickly lose track of actual profitability.
If you look at eBay’s terms of service, the small fees can really stack up, whether you are auctioning or selling outright.
Each of these types of stores costs money to maintain:
You can pay either month-to-month or year-to-year, but year-to-year is cheaper if you plan on keeping your store a while. If you are not sure if you intend to keep the store, month-to-month might be a better option because you can cancel without a year-long commitment.
The Time Cost of Posting New Items
The sheer labor cost of uploading your inventory to eBay could outstrip the revenue generated by sales—especially if you fail to take advantage of automated tools like Seller Hub.
Individuals report spending anywhere from a few minutes to an hour or more posting each listing, depending on how detailed and complicated the listings are (with pictures, descriptions, weight, etc.) and if they already have a template for the post or not.
Listings can take as many as 24 hours to process or as little as a few minutes. Users report that although listings appear immediately on the direct links, they can take much longer to show up in search results. The category of the item can sometimes be a factor in this delay.
The eBay user agreement states, “Your listing may not be immediately searchable by keyword or category for several hours (or up to 24 hours in some circumstances). eBay can’t guarantee exact listing durations.”
If you’re going to sell on eBay and do it right, expect to invest a significant amount of time.
Is eBay Worth It?
According to the website My Wife Quit Her Job, once you add up all the fees, eBay takes between 8-12% of your gross sales by itself, but when coupled with PayPal, the final effect is that you lose 11-15% of your revenue.
However, you might be able to offset this cost because for many types of businesses, items often sell for more on eBay than in-store. Because eBay offers you a wider audience, it also can increase demand for a truly unique item. If you do not take advantage of being able to sell your inventory at higher prices on eBay, your customers probably will!
When faced with the choice of using eBay as your primary selling channel vs. your own website, you have to weigh the benefits and costs of the relative ease of eBay vs. the technical expertise required to manage and market your own e-commerce shop.
But is eBay really that much easier? The site is complicated and has rules that are changing all the time. If you try to find good blogs or books about selling on eBay, they are already out of date.
The best source, of course, is eBay itself, but all the different features can be quite complex, making it difficult to discover which features are truly profitable for your business.
Our Recommendation for Selling on eBay
As long as you combine eBay with a budgeting system like QuickBooks so you can track your ROI, we think eBay can be a worthwhile option. Any online channel is going to cost both time and money, but if it helps you get rid of unwanted inventory and gain more customers (and perhaps even sell your inventory at higher prices than you can locally), it’s worth it. Even “free” channels like Craigslist cost money because of the man hours required to manage their individual listings.
Remember: With eBay, you are not just paying for the space but for a captive audience of millions of customers. You are also paying for SEO, since eBay listings often show up near the top of search engine results. Many single sellers say that eBay drives a majority of their online sales.
Is eBay Enough By Itself?
Businesses with small operations may be able to get by without having their own e-commerce site and just maintaining a couple of online channels, such as an eBay store and Craigslist.
For larger businesses, we’d recommend eventually developing your own e-commerce site, but that will take some time. Meanwhile, eBay can be a great solution. We recommend at least cross-listing on eBay and piggybacking on their SEO while waiting for your own website’s authority to ramp up in search engines.
We believe it shouldn’t be an either/or approach. Ideally, you should be able to post inventory on your own website and simultaneously list it on eBay, with a management system that automatically synchronizes inventory in both places.
In our next blog posts, we’ll explore some more e-commerce single channels and then some management systems that sync your inventory.
Does your store sell on eBay? In your experience, is it worth the investment?