Activity theory (Auctions vs Fixed Pricing)

Let's embellish something.  I read a statistic the other day about auctions hitting higher in search rankings than fixed listings.  Assume 1000 listings pull up and 100 were auctions and 900 were fixed.  And, 64 or something of the top 100 were auctions while the other 36 were fixed.  This means auctions carry a higher percentage of the top 100 and were over-represented based on pure numbers.  (I figure some of this gobblegook has to do with both new listing and ending soon bonuses, but whatevs.)

I also saw a video blog of a seller than lists auctions first and moves them to store after they don't sell.  But, she lists HIGH on the first auction shot.  She does this because she saw this over-representation, too.  And, because she swears it drives traffic to her store and keeps her numbers up.

Hmmmmmm.  Of course, this gets me thinking.

Why not list an auction, at YOUR price, and see if you can't flip a few things in a week?  So, I tried it today. I usually just dump things directly in the store with a Best Offer on them to cover my range of acceptance.  For example, a $25 shirt may have an offer on it for $20.  I don't care what it sells for in that range.

The auctions I put out there today were on some bigger ticket items, too.  I started the auction price at what I would typically put as my low offer acceptance.  If I felt it may work, I placed a Buy-It-Now on for what my original asking price would be.

This allows me to offer free shipping on auctions.  It also means since eBay dropped it's tiered auction pricing (where everyone used to fear going over the 9.99 mark) I can ask pretty much whatever I want.  I only need one bid......I don't need a war to start to get MY price.  However, the listing fees were higher.  In some cases, double.  I felt that's ok for the sake of experimentation, but don't know how I feel about it long-term.

The shirts I put out there were Hawaiians.  I put out two Reyn Spooners, a couple cheapies, and two Tommy Bahamas (one NWT).  These "should" get some attention at the least.  I'll be interested to see if a few of them sell.  If so, this will be one seriously quick way to get paid for some great thrift store finds.

Make Today Count!
Chip

Flip vs Buy and Hold.....some math

This is the constant question poking in my brain.  I don't think anyone short of Alan Greenspan could get the answer correct.....and he likely can't.  

It's the question that forms the very bedrock of your business model.  Do I charge less and burn that inventory out (aka WalMart), or do I charge more and make more profit for less work while risking holding onto an item for awhile and having to store it (aka Tiffany's jewelry)?  Which one makes more sense for me?

I'm a geek when it comes to breaking down things to their simplest form.  It helps me understand things.  Granted, nothing is black and white.  There are always shades of gray.........about 50 to be exact, right?

Well, I've finally put some rough work into the details.  Let's assume (yes, I'm about to make an ass out of you and me) that we have an average profit of $10 if we can unload an item in a month.  And, let's assume we will make $25 in profit if that same item is priced higher and doesn't sell for an average of 4 months.  Which is better?

I buy my shirts for $3, but let's use $5 for ease.  If I sell that first shirt for a $10 profit, I can now buy 2 shirts.  Provided I get them listed quickly, that next month I should make $10 on 2 shirts, or $20.  Now, flip it again and it's $40.  Again, and it's $80.  So, 4 months later, I have netted $150 in profit, right?  Seems like a no-brainer vs letting the item sit for $25.  After all, $150 beats $25 hands down.

Oops.  Look a little deeper.  What is your time worth to you?  It will take significantly longer to pack and ship 1+2+4+8 items (15 items total).  To make the same $150 the 15 shirts made me, I only need to sell 6 shirts at $25.  All I need to do is build my inventory up while I sit around waiting.  If it takes me an average of a half hour to source, list, pack, and ship each item (random time here, but worth knowing about yourself someday), that's 7.5 hrs for the 15 items vs only 3 hrs for the 6 items.  Translate that to an hourly wage, and we have $20/hr for the $10 profit model vs $50/hr for the $25 model.  Assuming 40 hours/week is all you want/can work, we have an income of $800/wk vs $2000/wk.

Look, I'm being overly simplistic here, but one person can only work so much.  There's only so much time in a day.  The difference here is working hard vs working smart.  The only trick is:  Are you buying items that can net you both $10 or $25 depending on how long you choose to wait?

I guess that's a topic for another blog post.....

Make Today Count!
Chip

The Way It Was...

I have dabbled with a few methods of getting rid of stale inventory.  As a result, I have learned quite a bit about the different methods.  I have learned a little of what works and what doesn't.  I'm no expert....believe me.  But, I can share a couple of tidbits today.

As I started this reselling on eBay gig, I was having fun building my inventory and number of listings.  Things started selling on a consistent basis and my confidence grew.  However, so did my stale inventory.  As the months went by, I could start to see what may not have a prayer at selling.  What to do?  

I tried dropping prices.  I dabbled with Markdown Manager.  I have even been running what I thought was going to be the solution....Ki Markdown.  This ingenious little program uses Markdown Manager to put items on sale either randomly or by age or by pretty much whatever method you want.  The sales can be set to recur daily, weekly, monthly, again...pretty much whatever way you want.  I thought, "Why not put things on an increasing sale as they age?"  You know, like retail stores do.  I constructed 30 day, 60 day, and 90 day sales.  I noticed a bump in sales of older things, but not like I had hoped.

Nothing worked as well, for me, as this method I'm about to share...........AUCTIONS!  Yes, the old-fashioned eBay auction.  But, with a twist.

If I have stale inventory (and that definition varies for us all) over 6 months, I move it to auction at "cost + shipping."  Yes, with all the DSR talk lately, this is a risk.  It exposes your shipping cost DSR to being rated. But, you don't have to charge normal shipping prices, either.  If something is going to cost you $3 to ship, you can charge $2.  That insulates you as well from the whackado buyer hellbent on leaving you a bad rating.  To do this, though, you need to know your cost.  There are many "eBay fee calculators" out there.  Just search that term and find one you are comfortable with.

I simply price the auction to end on a Sunday and detatch any emotion I have with the item.  This works well because we all know we usually get only one bid.  I don't care.....I recouped my cost.  I'm out nothing.  Ok, ok, maybe I'm out a couple of listing fees.  But, I look at it as recouping some cash to go out and hit another homerun.  Sometimes, I mark things up a buck and start the auction at that price.  Sometimes I mark it up a few bucks.  But, the best way for me over the months has been moving things to auction and pricing them at my cost + shipping.  Any multiple bids I pick up are gravy.  If I get a bid, I can't lose money.  Auctions also bring different buyers to my storefront to look around for other possible values.  

Think a little about this.  I could go on and on, but don't want to bore you with long blog entries.  If you are like me, you suffer from UDADD (UnDiagnosed ADD).  I'm not much on pretty blogs and pictures to entertain you (although I'll try and play a little).  I'd rather keep things ridiculously content-rich so you come back knowing you'll learn something.  Or, at the very least have something to think about going forward.

Make Today Count!

Chip

Get in Line with Ebay's Requests

I don't know about you, but I'm always looking for ways to make my eBay items appear higher in search rankings.  With the switch over to and evolution of eBay's new search algorithms, Cassini, we need to pay attention to more factors than just keywords.

I believe, without being told, that one of those parameters is paying attention to "warnings" eBay issues.  Whether it be that your DSRs (Detail Seller Ratings) are low, or that your photos aren't the correct size, I believe we should hop-to and fix things before we agitate the powers that be.

Ebay now rewards us for being customer-centric sellers.  The more convenient we design our listings for buyers, the more Cassini rewards us with higher placement.  Ebay has made no bones about focusing on the buyer, and it behooves them to do so.  They don't want the buyer running off to Amazon or another rival.  Those sellers that get in-line with this concept will outperform the sellers that don't.  It's that simple.

I received a warning today that 2 of my listings didn't fit the photo profile eBay wants.  So, I'm jumping on this right away to fix it.  At the very least, I am pulling the listings until I have time to rephotograph them.  But, I also noticed eBay is giving me suggestions for 9 other listings regarding adding Item Specifics.  Well, it would probably behoove me to fix those, too.

In the recent past, many sellers (15,000 to be more precise) have been suspended or banned from selling on eBay because they didn't adhere to multiple warnings eBay gave regarding customer service.  I am just taking this one step further and staying ahead of the game.  I suggest you contemplate doing the same.

Where do you find these warnings?  I found them under the Selling Reminders section under the My Ebay tab.  This is what mine looks like.

When poking around your eBay page today, take a look in the Selling Reminders and see if you don't have anything to correct.  I will report back if I see a bump in sales after fixing these.

Make today count!

Chip