How to sell on eBay: part 2

In the first part of this post What to do and what not to do when selling on eBay I talked about some general guidelines that as a small seller you should be aware of.

This second part will deal with a number of items:

Let’s get to it!

eBay fees, and how to minimize them

1. Insertion fees and feature fees. You select what you want here, you can avoid paying these.

The insertion fee is a fixed amount which is payable to eBay for each item you list for sale, auction or buy-it-now. However, eBay offers to each seller 50 listings every month free of this fee, and recently it has started offering 200 listings free. As a small seller, I have absolutely never gone anywhere near this number. This fee is relatively easy to avoid: do not list over the allowed number each month.

Beware that each item, when relisted, counts as one new listing, and will use one of your allowed free allowances.

The feature fees are fees charged by eBay to “upgrade” your listing. For example: bigger font in “search”, extra images above the 12 offered free of charge, etc. There is a full list of features with attached prices here. Personally, I find these optional items do not add value to the listing, and I have never used them. It is of course my preference and my opinion.

A feature fee that merits a separate discussion is the “reserve price” fee. Theoretically, this works like this: you set your item up for auction starting at a low price, to entice the users to look at it and bid on it. However if you are not willing to sell it at a low price, you set up a “reserve price” (which is secret) and if the bidding does not reach that level, you do not lose anything, because you do not need to sell the item.

“Anything” is relative. The cost of this feature is not negligible, it is 7.5% of the price of the item, but not less than $5. And my observation is that IT DOES NOT WORK except in exceptional cases. Bidders are usually discouraged to bid and I have very seldom seen a reserve price being met. My advice: avoid listings with a reserve price.

Final transaction fees. This is a percentage of the TOTAL GROSS amount of the sale which includes the shipping cost and any handling fees but (so eBay says) does not include the tax eBay charges the buyer. You can not avoid this fee. However keep in mind this fee when you compute your shipping cost. This fee is usually 10%, and it is exactly 10% for the category we are interested in (Vintage Calculators).

Payment processing fees are the fees that the payment processing organization charges to perform the transaction. If you use Paypal, they charge a fixed fee of $0.30 (assuming the transaction is in US$) plus a percentage between 3 and 4.5% of the total (roughly), applied to the total amount of the transaction. Beware that this gross amount included the tax that the buyer pays, so in effect you pay a fee on money that you never receive.

eBay stores: are they worth it

The answer is, it depends on what you sell and how much you sell. There are two basic incentives for store sellers:

1. Increased number of items for which the insertion fee is waived
2. Reduced fees in some categories. The reduced fees is 6% for the category we are interested in (Vintage Calculators).

I will not talk about the “Starter” store, it does not offer any incentive as far as I am concerned and I recommend you do not consider it. The only kind of store a hobbyist would consider is the “Basic” one.

Why does eBay force its own payment processing system? They are not the only ones, Etsy for example does the same thing. Simple: increased revenue. Counting that eBay sales are around 100 billion dollars, if 1/2 of those are in the US (I could not find an exact number, so this is a guess), a processing fee of 3% of 50 billion dollars is quite an amount: 1.5 billion dollars! Yes credit card companies will take some, probably most of it (eBay has its own brand of merchant card too), but I bet enough is left to make it worthwhile for eBay.

If you are a hobbyist and not a large business, you probably do not sell more items than the monthly free allowance, so for me the increased number of free listings was a non-incentive. Also the eBay branded packing materials do not really cut it for me, in my opinion eBay should PAY me to use their brand, after all I advertise it; instead, they sell their packing materials at prices well above what unbranded materials sell. So I also recommend you do not use eBay branded packing materials.

The final value fee though, that is different. the “Basic” store promises a 4% reduction (in Vintage Calculators category) and the fee is $22/mo. What do I have to sell monthly, to make it worthwhile? Simple: $550. Do you consistently sell more than that? Get a store. You do not? The store is not for you.

We can do the computation based on a full year: the subscription will cost you (at current prices) $21.95×12 = $263.40. You will need to sell $6585 in merchandise for the year to make up for the store fee. Do you sell at least that amount? Get a store. You don’t? The store is not for you.

Simple, right?

eBay promoted listings: do you get value for your money

I will state my opinion here very clearly: for collectible items, antiques or other items that are easily searchable by name, the promoted listings are not providing value. Ah, I want to sell white gym socks? There are 1405 results coming up on search. I want to sell a, say, vintage HP-45 (not the most rare) calculator? There is a grand list of 11 results coming up right now. Do you really need to pay 5% or whatever eBay charges to be the first in this list?

Another argument against promoted listings: you sell a vintage, possibly rare and unique item. Nobody buys a vintage calculator to USE it; for that you buy a $10 machine from Walmart or Amazon. You buy it to cherish it, as a memory, etc. Its cosmetic shape, its functionality, its accessories, if it has been modified since new, the scratches, signs of use, etc. are all factors that affect both the desirability and the price. A collector will definitely look at all available items before making a decision. I have personally NEVER bought a vintage calculator through a promoted listing (eBay tells you when a listing is promoted, you will see the “Ad” text, see the image below).

My conclusion is: for vintage calculators, promoted listings do not make sense. For every day items, where there are many sellers selling the same article, or an article with a similar functionality, they may be useful or not, I have no opinion.

eBay managed payments: what is it

Recently eBay has decided to force the sellers (in the USA) to use its own payment processing system. If you want to sell on eBay and you live in the US, you MUST register to use eBay processing system. The fees are probably competitive and comparable with what PayPal charges.

Why does eBay use such a heavy handed tactic to force users to use their own payment system? They may say “convenience”, they may say “security”, they may say whatever they want. The truth is probably that the real reason is “revenue”.

I could not find an exact number of sales from sellers in the US, different sites place it at between 58% and 70% of the total amount of sales on eBay. Let’s be conservative, and assume the lower number (58%). The gross amount of sales eBay had last year was $95,000,000,000 (95 billion US dollars), so a quick computation will give $55.1 billion dollars sales for US sellers. If eBay would have managed all these payments (it did not), the fees would have been around 1.6 billion dollars. Out of which of course eBay would have had to pay the credit card companies and other expenses.

But eBay stands to make serious money out of this move: if we look at PayPal, which publishes data, in 2018 they had a total revenue of a little over $21 billion dollars and a net income of 2.46 billion dollars, i.e. about 11% of the revenue. If eBay reaches the same percentage (revenue vs. income), and I don’t see why not, we have a boost of 175 million dollars to the net income. Not bad, right?

Also the truth is that it does not really make too much of a difference for the buyer or the seller who manages the payments if the fees are comparable, so eBay managed payments should not really be an issue with the sellers. But I personally would have liked to have a choice, instead of this heavy handed approach, and perhaps an incentive (say, 10% fee reduction for a time) to move to eBay.

HOWEVER: after reading some of the very, very fine print, it turns out that “managed payments” sellers do have to pay an extra fee for all international sales, in addition to any currency conversion charges that may also be payable.

Also from experience I know that eBay charges VAT on total cost of the item in certain cases. Example: I sold an item valued at $5 to Great Britain, shipping was $16 and the item had a handling fee of $2 to cover eBay charges (10% on shipping). Guess what: eBay charged the buyer $5 in tax! Of course the buyer asked for the transaction to be cancelled, which I did.

eBay shipping labels: is it good to use them

Ok; you made a sale. The item must be shipped. You can use any shipping service in the US: USPS, FedEx, UPS. And eBay offers the ability to print shipping labels for all these services from the comfort of your office.

What do you need for this? You need a computer, a printer, and a scale. That is all. The postal scale, which is probably the only item few homes already have, sells on eBay for between $15 and $30, depending on its maximum weight capability. I personally used three in my 20+ years on eBay and I have become picky: I only want one that connects to AC, I am tired of batteries and leakage (this is how I lost my first two scales, I went on vacation, came back – battery leak happened).

Is it convenient? Certainly. I do not believe I bought a label at the post office in the last 10 years.

eBay also offers some discounts for buying shipping labels, for certain classes of mail. Small USPS packages is one such class, where the eBay offered discount is greater than the eBay fees. Because eBay charges fees on shipping costs.

It was not always like this, initially eBay did not charge fees on shipping. The result was, sellers were selling items for $0.99 with a $50 shipping cost or handling fee. So we can’t really blame eBay for this, can we?

So my conclusion is: yes, eBay shipping labels are a convenience and are worth it, but remember that you have to account for the eBay fees charged on shipping.

eBay international transactions: how to

It is surprisingly easy to sell internationally on eBay. eBay has as March 2021 two very convenient international shipping programs: eBay Global Shipping and eBay International Shipping.

How they work: you ship the package to eBay, and eBay ships it to the final destination.

Both are good. What is the difference between them:

1. Global shipping pays import duty/taxes on behalf of the buyer and the buyer is charged the estimated amount outright. There are no extra duty/taxes collected. International shipping allows each national body to assess taxes and bill the buyer. Some countries do that, some don’t. The ones that do that, sometimes are inconsistent in doing so, so you might end up not paying import duties/taxes.
2. With Global Shipping you are paid only for shipping to eBay, and you receive only the amount necessary for internal US shipping. With International Shipping, you receive the full estimated shipping amount, ON WHICH EBAY CHARGES TAX and fees, but the label printed is still a USPS label to eBay.
3. When you send with Global Shipping from the US, your responsibility ends when eBay receives the package. If the package is lost, eBay will reimburse the buyer. With International Shipping, YOU will reimburse the buyer, and you can purchase extra insurance over the standard amount of $100. Insurance does not cover shipping costs as far as I know, I may be mistaken here.

Global Shipping is definitely better for the seller, but it is more expensive for the buyer and is not available in all countries. International Shipping is more costly and more risky for the seller, but it is cheaper for the buyer and may generate more sales.

One thing to consider when selling internationally is the possibility of a return. If you sell a device as “working”, and s**t happens, the buyer might want to return it. This is a big issue” who pays for shipping, because that is very expensive? Do you get the item back, since eBay will not carry it back, you will need to provide your own shipping?

My recommendation: sell internationally, but always sell “as is”, never promise any functionality and anything that might be used as a reason to return. And keep in mind that prices outside US for vintage calculators are higher, but the risk for you, as a US seller, are also higher.

For more information on selling internationally, please visit this eBay page.

eBay insurance: does it work

There are multiple types of insurance on eBay:

1. USPS insurance. You can buy this when you buy a USPS label, and it works in the same manner as it does when bought at the post office. USPS Priority Mail packages are insured by default up to $50, some sellers will see this raised to $100 by default (Top Rated sellers and high volume sellers). I have used this, I had claims and USPS has reimbursed me for lost items. It takes time, but it works.
2. UPS, FedEx insurance. Again, this works in the same manner as when bought over the counter at UPS and FedEx offices. I have used both UPS and FedEx shipping, never had to file a claim.
3. eBay offered supplemental ShipCover insurance (only for items shipped with USPS). I have personally never used this insurance and I do not recommend it. I am a simple person: I stick to what I know and I agree that “if it ain’t broken, don’t fix it” so I know USPS insurance works, and that is what I use.

For eBay international sales, the Global Shipping program works pretty much like a US sales: once the package has reached eBay shipping center, it is no longer your responsibility, so you only need insurance for the shipping leg inside the US. Same as a US sale.

For the eBay International Shipping, eBay offers a standard $100 insurance coverage and you can buy extra coverage as required, up to the total package value. Beware that the shipping costs do not seem to be covered by insurance.

For a full description of the types of insurance offered by eBay please see this eBay page.

This concludes part 2 of the “How to sell on eBay” article. I hope the information was useful. If you have any questions, please use the contact form below.

For a more in-depth look at the eBay rating system for sellers and more tips, please refer to part 3 of this article, eBay seller rating: what is it.