Must Read if you Buy or Planning to Buy ONLINE

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In Part I of Welcome to the Jungle: The Two Sides of eBay, we examined the scope of eBay's market dominance and the realities of running a business on the auction giant's site. This week, we delve deeper into pricing your items to sell, the bidding process, the importance of positive feedback and payment processing.

eBay founder Pierre Omidyar started the site as a means to sell his Pez dispenser collection online. Today, collectibles remain the most popular top-level category on eBay, accounting for 17 percent of all items offered, according to the Auction Software Review. However, Clothing, and Entertainment follow at 11 percent each, with Sports, Home, Jewelry and Watches, Computer and Electronics, Toys and Hobbies and Books all coming in at 5 percent or higher - much of it new, non-collectible merchandise. Bear in mind we are talking percentages of a very large pie. For instance, "Business and Industrial" items garner just one percent of the total items offered on the site, yet, there are over two hundred thousand auctions in this category at any one time.

Given the astronomical amount of items up for auction at any given time, however, there are no guarantees your items will sell.

Auctions: The Dark Side of Paradise

The cold reality is that 53 percent of eBay auctions end without a bid, another 23 percent sell with just a single bid. Re-listed items often sell on the second try; (not all of eBay's users search at one time,) but meanwhile listing fees keep adding up, cutting into profits. Further, with 25 million auctions running, sellers need any edge they can get to make their needles visible in this huge haystack.

A good starting point is research. eBay allows searches of past performance sales in all categories. This the best starting point for establishing the pricing prospects for your merchandise. Further, if you are selling a collectible, eBay has no less than 743 separate collector groups or chat rooms. Under "Buttons and Textiles" for instance, these range from Cutey Pie Threads with one lonesome member, to Button Buddies with 279. By perusing a group you can find what niche collectors are looking for, their complaints, attitudes, and needs before marketing auctions to these target buyers. There are also group forums for selling any imaginable (and some unimaginable,) products, as well as marketing strategies, such as the One Cent Wonder group who glory in starting auctions at one cent. Preliminary research of past sales and within the groups will save time and pay dividends down the road.

Keywords

A majority of buyers find what they are looking for with keyword searches. It is critically important to fill the fifty-five character heading with the proper keywords to attract niche buyers for your item--as well as attract the potential buyers who do serendipitous searches through all the listings. By default, the eBay search is set to the title headline only, but many buyers will turn off the default and search by auction header and item description. So it is important to also pack your description with as many keywords as possible. For instance: if you are selling a signed Mahalia Jackson program from the Brooklyn Academy of Music, you want to feature the word "Brooklyn" in your header and description, since there are many more Brooklyn collectors than gospel singer or Mahalia Jackson devotees.

The Pricing Quandary: The $1 minimum versus retail.

There are two schools of thought regarding opening bid pricing on eBay. Many, perhaps a majority of sellers, will purposely start an item's bidding at a price far below the item's value in order to attract bidders seeking a bargain, and/or (dream of dreams,) engender a bidding war on the item. Sellers that know they are offering a desirable item, realize the item will rise to its price regardless of its dollar stating point. Of course, the downside is that this might not happen - due to sniping software and other factors, and the seller will find his $200 book selling for $4.99. Sellers who have been too often burned by this opt to start the minimum bid at or near a price they are willing to accept. This tends to slow down the bidding but at least guarantees that you do not lose money on the sale of an item that can still be sold for retail in a brick & mortar store or an off-eBay web site. A good rule of thumb is to rely on experience: start out protecting your sales until you feel certain you know the market, then start the sale low and wait.

To Bail Out or Tough It Out

Watching bids accumulate on your auctions is not unlike watching grass grow. Years ago, bidders would plunge into anything they wanted from the opening bell; however, today eBayers are far more savvy: rather than running up the price with early bids, most wait for the last day, frequently the last few minutes, before bidding.

eBay pretty much allows sellers to cancel bids and auctions at any time. Because so much of the action occurs on the last day, this is not a good idea. The seller is better served by making a firm decision on selling before initiating the sale and sticking with it.

To Reserve or not to Reserve

The way the reserve auction works is that the item will not be sold unless the hidden reserve price is reached. eBay charges a fee for reserve auctions; the fee is reimbursed only if the item reaches its reserve. Some sellers who offer high-ticket items use the Reserve Price auction while simultaneously starting the sale with a low minimum bid to attract interest. The problem with this is that reserve auctions tend to turn off bidders who want to know their participating in an absolute sale. Most sellers avoid reserve auctions except with a high ticket item that they feel will reach its reserve, but want insurance in case it does not.

Find the Right Slot.

Selecting the right category to place your auction can make the difference between success and failure. There are hundreds of categories and sub categories on the site; unless the item has a clear cut slot, such as a new digital camera, or a used BMW, the choices can be perplexing. Some sellers use several categories on items of crossover interest, but each extra category doubles the listing fee. It is a good idea to use a hidden counter system that tracks the number of hits on your sale; several hosting services, such as Andale, offer them for free. If you see that your sale is garnering few hits in a certain category, try changing categories. If completely bewildered, run a search for similar items and see where their sellers list them. Auction duration: eBay allows one- , three- , five- , seven- and ten-days auctions. The majority of sales run seven days, with the ten-day sale (which incurs a small extra fee) the second choice. Besides the extra exposure, a ten-day sale allows the seller to show his item over two weekends when buyer activity is at its peak. Start ten day sales between Wednesday and Friday to catch part or all of two weekends.

eBay as a crapshoot

Only a fraction of eBay's 114 million users surf the site at any one time. eBay has its hardcore steady users, but many eBayers surf and buy as time or money allows, and then in fits and spurts of several weeks or months. Routinely, items that fail to attract a bid on the first or even a second try, will sell, sometimes with multiple bids, in the next listing. (From personal experience auctioning used books on eBay, about 40 percent of re-listed items sell on the second try.) eBay sends a re-listing link with your auction result email and will reimburse the re-listing fee if the item sells. But before re-listing an item, consider adjusting the price, description, or category(s) for the second try, and wait a week or longer before re launching the sale in order to attract 'fresh blood' to the audience.

No Surprises

According to WebTrends, 35 percent of U.S. adults say "surprise costs" will lead them to abandon an online sale. eBay buyers resent high shipping charges; it can make the difference between repeat business and never seeing the buyer again. If possible, state the items shipping charge on the sale; in any case, it's better to keep shipping at cost and view the "handling" as part of the price of doing business. The goodwill makes it well worthwhile.

Make Nice

A combative attitude and negative feedbacks are poison on eBay. High maintenance and distrustful bidders come with the territory - seller fraud on the site is such that eBay employs eight hundred people to root it out. There is also the nuclear deterrent Feedback Rating System wherein buyers and sellers rate transactions as "positive," "neutral" or "negative."

Buyers gravitate to sellers with excellent feedback ratings and tend to eschew those with negatives. Most negative feedback is avoidable with good, polite e-mail communication, patience, honest descriptions and timely shipping. It's advisable to avoid handing out negatives loosely as the other party is free to respond in kind. Even with renegers, the seller is better served by claiming a closing fee credit, issuing a bidder "strike" against the reneger (three strikes and the user is kicked off eBay,) and either offering the item to the under bidder or re-listing it rather than issuing a 'negative' which can be reciprocated PayPal In the past, horror stories abounded among sellers who had their funds wrongly frozen, misapplied or lost in PayPal's twilight zone - to the point where a successful class action suit was just concluded against the service. Purchased by eBay several years ago, PayPal has been 'stabilized,' and with 50 million users, it is the benchmark of online payment services.

Considerably more cost efficient than online credit card processing, its convenience makes it the favorite payment method among eBay users. Small to medium auction sellers (several to fifty sales a week,) can expect to lose a few sales for not having PayPal. For larger venders with a hundred or more weekly sales it's a necessity. The service also takes much of the pain out of international sales--which you'll want to consider.

Over There

International buyers are an increasingly large segment of the eBay auction market. Sell internationally. But particularly if you do not offer PayPal, protect your self by using the "Ship to U.S. only" eBay option. Few overseas buyers will be put off by this. If a buyer wants what your selling, they will e-mail to ask if you will ship to a foreign destination, or, just as often, ignore or not even read the terms & bid anyway. In either case, this option gives the seller important leverage: if the buyer refuses the shipping costs, terms, or offers payment that will incur a conversion charge, the seller can cancel the sale without risk of receiving a negative feedback. (eBay removes negative feedbacks placed by international buyers when the sale stated "ship to US only.") International sales require customs forms and usually extra emails, but if you turn away from this market, you will be leaving money on the table.

Jump in

This has been intended as a very general guide to entering the eBay market. There are many other nuances to selling on eBay--depending on the product you sell, your goals, the time you can put into the effort-- that will become apparent with experience. eBay is not for everyone. If you intend to tippy-toe into eBay as a hobby, avocation, or source for side income, it's advised that you begin in the auction format, try it and discover if this venue is your 'cup of tea' before investing the expenditure of time and effort required for establishing a Store. For large volume sellers, segueing into eBay Stores is a natural transition that makes good sense once an auction following has been established. Have fun, make money.