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EcommerceBytes-Update, Number 185 - February 18, 2007 - ISSN 1528-6703     2 of 9

Fourteen Tips to Reduce eBay Fees

By Trevor Ginn

February 18, 2007

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One of the top complaints against eBay is the level of fees. It is therefore surprising that many large eBay sellers make unnecessary and easily avoidable payments to eBay. This article lists 14 easy-to-implement ways to reduce eBay fees and improve the profitability of your eBay business.

Strategies for all eBay Sellers
These fee-saving strategies can be implemented by all eBay sellers, no matter what items they sell or their listing strategy.

1. PayPal Merchant Discount
If you are a volume seller on eBay, then you are probably eligible for a merchant discount on PayPal fees. The merchant fee structure is as follows:

UK PayPal Fees
£0.00 to £1,500.00 - 3.4% + £0.20
£1,500.01 to £6,000.00 - 2.9% + £0.20
£6,000.01 to £15,000.00 - 2.4% + £0.20
£15,000.01 to £55,000.00 - 1.9% + £0.20
above £55,000.00 - 1.4% + £0.20

US PayPal fees
$0.00 to $3,000 - 2.9% + $0.30
$3,000.01 to $10,000 - 2.5% + $0.30
$10,000.01 USD-$100,000 - 2.2% + $0.30
above $100,000 - 1.9% + $0.30

To receive discounted fees you must log onto your PayPal account and apply. This can be done from PayPal's fees page.

Potential saving: up to 2% (1% on PayPal.com) on all PayPal transactions.

2. Relisting Credits
Insertion Fees are generally non-refundable. However, eBay will automatically credit the Insertion Fee for an unsuccessful auction if:

You relist the item by clicking the "relist your item" button on the item page for the ended listing (or any other relist feature on the website) and the relisted item is sold the first time you relist it.

Potential saving: Up to £2 ($4.80 on eBay.com) per relisted item.

3. Reclaiming Non Paying Bidder Fees
If a buyer does not pay for their item, you can claim back the eBay fees via eBay's unpaid item process. An unpaid item can be reported up to 45 days after an item closes.

See http://pages.ebay.com/help/tp/unpaid-item-process.html for more details.

Potential saving: Final value fees on unpaid items. (And if the item is relisted and sells the second time, eBay will refund the Insertion Fee for the relisting, see point #2 above.)

4. Host Your Own Photos
If you need to use more than one photo to describe your item, eBay will charge per additional picture. However, it is simple to host your own photos, and avoid this extra cost.

If you have an eBay Store (eBay Shop), eBay provides 1MB of free picture storage. In addition, there are many free photo hosting services such as http://www.theimagehosting.com or http://www.pictiger.com

Potential saving: £0.12 ($0.15 on eBay.com) per additional picture.

5. Tweak your Starting Prices
Be careful when you choose your starting price, as a very small difference in price can lead to a large increase in insertion fee, especially if you are selling multiple items. For example, an item with a starting price of £29.99 incurs an insertion fee of £0.75, whereas a starting price of £30 would cost £1.50.

On eBay.com a staring price of $49.99 incurs a fee of $1.20 where as a starting price of $50.00 would cost $2.40.

Potential saving: Up to £0.75 ($1.20 on eBay.com) per listing.

6. Pay for Your eBay Fees Using a Cash Back Credit Card
Several credit cards give cash back on money spent. By using an American Express credit card to pay your eBay fees, you can receive a small rebate for your eBay fees. Bear in mind that this only works if you pay your credit card bill in full each month.

Potential saving: Up to 1.5% cash back on eBay fees.

7. Teach Yourself HTML
Many sellers use eBay's listing designer service to improve the look of their listing. If you are listing multiple items, this cost will soon add up. By learning some simple HTML or employing a designer, you can develop your own template and save on the extra listing fee.

Potential saving: £0.07 ($0.10 on eBay.com) per listing.

8. Open an Ecommerce Store
Potentially the best strategy of all is to expand your business beyond eBay. By setting up your own ecommerce store you can upsell to customers you have acquired through eBay, and pay no fees at all. Channel Management software such as eSellerPro, Marketworks and ChannelAdvisor enable eBay sellers to run an ecommerce store off the same inventory as their eBay sales.

Potential saving: You pay no eBay fees on items sold off eBay, though you will pay for using the channel-management software.

Savings Fees on Listings
The following fee-saving tactics involve changes to your eBay listing strategy and should therefore be considered in the light of your business objectives. For each of these tactics, run a limited trial and compare the conversion rates (percent of listings that sell), average sales price (sales total/number of items that sold), take rate (% of sales that eBay takes as fees) and margin against your current listing strategy.

9. eBay Store (Shop) Listings
Despite the recent rise in eBay Store (Shop) listing fees, they are still on the whole cheaper than listing on core - if you sell a certain volume, since there are monthly subscription fees. The best use of Store listings is for upselling commodity items and for unusual items that require a longer listing period.

10. Sell More Expensive Items
eBay has a sliding scale of fees, taking a higher percentage of the sale price (take rate) of less expensive items. By selling more expensive items you can reduce eBay's take rate. For example, the take rate of a £5 item is 9.25 percent, whilst for £200 item it is 4.55 percent.

11. Reassess Your Use of Listing Upgrades
Listing upgrades are expensive, and should not be used unless they are improving sell-through rates and average selling prices. eBay research products like eSellerStreet (http://www.esellerstreet.com), Hammertap (http://www.hammertap.com) and Terapeak (http://www.terapeak.com) will allow you to investigate the effectiveness of listing upgrades for products in your categories. You should also conduct your own trials.

12. Second Chance Offers
eBay's Second Chance Offer feature allows more than one item to be sold from a single listing, saving on the listing fee for each additional sale. When using second chance offers, you should be aware that you are making a trade-off between price and sales volume, as second chance offers are inevitably lower than the item's final price.

Potential saving: Up to £2 ($4.80 on eBay.com) per sale.

13. Lower Your Starting Prices
eBay's insertion fees are linked to the starting price of an auction, by lowering your starting price you will encourage bidding and lower your listing fees.

Potential saving: up to £1.85 ($4.60 on eBay.com) per listing.

14. Dutch Auctions
Dutch auctions, like the Second Chance Offer, allow you to sell multiple items off a single listing, saving on multiple listing fees. (See details at http://pages.ebay.com/help/sell/fees.html).

Potential saving: Up to £2 ($4.80 on eBay.com) per item.

About the author:

Trevor Ginn is principal at Internet consultancy VendLab and also runs his own online eCommerce business - Hello Baby. Previously Trevor worked as Head of Consulting at Auctioning4u, the UK's largest eBay drop off shop. Trevor's eBay blog, eBay, ecommerce, life can be found at http://www.trevorginn.com.

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