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EcommerceBytes-Update, Number 185 - February 18, 2007 - ISSN 1528-6703     3 of 9

How to Increase Sales with eBay Markdown Manager, Part 1

By Randy Smythe

February 18, 2007

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I've taken a good hard look at eBay's new Markdown Manager for Store sellers and have come to the following conclusion: This is a great new feature! Markdown Manager allows you to put select eBay Store items on sale. You can select individual items, whole categories or put your entire Store on sale. While eBay is still working through some of the kinks and there are intermittent technical problems, don't let that stop you from developing a Markdown Manager strategy for your Store.

Brick and Mortar stores have been using a markdown strategy for decades to drive buyers into their stores and increase sales velocity. Stores like Best Buy use sales to increase buyer interest and traffic. If you are a movie buff, you know that Tuesdays are when Best Buy discounts that week's "New Release." This drives buyers into the store and increases the likelihood that the customer will add a regularly priced item to their order. I'm sure Best Buy has sales data that shows "Sales" increase the AOV (average order value) over non-sale periods. The sale will generally last no longer than 1 week and then those new releases go back to their regular price.

Presently, there are a few limitations with eBay's Markdown Manager:

  • 1 Day Minimum Sale Duration
  • 45 Days Maximum Duration
  • 5% Minimum Discount
  • 75% Maximum Discount
  • 24 hour wait time from when an item goes off Sale to when it can go back on Sale.

Also there are daily limits on the number of items you can list or edit based on your Store subscription level:

  • Basic Store Subscribers: 250 Listings or edits
  • Featured Store Subscribers: 2,500 Listings or edits
  • Anchor Store Subscribers: 5,000 Listings or edits

As you develop a Markdown strategy for your eBay Store, please consider the following:

1) Test, Test, Test. Make sure and test your ideas before you make wholesale changes to your Store. Find the best Markdown method for your items.

2) Limit the items that are on sale. The idea is to find items you feel will be most attractive in your Store while still having regular prices for the majority of product in the Store. If you choose to put your entire store on sale then identify it as a clearance sale and schedule it during traditional clearance sale periods specific to your product category, i.e., after Christmas, change of season, etc.

3) Establish reasonable regular prices. If you are already listing items at the lowest price possible, there is no way to discount further. Most Media Sellers on eBay are discounting all of their items so heavily they can't put anything on sale. Markdown Manager will not work as effectively in that type of category. If you have to raise your regular pricing in order to make a Markdown strategy work, then carefully consider how this will work in your category.

4) Check out your favorite Brick and Mortar stores for ideas. Try to adapt their Markdown methods to your eBay Store. A large number of online stores use this strategy very effectively (Amazon has it down to a science).

5) Reconsider your Shipping & Handling strategy. Offer discounted S&H if additional items are added to the order during the "sale" period.

Next time we will look at some specific things that eBay sellers can do to maximize their Markdown strategies.

eBay's page on Markdown Manager:

eBay Has Technical Problems with "Markdown Manager" (2/8/07):

About the author:

Randy Smythe had built his company, GlacierBayDVD, into one of the most recognizable brands on eBay and then suddenly in January of 2006 he shut the business down. "Failure is not one of my favorite teachers," he says, "but the lessons learned are worth their weight in gold." Today, he writes about selling online and shares those lessons with other online sellers at his blog: MyBlogUtopia http://myblogutopia.com

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