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Online Selling Trends 2016: Profits Squeezed

Higher shipping costs is one of the biggest challenges facing online sellers in 2016, according to Xudong Yan. “With the new USPS pricing, we see increasing pressure on seller’s cost structure,” he said.

Yan is CEO of Teapplix, which provide shipping, inventory tracking and QuickBooks integration for small and medium-sized multi-channel ecommerce sellers.

“P&L analysis (profit and loss) and control will be a big factor. We see continued search to low cost shipping options.”

Marketplace selling expert Skip McGrath agrees that 2016 could pressure profitability for merchants as economic issues could have a negative impact on buying activity.

“I am not starting off the year on a very optimistic note. World events are getting 2016 off to a rocky start,” he said. “The China stock market is melting down which is affecting our market and troubles in the Middle East may cause a rise in oil prices. Both of these issues will affect customer buying habits.”

McGrath, who is a longtime marketplace seller himself as well as writing numerous books and guides about online selling, believes it makes sense for sellers to focus on categories that people always buy no matter what the economic challenges are, including kitchen products, toys food and other necessities.

“As far as selling venues go, I think Amazon will continue to dominate over eBay, Rakuten and Sears,” he said – although it make sense to also sell on these venues for the marginal addition they make to sales, he believes.

“Amazon now makes up 80% of our online sales, but in a down market the 20% that comes from those other venues could be important.”

Consumers will always value high-end quality goods, and that may explain the optimism shown by Ruby Lane’s Palmer Pekarek. “I believe the quality of items on our site continues to increase and commands a higher price. Also, our buyers are shopping for competitive priced items of the best quality. With our guidelines, buyers can trust that the antiques and vintage collectibles on our site are authentic and in beautiful condition.”

He said Ruby Lane, a marketplace that brings together buyers and sellers of antiques, art, vintage collectibles and jewelry, is coming off a great year with more items up for sale than ever before and a higher average selling price. Among the best-performing items on Ruby Lane were men’s luxury watches, jewelry (its biggest seller), antique Tiffany Lamps, Art Deco lighting, Art Deco and Mid-Century Modern furniture and dolls.

Teapplix’s Yan also sees opportunities for merchants. Newer marketplaces are giving sellers more opportunities and options, he said, and new product categories like hoverboards present both an opportunity and challenge to sellers.

“For existing marketplaces like Amazon, new programs like Seller Fulfilled Prime may also offer certain sellers extra exposure, but at a much higher cost.”

Sellers should also pay attention to Facebook and Pinterest this year, according to Pekarek. He said those two have the best sell-through rates of the social networking sites for merchants on Ruby Lane and believes they will continue to dominate in 2016.

Also see “Online Selling Trends 2016: Pressure Intensifies for Amazon Sellers” from the January 11th issue of EcommerceBytes Newsflash.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.