|Sat Aug 11 2012 15:45:20|
FortKnoxMetals Calls It Quits on eBay
After 13 years of selling on eBay, maintaining Top Rated Seller status, and becoming a Platinum level Power Seller, we have finally decided to pull the plug on eBay.
We are a precious metals bullion seller, and operate on a small profit margin. We've sold over a million dollars of products on eBay last year, and would have reached two million this year. Having to pay up to $7,500 in eBay fees a month has left us very little profit at all. Our processes have been streamlined, and our business expenses have been reduced as much as possible.
There's not much else we can do to increase our profit margin without eBay lowering its fees. I like to compare eBay with Walmart, as they constantly chisel away at a seller's profit so that they can make as much as possible.
The major issue that we and many other sellers have with eBay is with its fee structure. To achieve the 20% Final Value Fee discount, a seller needs to have at least 100 transactions and $1,000 in sales in the past 12 months, among other requirements. We surely meet these requirements, however, there is no additional fee discount given to high grossing sellers. There are no financial incentives for a seller to increase sales if they are only going to receive the same discounts as a $1,000 seller. eBay is the only business that I know of that does not offer additional discounts to its customers who do volume business with them.
We have asked eBay repeatedly at what point of sales volume will we receive additional fee discounts, or what is known by eBay as "custom pricing", and have never received a clear response. There is absolutely no transparency in the fee structure for large volume sellers. The only response that we received was that we have to sell more to even be considered for custom pricing. Again, we asked at what sales level do we need to achieve to receive greater discounts, and could not get a clear answer from eBay. The only thing that is clear is that eBay considers us a small seller, and could care less about the business we generate for eBay.
Prior to making the decision to leave eBay after so many years, we contacted our eBay account rep, as well as the Collectibles category manager. I even flew out to Chicago to meet with the category manager to discuss our business, the fees we pay, the business model for bullion sellers, and how bullion sellers differ from other types of sellers in the Collectibles category.
We completely understand that eBay structures its fees based on the risk associated with items in a given category, and their potential exposure should a seller not perform as expected. However, we have done everything in our power to reduce this risk, as evidenced by our impeccable record.
To reduce eBay's risk, we went as far as giving them a personal guarantee to cover all sales, shared business financials, provided proof of business and inventory insurance, etc. We even installed a video recording system to record all order processing to further reduce the risk to both us and eBay. We have never had a buyer protection case filed against us, and eBay nor PayPal have ever had a loss as a result of our business. Our customers have always been very happy with our products and service, and many have become repeat customers.
If eBay wants to retain top sellers who generate substantial fees for them, they need to reevaluate the fee structure, and offer greater incentives. They need to create a tiered set of fee discounts for specific gross sales levels, and make those discounts available to all sellers, not just the chosen few. A seller needs to know what incentives they will receive as they grow their business.
Without this information, it is very difficult for a seller to justify the time and effort they have to invest when selling on eBay. It's quite clear that eBay wants more and more from its sellers, but wants to give little in return.
It is for this reason, the outright greed, that we have chosen to leave eBay and focus on our other sales channels. eBay is no longer a place to create and grow a business. It is simply a place for eBay to fleece its sellers of their money to increase eBay's profits. This surely cannot be a sustainable plan for eBay, as they will most likely implode by ignoring the plight of thousands of small business sellers.
The author G. S. Bowles said it best..."Covetous persons are like sponges which greedily drink in water, but return very little until they are squeezed."
Owner, Fort Knox Metals, Inc.
eBay ID: FortKnoxMetals