EcommerceBytes Letters to the Editor Letters to the Editor
Your emails to EcommerceBytes
For consideration, send your email to ina@auctionbytes.com with "Letters to the Editor Blog" in the subject line! Remember to include your name as you would like it to appear in the blog.
Sat Aug 11 2012 15:45:20

FortKnoxMetals Calls It Quits on eBay

By: Reader

Sponsored Link

Dear Ina,
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."
Sincerely,
Dean Hansen
Owner, Fort Knox Metals, Inc.
eBay ID: FortKnoxMetals



Comments (44) | Permalink

Readers Comments

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

by: mylifeisgood This user has validated their user name.

Sat Aug 11 15:52:34 2012

Sounds like that guy last week..Wined and dined but treated badly..Oh well BYE BYE

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

by: Digmen1 This user has validated their user name.

Sat Aug 11 15:56:57 2012

Wow
Another big seller leaving ebay!
There seems to be a steady stream of them.
But surely having to rely on ebays discounts to make a profit was not a good business model in the first place.
And it would be great if Dean had told us what channels he is going to use.
He would need to list on quite  few alts to replace that sort of turnover.
I was also amazed that he had manged to meet with ebay staff in Chicago!

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

by: mylifeisgood This user has validated their user name.

Sat Aug 11 16:02:44 2012

According to toolhaus he has a total of about 4600 feedbacks for 12 years with 2 negs and 1 neutral in the past year.

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

This user has validated their user name. by: Ed Gadfly

Sat Aug 11 16:21:25 2012

So you were treated good, but not good enough.

The small guys weren't treated, just tricked.

Tell Jeff you want the Ed Gadfly discount on a Suit FlambĂ©. It's great for job interviews.  

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

This user has validated their user name. by: WOODJUNGLE! ON EBAY

Sat Aug 11 16:33:49 2012

LOL

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

This user has validated their user name. by: WOODJUNGLE! ON EBAY

Sat Aug 11 16:36:58 2012

LOL, Ed.  Jeff was a piece of work for certain. But rest assured,  the bar that sellers must reach for Ebay to give a darn about them keeps going higher and higher.  Always take what they give you or offer with a very large, fleeting grain of salt.

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

by: 10 year seller This user has validated their user name.

Sat Aug 11 17:20:01 2012

Why does eBay value volume over dollar amount?
Maybe the listing fees?
It still seems strange.
The money they are losing from these long time sellers leaving the site should be of some concern.

PayPal isn't going to make it for them.
I just got a check from a customer that came directly from their internet Chase bank account to my door. Very nice.
There are so many other payment options now.

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

by: Digmen1 This user has validated their user name.

Sat Aug 11 18:08:31 2012

Its amazing that ebay keeps losing these sellers, but their traffic as shown by their Alexa rating remains about the same for the last 3 years - ranked 21 or 22.

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

This user has validated their user name. by: basset

Sat Aug 11 19:13:47 2012

I do not understand the absolute reliance on the TRS discounts. Waaaay back when eBay first came up with it I never counted on it being there forever. All the years I had it, I looked at that discount as GRAVY. I deliberately walked away from the 20% discount a couple months ago to run my business as I wish. Soon my TRS badge will be ''in the closet'' it sounds like. I'm moving forward without the discount, still selling & having good numbers.

eBay is what it is. The TRS discount is no different than any other ''handout'' with strings attached. Tax abatements,  mortgage deductions for homeowners, agriculture subsidies, any social program like public assistance or food stamps and on and on. You must do what someone with power tells you to do to get the benefit. And the rules change constantly & you have to hop when they say ''hop'' or your benefit is suspended. Some become reliant on the benefit or handout to the point that they do not know how to proceed without it when they can no longer ''hop'' , no longer meet the requirements to get it, OR if the program loses funding and ends.

When I worked in public assistance, often, someone would get a job and because of the new income, become ineligible for food stamps (their income was over the eligibility limits). They would ask - in all seriousness & sometimes in tears - how can I buy groceries if you cut off my food stamps? It never occurred to them that their wages could be used to buy groceries. Sadly, some ended up quitting their job because not having the food stamps was a scary scenario for them.

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

by: nsc This user has validated their user name.

Sat Aug 11 23:12:36 2012

It is incomprehensible to me why Donahoe never introduced tiered discounts in the first place. Instead he chose to sneak diamond sellers in on the sly, as if everybody else was too stupid to notice. It's as if he had a spite against eBay's best customers. There really is something sociopathic about this way of behaving. It's not what you would expect from a successful businessman. It goes against self-interest. If you're eBay, don't you want to be a place where businesses can grow? But no, that's not how Donahoe thought about it. I wonder if he ever thinks about anything beyond the next quarter end's tall tale to the Street.

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

by: Bloggo This user has validated their user name.

Sun Aug 12 01:03:36 2012

John Donahoe doesn't care if eBay is a place where businesses can grow. He's getting richer by running it into the ground.  

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

This user has validated their user name. by: Anonymous Annie

Sun Aug 12 11:37:15 2012

eBay *takes* profit, it doesn't *earn* it.

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

This user has validated their user name. by: iheartjacksparrow

Sun Aug 12 11:56:43 2012

With the loss of Fort Knox, that will be approximately $90K less a year that eBay will be taking in. I wonder how many more sellers doing the volume of Fort Knox will need to leave before the powers that be at eBay realize their existing policies are driving away good sellers.

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

by: Steevo This user has validated their user name.

Sun Aug 12 12:04:08 2012

Dean's statement doesn't make much sense.  A 20% discount on fees on two million dollars is twice what it would be on fees on one million dollars. So his fees are reduced by that amount, the more he sells the more fake *savings*.

Does he think eBay should charge him less for some reason? I guess they don't want to.  Suck it up.

Think about this: eBay can do away with that 20% *discount* at any time, for any reason or no reason, and it makes no sense worrying about it.  Consider it a bonus.  *Extra profit*.

If your business model doesn't work without that 20% you are working on too low a margin.

As I have said before, eBay is a good place to sell things you got for free.  If you have to pay too much for the items  you are selling that is going to be a problem on eBay.

Sales cycle is too long, prices are too low.  Too much competition.  

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

This user has validated their user name. by: Anonymous Annie

Sun Aug 12 12:26:57 2012

Steevo observes: ''If your business model doesn't work without that 20% you are working on too low a margin.''

For the most part, I'd have to agree with this... and it would appear to be an accurate observation for sellers who sell more expensive items. For those who sell ''cheap'' items, where a large profit margin isn't possible, then the 20% discount becomes much more meaningful. (And, as Steevo also suggests... eBay is no longer the best venue to sell those items.)

But there's another thing about the 20% discount that I'm a bit confused about. If a seller LOSES the 20% discount, IS THE SELLER ALSO PENALIZED in the ''best match'' placement?

IN OTHER WORDS: Are the two things connected? Or are they determined by separate criteria?

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

This user has validated their user name. by: Spartacus

Sun Aug 12 12:47:34 2012

@iheartjacksparrow - I did over $180K in sales on eBay since 2008. Was also buying about $10K per year in collectibles and supplies there. They lost my account two months ago.

As someone who has been in business over 20 years, following my parents and grandparents who were brick&mortar shop owners, it's completely unimaginable ANY BUSINESS would let a client/customer bringing them over $10K per year would not even warrant a courtesy call to get their business back.

Hell, if I even mention to my cellular provider i'm thinking of switching, they bend over backwards to keep my business and that's a fraction of the money I was bringing eBay.

In my opinion, leaving that kind of cash on the table is no a ''vision'' for a successful business future.

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

This user has validated their user name. by: Anonymous Annie

Sun Aug 12 17:43:35 2012

--- ''it's completely unimaginable ANY BUSINESS would let a client/customer bringing them over $10K per year would not even warrant a courtesy call to get their business back.''

This is a symptom of an arrogant business culture that believes it can do no wrong. They're smugly thinking to themselves ''good riddance'' and ''your-loss-not-ours''.

Or... perhaps they just didn't want to give you the satisfaction of being able to reject them again. I imagine that perhaps in the past, a courtesy-call was a routine business practice. When they realized that it was a futile effort, they stopped the practice.

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

by: go-figure This user has validated their user name.

Sun Aug 12 18:03:57 2012

No matter how you may view their situation, it's yet another seller that's called it quits on the Zombay.

One suspects that until the ''collapse'' happens, the powers that be will continue not to care. For as long as we can remember, the attitude toward sellers has always been ''let them leave, there's always another one waiting in the wings'' (and we've been on eBay since 2001).

The Chinese invasion, the loss of uniqueness (fewer and fewer unique items), the ongoing and accelerating decline in their reputation, and the loss of revenues due to so many buyers and sellers no longer buying on eBay will eventually catch up with them.

When you see the Ho start shopping out his resume, you'll know that the crash is just around the corner. The biggest rat is always the first to leave a sinking ship.

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

by: Steevo This user has validated their user name.

Sun Aug 12 19:52:35 2012

I suspect the Fort Knox Metals guy is selling items with very little profit.  

There is just no way to do that type of business on eBay.

I just looked at his sales, he sold a 1 troy oz silver piece for $33. Free shipping.

I looked at silver futures, the last close was higher than $28. So the most he would probably make (and I am no metals expert) would be $5- if that silver bar sells wholesale for the silver commodity price which seems unlikely.  

Inexplicably there are some completed 1 oz silver bars that have sold on eBay for even less than that! Whatever for?

And he held a 5 or 7 day auction, and he has to pay for shipping, eBay fees, Paypal fees, and overhead.

So it took a week to make a maximum of $5 and that's the best case. Less expenses.

He did have 6 separate bidders, so that is encouraging.  So many auction items on eBay have only one bidder.  Which is why I have hardly any auctions anymore.

I have to say, if I had something that sold for that little margin I wouldn't be trying to sell it on eBay.

Sounds like a bad business model to me.

Now if he could get buyers to pay $50 or $60 and he could sell fixed price, and sell 40 or 50 of them in a week, it might be worthwhile.

Margins too low, expenses too high, sales cycle too long.

Auctions are mostly a waste of time for most items.

The only part of this I can fault eBay for is maybe prices too low and then there is that problem where free shipping is essentially required.  That's the only part of his problems that are eBay's fault.

If he could charge $10 for shipping, and with insurance I don't think he can pack, address and ship that for any less, he might be OK.

But free shipping, that puts it over the top.  

Perminate Link for FortKnoxMetals Calls It Quits on eBay   FortKnoxMetals Calls It Quits on eBay

by: mylifeisgood This user has validated their user name.

Sun Aug 12 20:19:21 2012

@ Steevo

No one in their right mind is going to pay 10.00 shipping on a 1 oz bar of silver. 1oz well packed in bubble wrap in a box will cost 1.64 - 1.81 and thats with tracking.

Believe me I ship them all the time..

I think what's really happened is he might have had a case of entitlement and Ebay blew him off.

We sell upwards of 200,000 a year and have no illusions of  being but a drop in the bucket to Ebay.

I would think maybe if you sold 200,000 a month maybe you might get a call or two from ebay.

Click to view more comments
1 2 3  [Next Page]


Login is required to post comments.
To sign in to leave a comment, fill in the form below. If you have not yet signed up for AB Verify, or if you'd like more information, go to the Registration Page
.

Login for AB Verify
Be sure and use your email address and password to log in.

 
Email:
Password:
 
 Forgot Your Password?
 Even though you are signed in with the AuctionBytes Blog, you will have to sign in to the EcommerceBytes blog. But you can sign in with your existing AB Verify info.