Over the past few months eBay has seen an amazing amount of changes going on, from new fee structures to new listing requirements, all these changes could be a make or break for any business. Here at Maine Trading we are no exception.
We have gone through some big changes, from our fee structure and returns policies, we have completely reviewed and fundamentally changed how we work to ensure our customers benefit and our business benefits.
Some of those changes have been small but have made a huge improvement in the way we work and some have been pretty big changes which will see our customers receiving more of their earned money.
Over the past year we have been analysing our customer accounts to assess how much they receive of the money raised through sales and what I saw made me feel pretty sad. One customer only received 8% of their overall total sales the rest going out in expenses, ebay and paypal fees, postage and commissions. This of course is an exception to the rule but never the less a situation that we never want to see repeated again for any of our customers.
We feel that is by far not acceptable for any customer to be facing those kinds of returns, we knew some big changes had to come to ensure all our customers received a greater share of their profits, while keeping our costs down.
We looked at the biggest expense which was the postage, in most cases over 60% of revenue raised went on postage costs this is without the paypal and ebay charges that go on top.
We looked around and found the cheapest postage options that gave the most reliable service and best insurance protection, we weighed up the benefits of fast and free service which for the benefit of a small percentage off the ebay fees charged we found was not worth it, not only in terms of the threats to our business metrics if we could not fulfil the 1 day deadline, but the cost of that service that the customer did not pay for despite trying to hide it elsewhere in the cost of the item sold, the price we receive for the items would not withstand the pressure of the extra cost.
Over the past few months we have tested out new postage costings on our listing which cover all associated postage costs from packaging to ebay and paypal fees and we have found that in actual fact despite postage costs being more for the end consumer it has made no difference to our rate of sales, in fact despite making similar volumes of sales the returns have been at a much better margin.
We did spend the past 6 months using the eBay postage option to see how it went and found that not only did it cause our postage bill to be much much higher than we have ever paid before, it also created more problem deliveries, while the cash flow release with their pay monthly option was a great idea and did generate a good cash flow, it caused far to many problems for us to consider keep using it.
The loss of items that occurred despite still being with Hermes was like nothing we had seen before, lots of people complaining that their item had not turned up, despite tracking stating delivered or items being damaged. This was quite interesting to watch as while going direct to Hermes or using Parcel2go none of these problems arise. I have still not worked the reason out other than the fact that ebay go through Hermesworld and the other goes through myhermes, what the difference is between them I have no idea.
Another of the changes we have gone though is a change to our commission fees, we have started to charge a flat fee of 35%, again through the analysis of the statements from the past year the low returns the customers had been receiving we felt were unfair.
To achieve this we have had to ensure that our own stock levels are forever increasing, this allows us to absorb any insertion costs that arise from listing on ebay, our customers now pay no insertion fee at all. The commission fee incorporates the paypal and ebay fees that are charged in association with a sale, including any postage fees, so rather than charging the customer 20% commission and a further 10% to account for ebay FVF and 3.4% Paypal Fees and a further listing fee, leading to us having to create complicated statements every month, we can now issue the customer with a simple statement with a commission fee of 35% all inclusive and not charge insertion fees, this has the added bonus that statements are now far simpler and quicker to raise.
We feel this is a massive change and one of our best changes as opposed to the customer receiving anything from 8% upwards after the extraction of expenses, they will now receive 65% of the final sale, in addition to this we have changed how we deal with returns.
As we all know returns are a massive part of any business and can cause our customers frustration with the costs associated with those returns and the inconvenience of not knowing what their percentage rate of return will be, so we have changed this so that we take all risk associated with those returns. If an item is to be returned we will still pay our customer the final costs minus our commission, we will then deal with that return as if it was one of our stock items and transfer ownership to ourselves and either re-sell the item to try to recover some of the return expenses incurred or dispose of the item. Thus removing any anxiety our customers could face while we have to deal with returns on their items. Both the end consumer gets satisfaction knowing they have hassle free returns and our customer has satisfaction that any sale we make is final and returns are not their problem.
Further changes we have made are to the way we spend time listing, instead of listing and bagging we now just box instead of bag. and we have started to use a white background and give more detail to the listings.
One change that ebay have made and are currently implementing will not affect us too much, is the use of EAN numbers, as we list mainly used items the use of EAN numbers is not something we have to be too concerned about as our category of used is exempt from those changes, for now at least!.
In addition to those changes we have been busy creating this blog and have updated the website so this has been a very busy few months over the summer slump in sales. Despite the low sales we have used the time wisely in preparation for the Xmas boom.