eBay Experiment

De-Clutter graphic - Recycle, Sell, Keep, Trash, DonateI’ve bought a few things on eBay over the years, although I’ve never sold anything since I figured the potential hassle wasn’t worth it. But I recently decided to seriously tackle de-cluttering my apartment and cleaning out a storage unit that I have. Along with this I decided to try eBay as a way to turn my unwanted items into cash. I wanted to see if it really was a hassle and if the money earned would be worth the effort. I began my experiment at the end of April.

First I set up some ground rules:

  1. I considered this all found money. I knew I wouldn’t recover the money I paid for the stuff. After all, it was used. If I did find the hidden gem it would be the exception, not the rule.
  2. This isn’t a business. While I would follow some good business practices, such as good customer service and honest listings, I wouldn’t be spending money to raise money. For example, no listing software or services. I wouldn’t add an eBay store subscription until I had solid data to prove the numbers were in my favor so the reduced fees would cover the subscription cost.
  3. While I had no cost of goods sold (as I said found money) in my calculations, I would have to justify my time, effort and expense.

I also set up two goals that would have to met for the experiment to continue:

  1. List at least one item within a week. The hardest part is the first step so this would force me to take that step. By setting a deadline I would avoid procrastination caused by unending research and planning. The only reason I gave myself a week is because I knew I’d be delayed getting photos.
  2. Reach $1,000 of sales within a month.

I listed 14 items within a week. Like I said, the first step is the hardest. Once I got the first listing up the rest was easy. The $1K goal didn’t come in those first 14 listings since I was hesitant to list too many expensive items, but I did reach to goal within the month.

While I’ve been an eBay member for over 8 years, it’s been over a year since I bought anything so I didn’t have any feedback within the last 12 months. And since I never sold anything I didn’t have any seller feedback at all. I was a bit concerned that this would impact my sales. All the feedback I did have was 100% positive and I was identified with positive phrases such as “longtime member” so I hoped this would help. I also happened to buy a couple items which resulted in recent positive feedback which may have helped if people did check. Overall, I don’t think the lack of recent seller feedback affected my sales very much. The selling prices were in the same ballpark (although at the lower end in some cases) as recent sales of similar items by other sellers. I only had one item priced over $200 and it didn’t sell. While I considered the price fair (even a bit low) my lack of feedback might have been a factor.

Most of my initial listings fell into two categories, watches and N-scale model railroad items. I accumulated watches over the years and had some I no longer wear and I still had the boxes. I figured having the original boxes and paperwork would help them sell for more. I’ve collected N-scale model railroad items over the years. It’s been years since I’ve used any of them so they were targeted to go. All still had their original boxes and were still like new.

The watches went for prices I expected. Less than some recent sales, more than others. I did hold back the higher priced watches and I did have one watch that didn’t sell. More on that later. I used Buy It Now (BIN) pricing for a couple of the watches since I could find recent sales of similar items but everything else went as an auction. Because I have a lot of N-scale stuff to get rid of I picked a variety of different items so I could get an idea of how’d they do.

Eleven of the first 14 items sold and I was 75% towards my goal for the month. So I already considered this a success. I added more items and reached the sales goal before the end of the month. This appeared to be worth my time since I was making considerably more than if I sold everything in bulk.

New sellers may have selling limits placed on the account as described here.

Time Matters

While I wanted to get my first listing as soon as possible just to get that initial step out of the way, there other reasons to get that first sale as quickly as possible. eBay provides certain benefits, and lifts certain restrictions, based on how long you’ve been selling. Ninety days is the target you’ll want to hit.

Most eBay benefits can be achieved with volume or something else that you can control. But these time based benefits just require you to wait after that first sale. So the sooner you start the sooner you’ll benefit.

Money On Hold

Image of $100 bill locked in chainsWhen you start selling eBay will place a hold on sales proceeds until they are comfortable that the sale was a success. Officially they say they will hold the money for up to 21 days. In my experience the hold was always less than 21 days, although the time did vary. I couldn’t see a rhyme or reason for the lengths of time that the money was held.

eBay says these holds will be placed for your first 90 days of selling. My experience is that the holds stopped after about two months.

You can optionally defer paying your shipping charges if you buy postage through eBay and print labels one at a time. The shipping payment automatically charged when the hold on the sale is lifted. The bulk shipping option doesn’t allow payment deferments.

Top Seller

The Top Seller designation, which lowers the final value fee along with other benefits, requires a 90 day sales history (along with other requirements).

Promotions

eBay likes to offer promotions. The most common “benefit” they offered has been the waiving of the insertions fee (typically $0.30 per listing). eBay offers 50 free listings per month to casual sellers so these promotions are over and above those 50. Of the promotions I’ve received only one appeared tied to an external eBay promotion (an ad campaign). The others seemed intended to get a new eBay seller (me) more active. So it may be worth being prepared to take advantage of any promotion. The promotions I received all had a very short timeframe to take advantage of them.

I was accidentally prepared for one of them since I had taken the photos for what I thought would be a month’s worth of auctions. The promotion allowed me to list them all at once and still have my 50 free insertions for the month. This provided a good way to see if I could handle the volume. While I was able to ship everything on time I did learn that the effort needed wasn’t sustainable. This will be an important consideration if I ever consider a store subscription.

Another promotion offered a Final Value Fee discount which could have been significant for higher priced items. I decided to go with some lower priced items I already had ready. The window to use the offer didn’t mesh well with my schedule so I couldn’t maximize the promotion.

 

What I Learned From The Initial Sales

  1. I dislike the Best Offer (BO) option (available with BIN listings). The quick listing wizard enabled Best Offer automatically and I hadn’t realized it was available. If I do use it again I’ll price the items high and have a minimum offer in mind. The only watch that didn’t sell was listed with a BO. I did get an offer for 50% of the asking price, but nothing approaching the asking price. I can’t blame people for making lowball offers. Not making any offer when it’s an option would feel like paying too much. I do think many people consider the “deal” rather than the actual value of the item in these cases.
  2. A low starting bid can generate interest in an auction. One example of this is an N-Scale freight car bundle that I initially listed with a starting bid of $99. While it generated views and watchers, it didn’t sell. I re-listed it with a $19 initial bid and it sold for well over $100 with eight different people placing bids. eBay consistently recommends a $0.99 opening bid. While I don’t go that low, I now set a low opening bid for everything.
  3. Shipping is a pain and time consuming. My first set of auctions ended on a Saturday. Even though this is only considered the second-best day to end auctions, I figured this would give me Sunday to package things up and the shipment clock wouldn’t start ticking until Monday. (I find it counter-intuitive, but orders received Saturday and Sunday are treated as if they arrived on the previous Friday. So, items with 1 day shipping must go out on Monday.) While I wanted to ship everything Monday I gave myself a three day handling time so I could handle the unexpected without getting a black mark. More on shipping in the next section.
  4. Fees add up. Fast. Fees can vary with some categories or if you have a store subscription, but you should expect eBay to charge 10% of the selling price (including any shipping or handling charges as they also have the same fees applied). You may also pay a insertion (listing) fee, although eBay currently provides 50 free auctions a month. Then there are PayPal fees. PayPal charges $0.30 per transaction plus 2.9% of the total amount. So you should expect fees of approximately 13% on all money you receive from sales, including any shipping or other charges.
  5. The online consensus is that auctions ending Sunday night between 6 and 7 pm U.S. pacific time (9–10 pm eastern time) work best. It’s hard for me to prove or disprove that in the short time that I’ve been listing items, but it does seem to work well, with a lot of activity in the final hours. I also found that 10 day auctions work well, with listings starting Thursdays and ending on a Sunday. This also fits my schedule better. The auction runs over two weekends plus it allows auction winners to see what else I have coming up. Since every item I’ve sold is different a perfect comparison is not possible, but 10 day auctions have had significantly more views and watchers than my initial 7 day auctions.

Photo of a lot of boxes

Packaging & Shipping

This was the hardest part to prepare for and it takes more time than I would have guessed. Since I expected surprises I started off slow, with a small number of items, auctions ending Saturday night and a 3 day handling time. This gave me Sunday to package and 3 working days to handle any surprises. I intended to ship the day after payment (1 day handling time) to see how much effort that would take. eBay offers some benefits to sellers who advertise a 1 day or same day handling time so I wanted to try to meet it when I wouldn’t get dinged for missing it.

This worked well and I was able to meet my own next day shipping deadline but there were some hiccups. I use eBay for postage and shipping labels and while their software is OK, it took a while for me to get an efficient workflow.

While you can set payment deadlines there’s really no way to insure when someone will actually pay. So while my auctions ended Saturday the buyers could pay anytime during the week and the shipment clock would start upon payment. This is especially true since I allow buyers to wait up to two weeks as a way to promote multiple purchases.

Printing Address Labels & Postage

One thing I learned was my current printer wasn’t efficient or cost effective as a shipping label printer. It was pretty easy for me to determine that a dedicated label printer would save both time and money. Even ignoring the extra time and effort required I could easily calculate that a dedicated label printer would pay for itself if I sold my entire N-Scale collection. It would be harder to justify if I didn’t have that volume and was just selling off odds-and-ends.. I ended up buying a used label printer (on eBay of course). I’ll write about the specific printer in another post, but if you plan to buy one be sure that in will print 4“ X 6” labels if you’ll be using eBay for shipping. Many consumer “postage” printers will only print the postage and not the entire shipping label. Just be sure that the printer is suitable for and supported by the shipping service you’ll use. Printers may accurately claim to print “postage” and “address” labels, but that is not the same as printing full shipping labels for USPS, UPS or Fedex.

Boxes

Photo of a stack of boxesI’d been saving packing material for awhile so I did have a supply I could use, but I didn’t have a supply of appropriate boxes.

First, it’s important to realize that the boxes you buy will need assembly, they ship flat. At least the boxes that are a reasonable cost will ship flat. For my initial auctions I just went to the local Staples and bought some boxes. There was a significant discount for buying 5 or more of the same box so the price per box was reasonable for small quantities. It did mean it was cheaper to ship a couple items in boxes that were bigger than needed, so more packing material, although they weren’t so big as to increase shipping costs.

The USPS provides free boxes for shipping via Priority or Express Mail. You can order these online and delivery is free, or you can pick some up at the post office. eBay will also ship you these boxes for free. If you plan to use priority mail it’s worth having some of these available.

Once I knew I’d be selling more I did some online shopping to buy larger quantities. I found that shipping charges were a significant factor when comparing prices. In general I found that Staples had the best price if I qualified for free shipping. Uline had many more box & envelope options although prices varied, especially once shipping was added. In general Uline box prices were lower than box prices from Staples, although they tended to become slightly higher once shipping was factored in. Other online sellers were significantly more expensive once shipping was factored in. Uline and Staples are close enough in price to make comparison shopping worth it for me whenever I need more shipping supplies. Uline also has a wider variety of box types and sizes.

If you use eBay for shipping/postage labels the box will need a 4“ X 6” flat surface for the label. Officially, the post office won’t allow the label to wrap around the box. But others have reported that as long as the barcode is on a flat surface, so it can be scanned, and the address is also on a flat surface then the package will go through. For my small items I’ve found it easier, and actually more economical, to pack it in a small box and then put that box in a envelope that is large enough for the label.

Having the barcode easy to scan is important, especially with eBay. Be sure that the barcode is on a flat service and the label isn’t crinkled through the barcode. If possible, avoid having a box seam run through the barcode as this would make the barcode easier to damage during shipping.

Postage & Shipping

You can buy postage and print labels through eBay which is what I do. eBay provides discounted postage so the prices are pretty good. Since I’m a casual, low-volume seller I haven’t researched any competitors. Shipping via UPS and Fedex are also available although I haven’t used either one of them as they’ve always been more expensive than USPS for my items.

You can limit countries that you are willing to ship to. I’ve limited my sales to the United States. My items are low cost and I don’t consider international shipping worth the potential hassle. From a buyer’s perspective, shipping could be more than the item which would probably be enough to drive international buyers away. Plus, there could be customs charges they aren’t expecting.

eBay does have a Global Shipping Program which could smooth things out, although the shipping cost would be still high and probably still keep people away. I may try it in the future.

One thing I found out was that although there is a setting to specify countries I didn’t want to ship to, it didn’t actually prevent people from outside the US from placing bids. I had excluded every country except the US but had a bid from Canada. Luckily I had specified “Ships to U.S. only” in the listing so I could have cancelled the sale if the buyer won. I found a second setting to actually block bidders from countries I wouldn’t ship to and enabled this.

eBay does allow the creation of rules that be applied to combine shipping at lower charges although I haven’t used these. I’ve found it easier and more reliable to have buyers of multiple items request an invoice for combined shipping. I haven’t found this too burdensome and it allows for lower shipping costs for the buyer.

It’s critical that you make sure the post office scans your package when you drop it off. (Pickup is also available although my Post Office is nearby so I’ve never done this.) eBay doesn’t consider it shipped until the first post office scan. Just buying postage and assigning a tracking number isn’t enough. This proves you shipped the item and that is was shipped within your promised time window. I’ve done this two ways.

First, I ask for a receipt when I drop the package off. The clerk weighs the package and scans the barcode. This can be time consuming since each package must be weighed and scanned. This does have the added benefit of verifying that there’s enough postage.

The second way, and what I try to do, is to use a SCAN form (Shipment Confirmation Acceptance Notice). This has the benefit of being quick since only one scan is needed and the packages are just counted, not weighed. All the packages associated with the Scan form are automatically reported as accepted with that one scan. There are some downsides to this method. The postage is not verified, so if you underpaid postage the package may be returned or it may arrive with postage due. In addition, the Scan forms are finicky. If you need to void a label associated with the form then the form cannot be used. If you use the form you will be unable to get a refund for the voided postage. Plus, the form can only be used on the date specified on the form.

While other software or services may vary, the eBay shipping software requires all labels to be purchased and printed at the same time in order to be associated on the Scan form. I’ve used two forms on the same day, but presented them at different times (morning and late afternoon). If you present multiple Scan forms at the same time the post office may complain.

Pricing Shipping

As I already mentioned, eBay includes shipping when calculating your final value fees. PayPal will also charge you their fees for the money collected towards shipping. So this means you lose nearly 13% off the top. If you let eBay calculate the shipping they do not consider these fees. They do calculate the shipping charge based on the full retail postage cost, so if you use eBay or another shipping service they may discount the postage and you’ll recoup some or all of the fees.

eBay tends to promote free shipping in the search results so if you can roll postage into the price of your item it may help sales. They further promote Fast & Free items that have free shipping and same-day or one-day handling times.

Since my items are relatively small and light, while also being inexpensive, I charge a flat rate. I’ve made the rate high enough to recoup my fees on the shipping in addition to the actual postage. I use eBay for shipping so the postage discount does keep the postage charges reasonable from the buyer’s point of view.

For heavier items I’ve been shipping priority mail and letting eBay calculate the postage since the cost varies by destination. In this case the discount on postage doesn’t cover the fees. But since these are also more expensive items the cost of the item can absorb the difference. eBay also allows a handling charge to be added to the calculated postage which could also be used to cover fees and packing material.

In the U.S. there’s not much difference between delivery times for first class or priority mail, while the cost difference can be significant. Since most of my items are below 8 oz. I use first class mail. If people buy multiple items I have them request an invoice so I can package & weigh the items and then charge based on the actual shipping. eBay does allow rules to automatically calculate shipping for multiple items but these don’t work for me. If someone orders enough to go above the 16 oz. first class limit there’s a significant jump in postage. Because my items are low cost I don’t have any cushion and would need to assume “worst case” when setting up the rules. While it would always cost less than the individual shipping charges, people buying two or three items would be overcharged for shipping when compared to me charging based on the actual cost. I haven’t found this too burdensome for me and the buyers don’t seem to have any problems either.

Declutter graphic - keep or trash

Wrapping Up

Overall I consider the eBay experiment a success and I will keep using it as I de-clutter my apartment. It’s been worth the time and effort so far. The fifty free listings that eBay offers every month seems to be a good level for me, although I could probably handle a slightly higher volume.

Using eBay’s calculator I would have to sell about 100 items a month to break even with a store subscription. That seems to be about the most I would want to list during the month and I have doubts if I could sustain it. As I de-clutter my place I’m taking photos so I can get ahead of 50 auctions per month and see what type of backlog I can build up. It may be worth it for me to get a subscription for one or two months and then try to blow everything out. But packaging/shipping is time consuming so I wouldn’t want to have to worry about getting new auctions together.

Even though I could wait 90 days to minimize my fees and maximize my income I’ve decided to keep listing items every week for two reasons:

  1. While this isn’t a business for me, the vast majority of my items will be N-Scale model railroad items. It’s a niche and because of this I think it’s important to get people used to seeing my stuff on a regular basis.
  2. I don’t think I’ll ever find a store subscription worth the cost, so to maximize my fees I’m limited to 50 listings a month. I really want to get a lot of this stuff out of the apartment and don’t want to delay.

I’m not totally ignoring the benefits that 90 days will bring. As I tick off the 90 days needed to receive some of the other benefits I’ve been selling my lower priced items while saving the higher priced items until I can minimize my final value fees while also building up my feedback.