Sometimes the smallest and least demanding techniques have the greatest and most favourable impact on a seller’s business profits.
Like slashing the price of your stock for example.
At this time of year, there is a temptation to offer deep discounts and accept best offers on unsold stock…
With people still recovering their finances after the festive period and many self-employed businesses settling with the taxman…there can be less money changing hands on eBay.
Be careful though.
Today I’d like to point to two useful techniques that can help you avoid pitfalls and grow profits at this time of year. First…
#1. Think twice before inviting Best Offers or running a discount sale.
In their own right, discount sales and Best Offers are first-rate ways to offload stock that has remained unsold over several months. But there is a very dark side to each technique.
Take discount sales.
We know that fixed price listings can be discounted up to 50% for a maximum fourteen days. Auction listings can also be converted to fixed price and a similar sale applied.
eBay will then alert people watching those listings and most slightly overpriced items will sell within days.
But kicking off with the highest discount is not a great idea. It means sellers take less than people might be willing to pay. That’s why sellers should discount goods in stages, by ten per cent on the first sale, for example, then twenty percent on leftover stock.
Discounting can continue indefinitely, in line with statutory consumer trading laws, but at each stage the seller risks wasting time and money and tying up money in unsaleable stock and facing possible cash flow problems.
That’s why sellers should…
— Auction their remaining long standing stock with a low starting price that lets bidders determine market value. This is the recommended method.
— Ignore auction and add a Best Offer button where none existed previously on long term fixed price listings. Sellers then wait until an acceptable offer arrives – if it ever does arrive – and prepare to pay more in listing fees than they might ultimately bank.
Unsurprisingly, this method is recommended for a maximum two or three months, following which the auction method might be more appropriate or the goods can be withdrawn from sale and donated to charity or taken to the nearest council tip.
Make the most of Best Offers
A Best Offer on fixed price listings also lets market forces determine resale value as well as tempting sellers to accept a price below what someone else might ultimately offer.
So it’s best to set a minimum acceptable offer for the first two or three weeks and lower it every month or so until a sale takes place.
A minimum acceptable offer can be set manually inside a seller’s eBay account and eBay will handle rejections. Or sellers can receive all offers direct, however derisory, and communicate personally with possible buyers.
Either way, Best Offers attract nasty individuals who expect sellers to accept their first offer and will turn nasty if they don’t.
How you deal with those people is for you to decide. I personally recommend refusing an insulting low offer and right away ban the individual from buying from you in future. Ask eBay to intervene if the insults continue.
Be careful about running Discounts and Best Offers together
Now what happens where a discount sale operates on fixed price items already welcoming best offers? Well it happened to me yesterday…
(i) I initiated a 50% discount sale on postcards and stamps with fixed prices between five and ten pounds. My big mistake was having originally offered free postage to buyers to help my listings rank high in search returns. I also omitted to remove Best Offer buttons before running a discount sale.
(ii) The end result was thousands of items discount priced at £2 or Best Offer with free postage.
A man offered £1 which I refused. I counter-offered with £1.50 which he ignored. Within minutes he telephoned, asking why his first offer had been refused and threatening to report me to eBay. I explained that £1, minus eBay and PayPal fees, left just over 50p for me to post the item and contributed nothing towards what I paid for it.
I asked if he might pay a little more to cover my costs. He refused and the argument continued and ended with me accepting his low offer and vulgar language, and ultimately losing me money.
You might think this is an extreme case but it isn’t; I’ve experienced it many times and every incident was entirely avoidable.
– I’ve found nothing to suggest free delivery increases sales. So I recommend you omit free delivery options from most listings and set a realistic delivery charge on low price items with Best Offer buttons.
– Be extra careful introducing discount sales on listings already inviting Best Offers with or without free delivery. This might work well for high price items but will almost always lose sellers money on items priced in the low pounds.
#2. The taxman cometh and you should be waiting for him.
Most of us are obliged to pay income tax on earned and unearned income and a good many of us do just that. Pay on time and the taxman will love you; pay late or don’t pay at all and he will fine you £100 and could take court action to claim unpaid taxes and interest.
That’s one hundred pounds and possibly more you could otherwise use to improve your eBay business. Worse still, make a habit of sending tax returns late or not submitting or paying at all and the taxman will be breathing down your neck, causing you stress and worry and taking your mind off running your business.
People are required to submit their tax returns and pay their dues at pre-determined intervals, typically depending on whether the taxpayer is employed or self-employed.
For most self-employed people, like many eBay business sellers, January 31st each year is the last day for submitting their accounts for the previous tax year. And that is also the day by which most business owners must pay the taxman, with another contribution taking place in July.
More worrying still, the Inland Revenue is working much harder this year than ever before to identify people selling on eBay, and making profits, but not submitting a tax return or not giving the taxman his share.
If anything just said describes you, it really is time to come clean with the taxman. You have until the end of January to comply.
On the brighter side, here are two reasons why other businesses paying taxes at the end of January and again in July can be so very profitable for you:
(i) Business owners who do pay their taxes often cut down on stock acquisition as the payment deadline draws closer. And that is why bidder numbers drop in many auction salerooms from round about early December to late January.
This is also why auction finishing prices are much lower during those months than the rest of the year. Much the same happens, usually to a lesser degree, in late July when many taxpayers pay part of their estimated profits for the current tax year.
(ii) Most business owners, not just eBay sellers, sell to customers who also have tax bills to pay in January – and July – or are busy paying off debts accrued over Christmas and will restrict their spending to essential goods, like food and mortgage payments, and will avoid buying luxuries. Those same sellers might have their own income tax and personal bills to pay from a temporarily restricted monthly income.
(i) and (ii) explain why many eBay sellers, especially selling antiques and collectibles and other mainly luxury items, spend little or nothing on stock until cash flow improves and that paves the way for you to stock up on goods presenting higher than normal profit margins.
Go get started right away taking advantage of other people’s tax bills and cut your product buying costs by up to fifty percent.