Profitable eBay Listing Features
by Steve Nye, eBay Certified Consultant and Research Education Specialist
Avoid Unnecessary Listing Fees
You've been there before. You walk into a car dealership. Your old car isn't what she used to be, and it's time for an upgrade.
The car salespeople swarm over you like sharks smelling fresh blood. But this time, you're prepared. You've done your research and you know exactly which car you want. You walk right to it. The color is perfect. It purrs happily as you test-drive it. Yep, it's the one.
You pride yourself in knowing that this time you won't end up paying more than you can comfortably afford. Well, that was your intention anyway. You bring the key with you as you approach the front office to do the paperwork. Then it happens.
"Do you want air conditioning?" the salesperson asks. What a strange question. Of course you want to stay cool in the summer! The salesperson makes a little tic on a sheet of paper to indicate your preference. Now tell me this: how can a single pencil mark cost so much?
The list of features goes on and on. A car stereo upgrade will only cost a couple of bucks a month extra, so you think, "What the heck, I'm worth it." Cruise control gets added, and summer wouldn't be summer without a sun roof. You see where I'm heading here.
Before long, the total at the bottom of the page the salesperson tabulates your "damage" on begins to look nothing like the price you had in mind. Sticker shock sets in. You add the numbers up, and it tallies correctly. You sign the bottom line, confused over what just happened.
With a grin, the salesperson hands you the keys to your new car. In a stupor, you drive your new car home. Within a day, you've forgotten all about the difference between what you intended to spend and what you actually paid. But you pay for it with every higher monthly payment for years to come.
eBay Listing Features
This happens with eBay listings too. You take a great picture of the product you want to sell and write up a good description of it. You now get a list of options.
"Of course I want to use a gallery picture with my product," you think. You click a mouse once and add this feature to your listing. Now it gets less clear. Do you want your listing in bold text? Is it worth the $1.00 to bold it? Should you apply a reserve price to the item?
Many Options, But Which are Profitable?
Like when you added features to your new car one by one, eBay listing features can quickly spiral out of control. The problem is that there is no rule of thumb for determining whether specific features will result in enough increase in the closing price to justify the added expense. That's not to say you won't hear a lot of opinions on the subject.
eBay advice is everywhere. Some may tell you to always set a reserve price for your listings to ensure you don't sell the item for less than it cost you. For some products, that's sound advice. For other products, on average you'll end up with a higher closing price without it. So how do you know when the extra features are worth it?
TMX Elmo at Auction
TMX Elmo (Tickle Me Elmo Extreme) was a hot seller on eBay around this time last year. Let's take a look at it as an example to see if sellers of this lovable toy were getting their money's worth out of the listing features they use.
Using HammerTap, I found TMX Elmo's Auction Success Rate to be just under 75%. The ASP (Average Selling Price) was $66.08. These averages were calculated across all listings of TMX Elmo on eBay, regardless of features.
Profitable Listing Features
We'll use these numbers as our baseline to measure the success of various listing features. To determine if listing features added to successful auctions results for TMX Elmo, the final selling price must be more than the ASP of $66.08 by more than the cost of adding a specific listing feature. We judge the Auction Success Rate improved if it exceeds our baseline 75% chance of selling.
- TMX Elmo Toys
Figure 1 illustrates how using the bold feature increases the selling price from $66.08 (the average price regardless of listing features used) to $67.99, a difference of $1.95. Now realize the bold feature costs $1.00 in additional listing fees. So, using the bold feature, you can count in making $.95 additional net profit over not using the feature.
Effect of Listing Features on Auction Success Rate
That's only half the story. We find in Figure 1 that the Auction Success Rate when using the bold feature fell from our baseline 75% down to 66.75%. Using the bold feature, we actually reduce the chance of selling a TMX Elmo by 8.25%. You can relist an item on eBay right after an auction closes at no additional charge. So even if you don't sell the item the first time, chances are you will sell it the second time, even at a 66.75% success rate.
Now let's look at the highlight feature. Listing with this feature, we increase the selling price from $66.08 to $68.52, a gain of $2.44. It also decreased our chance of selling by 25% (75% - 50%). Worse yet, it costs $5.00 to use the highlight feature. A quick subtraction shows that we actually LOSE $2.56 by adding the highlight feature. It's a lose-lose situation. Using the highlight feature selling TMX Elmo toys results in making less per listing and results in a failed auction more often than if we hadn't added the feature.
So the process is as follows:
- Determine if adding a feature to a product increases the selling price.
- Compare the amount the selling price increased against the cost of using the listing feature ($1 for bold, $5 for highlight, etc.)
- If the increase in selling price is more than the cost to use the feature, you have a positive profit by using the listing.
- Finally, look to see if the chance to sell your item decreases by using the listing feature. If so, you've got to determine if it's worth it to you to have less chance of selling your item the first time you list.
Developing a Feel for Profitable Listing Features
The main thing I would warn against is assuming profitable listing features for one product will apply to another product. This is where much of the bad eBay advice you'll find out there comes from. An eBay seller learns through trial and error that a specific listing feature makes them more money on a product or category of products. They announce their success with the feature, and an eBay Myth is born.
Extensive research done across many product categories has proven time and again that you simply can't generalize when it comes to eBay listing features. What works for Elmo toys may not work for iPods. The only true test is to perform the research. The good news is that it only takes a couple of minutes to research eBay listing features with HammerTap. I can't stress enough that if you don't base your eBay business on research, you're just flying blind.
As you research various products and the factors which lead to successfully selling them on eBay, you'll begin to get a feel for what works for that product category. You'll want to check back from time to time to reassure yourself that what worked last time you researched a product still holds true. But over time, you'll learn general rules of thumb which apply for your product categories.
One Last Example
I took a look at what listing features contribute to successful listings of DVD players in HammerTap. Figure 2 below shows the results:
Figure 2: Portable DVD Players
Different Product, Different Results
To illustrate how what works for one product often won't apply to another product, in this second example, I used a completely different product, DVD players.
Initial research in HammerTap showed that for portable DVD players, the ASP (Average Selling Price) came to $70.71. The Auction Success Rate was 64%. So for this example, unless adding a listing feature increases the ASP over $70.71 + the cost of the listing feature, we won't consider adding a listing feature a success.
Figure 2 tells us that for portable DVD players, the use of the following listing fees increased the Average Selling Price more than the cost of adding the listing feature:
- Bold: +$9.21 (listing fee $1)
- Highlight: +$53.29 (listing fee $5)
- Gift: +$7.06 (listing fee $.25)
This was based on a general search of portable DVD players. When I narrowed my search to Sony, Panasonic, or JVC, I found that the Auction Success Rate and Average Selling Price changed. Not only does the effectiveness of listing fees change across categories, but also within the same product category.
Base Your eBay Success on Facts
The only way to predict what eBay listing features will add to your success is to use a research tool like HammerTap.
Without research, you risk wasting money on listing fees that simply don't add to your bottom line. Worse yet, using the wrong eBay listing features will actually hurt not only your profits, but your likelihood of successfully selling your products at auction.
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