eBay Tips 2008: Know your Numbers.

It seems to me that a great many serious sellers on eBay fall into it almost by accident. Perhaps taken surprise by a few good sales and the hope they can change how they work and live, they take the plunge. This is one of the reasons why the eBay marketplace is so vibrant: lots of people, perhaps new to running their own business, are learning as they go along and doing business in their own way.

A lot of serious sellers are running their own businesses for the first time and with that comes inexperience. One basic business practice that many sellers neglect is keeping a close eye on their sales and other business metrics.

Why is this important?
Understanding what’s going on with your sales is vital because it’s how you determine how much money you’re making and let’s face it, profit is why you’re in this game. On eBay it’s particularly important because it’s a cut-throat, competitive marketplace. It’s not an advanced skill or practice; it’s one of the fundamentals. You haven’t got time? You have to find it. Next time you’re hunched over My Messages waiting for an email to come in or checking your auctions for the umpteenth time that hour, consider if it’s really necessary and whether you could be spending some quality times with your numbers.

When you know the numbers, you will be able to make informed decisions related to stock, pricing and improving the health of your business.

What numbers matter?

Sales Data: First up, you need to know what you’re selling and for how much. This information can be found in the Sales Report in your eBay Shop. Something else to examine the number of unique buyers you’re selling too. Repeat sales and multiple purchases are a really good health metric: the higher the better.

eBay/PayPal’s ‘Take Rate’: What percentage of your turnover in general, and item by item, are you paying to eBay/PayPal? There’s no hard-and-fast rule but between 8% and 15% is pretty good for most sellers. Most importantly, is the ‘take rate’ changing over time? One way to improve your profitability is to maintain sales but cut what you’re paying. Or you could concentrate your sales on more profitable lines with lower ‘take rates’.

Conversion Rate/Sell Through Rate: What percentage of what you’re listing is selling? Are some of your lines better performers? Improving your conversion is a key way of improving profitability because you’re not wasting fees on items that don’t sell. What’s an ideal conversion rate? It depends. If you sell big ticket items, a conversion rate of 10% can be profitable and even a seller who has 100% conversion might not necessarily be making money.

Average Selling Price: What prices do your lines get? A vital metric on it’s own but more valuable as you track it over time. If you compare ASPs to the previous month, and also the same month the year previous, and they’re decreasing it’s a heads up that the market is saturated or demand has fallen and you might want to look for other lines.

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Tomorrow: Know the Marketplace

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