If you want to build a profitable ecommerce business that stands the test of time, you need to register your own domain and start your own web site.
Most people who aren’t tech savvy often question their own abilities and end up relying on 3rd party marketplaces like Ebay to implement their website store for them.
Here’s why starting an Ebay store is a bad idea.
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Ebay Doesn’t Have Your Interests In Mind
Ebay, like most publicly traded companies, is primarily concerned with their own growth and stock price. They don’t care whether you are successful, nor do they care whether you provide a genuine service to the community.
They’ll do whatever it takes to demonstrate growth and make shareholders happy.
What this means is that you are always at their mercy. They can switch up the rules whenever they want and drastically affect your sales. They can also ban your sellers account at any time.
Over the years, Ebay has made dramatic changes that have put many sellers out of business. As a slave to their platform, you can never be complacent and they continue to raise prices to appease Wall Street.
Let’s take a quick peek at Ebay’s selling fees in the table below.
|Basic fees for auction-style and fixed price listings|
|Insertion fee (per listing)||Final value fee (per item)|
|Your first 50 listings|
|Free||10% of the total amount of the sale|
|All additional listings over 50|
|All your listings appropriate for and listed in the Musical Instruments & Gear > Guitars & Basses category||Free||3.5% of the total amount of the sale|
In addition to the final value fees listed above, Ebay also likes to nickel and dime you with listing fees as shown in the table below.
|Upgrade||Starting or Buy It Now price: under $150||Starting or Buy It Now price: $150 or more|
|1, 3, 5, 7, and 10-day duration||30-day and Good ‘Til Cancelled||1, 3, 5, 7, and 10-day duration||30-day and Good ‘Til Cancelled|
|International site visibility||Auction-style listings (all durations)||Fixed price listings (all durations)|
|$0.01 – $9.99||$0.10|
|$10.00 – $49.99||$0.20|
|$50 or more||$0.40|
As you can see, the listing fee table is fairly intricate and intentionally complicated so you don’t realize how much it costs to list an item.
Bottom line, if you open a store on Ebay, they will take between 10-11% percent of your gross sales right off the bat.
If you also take into account the fact that you have to use Paypal for your transactions, you end up paying Ebay about 11-14% of your total revenue.
In addition to this, you also have to pay a monthly store membership fee for the privilege of creating a web presence on a platform that you do not control.
For a long time now, Ebay’s growth has been stagnant. Do you really want to host your ecommerce business with a company that hasn’t grown or innovated for years?
In any case, here’s how much Ebay charges for store membership fees.
Note: The difference in plans comes down to how many listings you plan on having in your shop and whether you need dedicated customer support. Ebay shops also get a slight discount on the final value fees
|Store type||Monthly subscription fee||Yearly subscription fee|
|Basic||$24.95 per month||$19.95 per month|
|Premium||$74.95 per month||$59.95 per month|
|Anchor||$349.95 per month||$299.95 per month|
As you can probably tell, Ebay’s listing and selling fees start to add up to a lot of money!
EBay May Charge You A 4% Fine For Certain Listings
Ebay silently began imposing a 4% fine for sellers with below standard accounts. A below standard seller is a vendor who…
- Ships packages late more often than average
- Has a higher than average defect or “item not as described” rate
- Has an above average unresolved dispute rate
As a result, it is imperative that you maintain an “above standard” Ebay rating or risk getting charged even more to sell on their platform.
Ebay’s 4% fine is on top of the final value fee that is incurred with every sale. Because Ebay is so competitive, there have been reports of unscrupulous sellers who purposely sabotage other sellers by making false purchases and leaving negative feedback.
Ebay Shoppers Often Don’t Pay Or Change Their Mind
Every time a buyer successfully wins an auction for an item you sell, Ebay charges you a final value fee. However, sometimes the customer has buyer’s remorse and decides not to pay.
When this happens, Ebay still charges you a final value fee unless you manually request a refund using their unpaid item process. If you sell many items through Ebay, this can be a very tedious process.
While Ebay has introduced an unpaid item assistant to help with this issue, not all sellers have access to this tool.
Ebay Sellers Will Copy Your Images And Listings
Because Ebay is such a cut throat marketplace, there is rampant piracy. Unscrupulous sellers will steal your images and your listing verbiage and sell your exact same items alongside of you.
Even though you can report these dirty sellers to Ebay and have them taken down, it’s like playing whack a mole. As soon as one copycat goes down, another one pops up.
Ebay Has A Long List Of Prohibited Items That You Can’t Sell
Unlike a normal store that you control, there’s a long list of products that you are not allowed to sell on Ebay.
These items include
- Adult items – Ebay technically allows adult items to be sold on their platform. However, adult items are always subject to some form of restriction at Ebay’s discretion. In general, adult items will have limited visibility on Ebay and you can not advertise.
- Alcohol – Ebay does not allow the sale of alcohol except for pre-approved sellers who can sell wine only.
- Animals and wildlife – Pets and most live animals can not be sold on Ebay
- Art – While you are allowed to sell works of art on Ebay, there are many rules and guidelines regarding how to create listings to sell reproductions, replicas and original works of art.
- Artifacts – Items taken from government or protected land, historical grave sites, or shipwrecks can not be sold on eBay
- Used clothing – Outside of used underwear and socks, most used clothing can be listed on Ebay
- Credit and debit cards – Due to fraud risk, credit and debit cards can not be sold
- Drugs and drug paraphernalia – The sale of drugs are forbidden on eBay including drug related accessories like vaporizers, pipes etc…
- Firearms and weapons – Firearms and weapons can not be sold on Ebay. However certain firearm parts and accessories are allowed as long as they obey Ebay’s guidelines
- Food – Unpasteurized dairy products, fruits and vegetable juices are not allowed. Expired food is not allowed either.
- Gift cards – Gift cards can be sold but the total face value must be $500 or less. Also, the gift card must be in hand and ship within 5 days upon auction closing.
- Hazardous materials – Hazmat goods like fire extinguishers, refrigerants, and flammable goods can’t be listed on eBay.
- Lock picking devices – Lockpicking or locksmithing devices are not allowed.
- Chance listings – Mystery listings or sweepstakes are not allowed to be sold on Ebay
- Mailing lists and social media – Selling personal information or social media accounts is prohibited
- Coupons – You can sell up to 25 coupons worth $100 in total per 30-day period
- Stamps, currency and coins – All currency for sale must be graded by an Ebay approved company
- Used cosmetics – Used cosmetics can not be sold on Ebay
Ebay Stores Don’t Provide Design Flexibility
Unless you feel like paying hundreds of dollars a month, Ebay greatly limits what you can do with your storefront.
They try to bundle their stores with design tools to add value, but most or all of these tools are available on the web for free already thanks to companies like Google.
To give you an idea of how restrictive an Ebay store can be, the “Anchor” membership which costs $300 a month, allows you to build a handful of custom webpages. And the design of these pages is very canned.
Here’s a what a page looks like..
In this day and age, $300/month is an egregious amount to be paying for a simple website builder. Meanwhile, you can build unlimited pages on your own website that you host yourself.
Ebay Shoppers are Inherently Cheap
When I shop on Ebay, I look for bargains. Especially since most of the stores on Ebay are mom and pop shops or individuals working out of their home, people generally expect to pay less for their merchandise versus a real store.
What this means is that you will rarely get top dollar for your items. Because you are limited by what Ebay allows you to do with your store design, the only way to differentiate yourself is to lower your prices which will cut into your margins.
In general, the Ebay marketplace is extremely competitive, cut throat and hard to break into.
You Can Not Build A Brand On Ebay
Because Ebay is a closed platform, you do not have access to your customer base nor can you sell to your customers outside of Ebay.
As a result, it’s extremely difficult to attract repeat business. After all, you can not collect emails and you are not allowed to contact customers after a sale has been made.
In other words, you have to constantly fight for new customers and you will never build a loyal customer base.
The other problem is that shoppers who buy on Ebay believe that they are buying from individuals or small business owners selling goods out of their garage.
As a result, it’s almost impossible to build a reputable brand. If you want to start a long term ecommerce business, then Ebay is the absolute wrong place to do it.
What Ebay Is Good For
Even though Ebay is not a good long term home for your ecommerce business, there are some benefits to selling on their platform.
First off, the Ebay marketplace is fairly large so there’s already a built in community of avid buyers to tap into. As a result, selling on Ebay is a great way to validate your product before you go all in.
By selling new items on Ebay first, you can quickly test the market to determine whether you should move forward with a bulk order.
Ebay is also a great place to liquidate your old junk or products that have been gathering dust in your warehouse.
To perform product research and validation on Ebay, I like to use a tool called Terapeak. Terapeak scrapes all of the completed listings on Ebay and tells you what products are hot.
Related: If you are interested in learning how to sell online, click here to take my FREE 6 day mini course. I will walk you through the process of finding a product to sell and how to make your first sales online.
Making Money Selling Online
In the long run, it always pays to own your own platform. After all, when you own your own business, you call all of the shots.
No one can raise prices on you.
No one can change their selling policies on you
No one can ban you from your own platform
The most compelling reason to start your own online store is that it allows you to own your customer base. After all, a customer who has purchased from you once is many times more likely to buy from you again.
You can gather emails. You can differentiate yourself from the competition with your own design. You can establish a brand.
The biggest hurdle most people have when building their own store is the fear of the unknown. But these days, there are many simple and inexpensive ways to build your own shopping cart.
How To Open Your Own Shop
For example, there are many shopping cart software packages already written for you. Here are some choices.
- The Cheapest Solution: Click here to watch a video tutorial I made on how to start an online store using free open source software.
- An Easier Solution: Click here to check out Shopify, which is a fully hosted shopping cart solution that will do pretty much everything for you for a small monthly fee. They offer a free trial
- A Powerful Fully Hosted Solution: Click here to check out BigCommerce which is like Shopify but is more powerful from a feature standpoint.
Whatever you decide, stay away from Ebay Stores. As far as I’m concerned, Ebay is only good for getting rid of unwanted items through their auctions.
Related: If you are interested in learning how to start your own online store, click here to take my FREE 6 day mini course. I will walk you through the process of finding a product to sell and how to make your first sales online.
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- Why Selling On An Etsy Store Is A Bad Idea Compared To Running Your Own Shop
- Selling On Amazon Vs Ebay Vs Etsy And Why Relying On A Single Platform Is Gambling
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