kyun — 2012-05-26T15:56:23-04:00 — #1
I've been selling about 10 years for a range of branded products belong to women fashions.
Lately we were so tired of the silly policies imposed by eBay. It was a good time under Meg Whitman. When John Donahoe took over, it had become a mess for sellers like us, the non-US sellers.
to survive on eBay, genuine sellers like us kept adapting to every new rules introduced by ebay, but those who couldn't sustain would choose to leave eBay. During the peak of 2007-2009, there were 30-40 genuine sellers like us.
Now only less about 7-8 left (including us), the rest hundreds of new sellers were listing their fake goods to fool customers. eBay doesn't care, or not as much as they used to be, feebay only cared about fees they earned.
Now we are stucked with about 200k worth of stocks with us. During the good years of eBay, we could easily sell them at 50% profits within 18 months for all these items.
But things have changed a lot now. We are lucky to squeeze 150k out of these, a loss of 20%-30% to sell them off on eBay. Because the cost of fake goods for same amount of items cost at a fraction of 50k-80k. Our monthly expenses is about 4k-5k a month, even selling all these items would sustain us for 2 years or so.
We have seen some websites selling the same items, at 100%-300% margin, even the wholesale sites, are listing at 25% margin, from some internal sources, the wholesale sites are trading over $4-5 million a year.
Now we are thinking of leaving the stuipd eBay.
1. Should we start making our ecommerce website? I've used oscommerce, but it was hard to modify the codes (it took me a week to make a ready-site). A programmer had made us another site using Magento, but it was too complicated to handle and we abandoned that site too. We heard some good things about prestashop, but would welcome any new suggestions.
We know making a blog or content-rich site will boost the site's ranking, compared to an ecommerce site. But wouldn't be a blog looks very not commercial to customers?
We have about 10k of customer list who bought from us in the past. How should we make a full out of it, should we start building a newsletter for them to follow? Is it considered a spam if we just send to 10k of customers at once?
Please let us know what should we do. A million thanks.
ted_s — 2012-05-26T17:18:04-04:00 — #2
As a brand marketer your story is really interesting to me as few retailers are willing to share this level of granularity about the impact of counterfeits [or perhaps they're just really not aware]. Sufficient to say it's a huge issue and something which will impact you no matter where you go, although perhaps to a different degree. It's tough and I seriously wish you the best with it -- we all need to fight harder to curtail this problem.
100% margins are clearly appealing but the switch is more than having a website, this is no field of dreams (building it will not make them come).
eBay provides two important things: an audience and a trusted platform. Marketing is really a function of source and time -- the people out there, the question is can you find them at an effective rate. The platform however is a little harder -- believe it or not people turn to eBay because they believe it somehow implies trust; they don't understand that these marketplaces have no visibility to products or sellers. Furthermore you're not big enough to warrant a major build but not small enough to get away with off-the-shelf skins and open-source carts. You need to invest enough to build something that stands out, that meets your customer's approval as secure, reputable.
Magento can certainly get you there although you may also want to look at the hosted carts (BigCommerce which gets my vote, Shopify, Volusion) which lower the barrier to entry so you can focus your investment on styling and marketing.
Blogs are about value, that's what makes them professional, success, or not. If you're simply going to post every new product you've got forget it and find something else. If you can talk shop, get into the fashion niche (difficult to break but huge) then you may have something. The same goes for pinterest and other social sharing communities -- make use of the tools that you can find a strategy for, don't have them just for the sake of having them.
And as far as email, the question is quite basic: did they opt in to get emails from you specifically?
Some other tips for handling the counterfeit impact:
Leverage your authenticity. Every fake site says they're legitimate, few back it up with really easy returns, really good customer support, or real reviews.
Get your manufacturer partners involved. Proactive brands realize that if the customer doesn't know, everyone loses. Encourage your brands to warn about fakes and call you (and other dealers) out by name so people know where to go.
Be authentic. Like I said about blogging, expertise & value work, fluff doesn't. Fake sellers use gimmicks, you need to stay to what's very open and clear so people get the line. Sell honestly.
kyun — 2012-05-26T18:30:27-04:00 — #3
Ted I don't know how you do it everytime, your advice is always intelligent and practical to apply.
The figures given were a real story of ours. I'm sure most sellers unwilling to share these numbers as giving away the margin will draw more competitors, but these are the mindset of petit sellers. These topics (believe it or not) are quite common among business owners (thanks to eBay during its glory time, we manage to open a brick-and-mortar shop and consign our products at departmental stores), there's no secret when a neighbour-owner told us how he successfully made 10 fold of margins by rebranding his products, while how another drinks seller where the margin is near to 600% but closed its business due to wrong marketing strategies. Also there's another guy made his fortune by retailing all the items at less than $1 profit. Figures(margins) are just one side of the story, it is not a measurement of the success level of a business.
Ted I must say marketing on eBay is redundant. There's no play of business skills level on eBay, or very minimal involved. If marketing is important on eBay, the small players won't be able to survive on eBay (or we wouldn't had made our little income during the first few years).
All we now see is the middle-sized sellers being chased out by small players in different ways. Take a simple case, a bag's RRP at $149 at retail store. If a seller managed to source a bag at cost of $50 for a quantity of 500 pcs per order, there are other costs involved than a small player, rental, equipments, utilities, manpower, etc. The cost of a bag could easily jack up to $65 after factor in everything. While for a small player, he could easily source the bags for $60 at a quantity of 12 pcs, sell it for $75 (after deducting various fees by eBay) merely for easy pocket money. That doesn't include the fake goods suppliers at cost of $10-$15 per pc. There's not much space to survive for mid-sized sellers in the long run. Yes there could be a few customers willing to pay over $100 for that bag, but you are counting on luck for that to happen. After all, why not buy from the branded departmental stores when they give even more vouchers and warrants than an ebay seller?
Anyway I agree that people turn to eBay because of trust. However eBay is stupidly exploiting the only valuable thing they have. They're helping the fake good sellers (mainly from China) by promoting their items in front page of searches. Why? Because
1. they have more listings - they're listing over hundreds or even thousands of some repeated items at anytime (yes there's guideline of no more than 7 same listings at same time, but it' is easy to get passed by manipulating the title),
2. have more bids (starting at lower bids, did I mention these are fake items?)
3. more views (again, who doesn't like a $149 bag starting at $0.01?)
It's not worth spending time to compete with the fake goods sellers, if eBay wouldn't do something to protect the genuine sellers. We spent almost 3 years without profits (our net assets actually dropped compared to 2008), gave them enough time to make the rectification. It's time to leave. Sooner or later, most genuine sellers will leave eBay.
Enough my rants on eBay. I won't want to talk about it. Randy Smythe argued better than I do, though he left there much earlier.
Email list we have is compiled by a long list of all the customers who bought from us in the past. They didn't opt in (unless purchase is considered an action of opt-in). But it's sort of grey area. More importantly the list was NOT acquired from 3rd party. The contacts were given by eBay or other platforms to smoothen the communication process during a transaction.
We worry by sending out all 10k emails at once, we'll get labelled at spammer. How could we do it the legit way? Is using aweber or other paid service a better option?
We will now start looking at BigCommerce, Shopify and Volusion. These are the kind of advices we needed so much.
ted_s — 2012-05-26T19:08:48-04:00 — #4
Again it's a really fascinating story -- thanks for the willingness to share.
My experience with counterfeits comes from a different seat at the table working on behalf of the brands making products where I've been involved in consumer education [even got to sit in and present our approach with ICE & the FBI once]. Sufficient to say while the brands are severely impacted, in action makes them a part of the problem rather than the solution.
There's only so much you can do to police the sellers yourself so educating the end customer and pushing up legitimate dealers is a huge part of fighting the battle as is serialization, factory controls and a host of other issues.
But at the end of the day it's always supply & demand. Most people still think you have to go to a shady back market store for a fake. Change the perception and you impact the bottom line.
Whether you send 500 or 10,000 emails won't make a big difference (unless they all go to the same ISP). It's about the customer's perception and the legal rules. It's obviously up to you to draw the line but just remember, reputation is your differentiator. Don't risk it for a quick buck.