BUSINESS ON THE WORLD WIDE WEB:

where "word of keystroke" begins

May 6, 1999 -- Ebay and ecommerce lessons

Transcript of the live chat session that took place Thursday, May 6, 1999. These sessions are normally scheduled for 12 noon-1 PM Eastern Time every Thursday. Please note that the US is now on Daylight Savings Time. So in international terms, we are on at GMT -4.

For Guide to eBay for sellers: practical advice from one seller to another, see www.samizdat.com/ebay.html

Since the chat itself happens at a rapid pace, it's often difficult to note interesting facts in particular URLs as they appear on-line. Here's a place to take a more leisurely look. I've rearranged some of the pieces to try to capture the various threads of discussion (which sometimes get lost in the rush of live chat).

Please send email with your follow-on questions and comments, and suggestions for topics we should focus on in future sessions. So long as the volume of email responses is manageable, I'll post the most pertinent ones here for all to see.

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For transcripts of previous sessions and a list of future topics, www.samizdat.com/chat.html.

For an article on how to make "business chat" work (based on this experience), www.samizdat.com/events.html.

For articles on related to online auctions, see www.samizdat.com/auc.html

Our online store at Yahoo
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My seller's profile at eBay (with all customer feedback)

Threads (reconstructed after the fact):

Today's Participants

Introductions

Richard Seltzer -- We'll be getting started in about 13 minutes. Today we want to talk about Ebay and other auction sites and what you can learn about e-commerce by selling there.

Richard Seltzer -- Welcome, Armin. We'll be getting started in a couple minutes. Please introduce yourself and let us know your interests.

Armin -- Hi Richard, sorry -- I logged in and went away for a few minutes. My name is Armin Zundel and I am curios why ebay is so successful. Coming from Germany I can not imagine a service like ebay being so successful in my home country. I just want to listen to the chat and hear about your experiences

Richard Seltzer -- Armin -- As for Ebay's success, they have succeeded in doing what we were talking about in a earlier series of chats -- they have created "positive chaos", an environment in which users provide much of the excitement and value of the site (a la Linux development).

Armin -- Richard -- that might be one of the cultural differences. In Germany people don't want chaos -- they are much less spontanous...

Ron Rothenberg -- armin - about 10% of my ebay buyers are from germany.

Richard Seltzer -- Welcome, Ron. Please introduce yourself and let us know your interests. (And thanks again for the digital camera -- that makes an enormous difference at Ebay -- I want to talk about that later.)

Ron Rothenberg -- I am Ron Rothenberg - financial planner, real estate broker and ebay merchant.

anthony alvarez -- Hello richard, this is anthony from acunet.net, inc. How are U?

Richard Seltzer -- Welcome, Anthony. Have you had occasion to try Ebay or any of the other auction sites? If so, tell us about your experience (either as buyer or seller) and what you learned.

anthony alvarez -- I bought a scsi hard drive and a computer case from ebay about 2 years ago. Good experience. The site wasnt as populuar then as it is now.

Richard Seltzer -- Anthony -- two years ago on Ebay? Wow! You are an early adopter. You ought to dive in now. It's probably quite different. In fact, in terms of number of users (and actually in terms of the culture/environment) it's very similar to the Internet as a whole 5-6 years ago.

Richard Seltzer -- Welcome, Chris and Bob, please introduce yourselves and let us know your interests.

Bob Zwick -- Hello everyone. Bob here, a consultant in Dallas, TX USA.

Richard Seltzer -- Welcome, Bob Fleischer and george, please introduce yourselves and dive in. Are you auction users?

Bob Fleischer -- I'm in Compaq Services. While I've been using the web for over 5 years, and buying stuff online about as soon as there was anything to buy, I haven't yet looked at an auction site like eBay (mostly for lack of time -- my basement and attic are filled with potential merchandise!) I have been a satisfied user of onSale's auction for purchasing computer equipment.

Richard Seltzer -- Welcome, Terry. We're getting near the end of the hour, but please introduce yourself and let us know your interests. If you don't have time to ask or say what you want, please email me seltzer@samizdat.com and I'll add your comment to the transcript. Also please join us next week -- looks like a hot enough topic to continue. 

Ebay lessons

Richard Seltzer -- Armin -- I'll try to give you a quick summary of what I'm learning at Ebay. Imagine you had a box with 2000 old bottle caps, and you knew that demand was such that you could sell them for anywhere from 50 cents to $4 a piece at Ebay. Could you do so profitably? (i.e., can you streamline your procedures such that you could pay someone $10/hour to do the grunt work and still make a reasonable profit?) It's an interesting experiment. One factor is the packaging -- can you create batches of bottle caps that are intriguing to collectors so instead of selling them one at a time, you are selling them a dozen, two dozen, or even three dozen at a time. Another factor is the marketing -- interacting with the collectors so they get to know and trust you and so you get to know what they are looking for and what they value most (and hence what batches will work best). Another factor is the graphics -- if you are limited to small webcam style photos, you are also limited to very small batches of bottle caps (max of about 6); with a digital camera, you can handle batches of three dozen and the photos are far more appealing and also convey more detailed information about condition (which is very important to collectors.) It's amazing what you can learn by getting down in the trenches and doing everything that's necessary for the online sale. (with selling comics, I found that items that at first sold for $3, when I was new at Ebay, now -- with lots of feedback and reputation, as well as more marketing savvy -- that same comic would probably go for about $20, and some have gone for more than $100 a piece. Yes, there's a lot to learn from diving in and also from sharing your experiences with others.

Richard Seltzer -- While I'm making a few dollars selling on Ebay, the main value to me is what I'm learning about doing business online. For instance, keep in mind that Ebay could be used as a ready-made lab for testing the market for new products. Quick and cheap. You could test the pricing/demand for particular products and with one message or another. You can learn about the effect of photos on sales and the effect of large photos vs. small ones and one photo vs. another. Maybe you think your product should be worth $100. Post it at Ebay with a starting price of $1-3 and see how high it goes. Do that not just once, but several weeks in a row, and modify your message, in response to the reactions you are getting. Send email to buyers and even losing bidders to find out what interested them and why. etc.

Richard Seltzer -- Keep in mind that Ebay is great for spring cleaning -- the less intrinsic value an item has the more value it is likely to have 30-40 years later as a collectible, because few people would have saved it. So the junk you never got around to throwing away can be turned into cash. That's the case with my "bottle caps" which I never treated as a "collection" -- it was just a box of junk that I happened to keep. And now I can't help but be intrigued by the challenge of how to profitably sell them. 

Marketing at Ebay -- how do people find your auctions?

Bob Zwick -- Richard and Ron - tell us a little about how you market your items at eBay. How people find "your" stuff in the huge maze that eBay is.

Ron Rothenberg -- Bob, I pick items that many people want, and not too many people are selling. Digital cameras, keyboards, mouses, personal organizers. I look for things with high demand, w/o a flood of sellers.

Richard Seltzer -- Bob -- At Ebay you can browse through their 1500 categories, or you can simply search. I almost always search -- which cuts across all the categories. You can search for words in the title/description, or for all the auctions offered by the same vendor. quick and handy.

Ron Rothenberg -- yes, I imagine most people find me by SEARCH. They know they are looking for something, and search for it. Title lines are very important.

Need for historical data on winning bids for classes of items?

anthony alvarez -- For both buyers and sellers, i would like ebay to post historical winning bids on items. Lets say I want to buy a used cell phone, it would be nice to be able to do a search against any item just to see what price range it SOLD for in the past. Just like when we get similiar historical data for stocks.

Ron Rothenberg -- results are posted on ebay - problem is, not all items are created equal. I sell some cameras with free air express shipping, and some in which seller pays for shipping. how do you catalog both of those like stocks, which are identical. actually the "not knowing" adds to the fun, I think .
anthony alvarez -- ok

Ron Rothenberg -- the market is still economically imperfect -- bidders have reasons to favor one seller over another, or just to be capricious. that makes it more fun than the stock market, which also has its share of imperfection and caprice.

Richard Seltzer -- Ron -- I agree 100% about the fun and the capriciousness. Sometimes an item will sell for far less than you expect, and sometimes for far more. The averages are reasonably predictable. But it's fun (I'm getting addicted to) checking how all your auctions are doing several times a day (or near the end, several times an hour). 

Community aspects of auction sites

anthony alvarez -- both amazon & ebay nicely combine commerce and chat in that buyer/sellers can post their opinions about each other (ebay) and the products (amazon).

Richard Seltzer -- Anthony -- Yes, there's great value in the community aspects of an auction site; that's how it can become self-regulating and also how it can snowball. As for posting historical bids, that would probably be of more value at a Web site devoted to selling brand new mass manufactured consumer merchandise. At Ebay, much of what is sold is second hand or collectibles, or refurbished/returned goods, so there's really no way to compare them apples to apples. The condition, the exact description, etc. have an enormous effect on price. More interesting, the message -- how you word your description -- and the photo (which you really should have) make a big difference in price. So knowing the max for a particular model or a particular product doesn't really tell you much. 

Need for digital cameras

Richard Seltzer -- Ron -- As you noted in our last chat about Ebay, digital cameras are perfect for this environment -- everybody selling regularly at Ebay eventually realizes that they need a digital camera.

Ron Rothenberg -- almost 1/2 my customers are ebay sellers, or want to be. a sure way to tell is if they have feedback over 100 - they're either a seller or a compulsive buyer. 

The selling power of photos

Richard Seltzer -- Re: photos. Playing with my camera and Ebay, I've learned an interesting lesson (okay, so some people take a long while to recognize the obvious). Text drives people to a Web site -- or even to a product offering at Ebay (searching is text based). But once they arrive, it is photos that sell. I mean photos of products, which are well done and large enough, have an emotional impact. Text drives traffic. But photos sell. Once I was able to take good digital photos of my comics, I found myself literally falling in love with some of those old comics, with their amazing cover art; it became really hard to part with them. (Keep in mind that decorative graphics and photos that have nothing to do with products for sale are still of very questionable value, and are often negative. But for e-commerce, you need to show what you want to sell.)

Ron Rothenberg -- yes, one or two pictures are nice. I think there is a problem with some people overdoing the photos. takes forever to load. some people forget that most of the world is still at 28.8 or on AOL.

Richard Seltzer -- Ron -- Yes, regarding load time. I stick to just one picture, but a good size one, now that I can do that. Once people have indicated an interest in a particular product, they are willing to wait probably as much as a minute for the photo to load, but they won't want to go any longer than that.

Foreign (non-US) orders at Ebay

Ron Rothenberg -- I am surprised at the number of international orders. Many in other countries are motivated by different factors than americans - factors such as availability of a product, and reduced customs duty.

Armin -- I am also suprised about the amount of international orders. I am thinking about the cost for shipping...

Ron Rothenberg -- Shipping costs have dropped dramatically in recent years -- to send an under-4 lb. parcel to most countries is usually less than $10. there are some exception.

Richard Seltzer -- Armin -- Actually, one of my best Ebay customers is in Germany. And another excellent customer is in the Netherlands. Still another is in Qatar. The international marketplace means that there are likely to be interesting demand for virtually anything. (Hence they have over 2 million items for sale right now). 

The effect (or non-effect) of shipping costs

Ron Rothenberg -- people don't seem to care much about the cost of postage and shipping. I sell many $20 items - bidders send the check by overnite mail (at employers expense) and want it back by overnite mail. Result: $20 item, $35 shipping. i am convinced that UPS, USPS and FEDEX are the real winners here.

Richard Seltzer -- Ron -- Amen about the shipping. I've been dealing in items that can readily fit in a flat rate Priority Mail envelope -- I do that for all the comics I sell. So whether the buyer is getting one comic or 5, the shipping price (known upfront) is $3.20. This is a strong motivation for someone buying one comic to buy others as well, which helps drive up bids, and also greatly simplifies my logistics. For 45 comic book auctions, I might typically end up having to ship just 15 packages (and keep track of 15 customers).

Ron Rothenberg -- I always cut good deals on shipping - no shipping charge if you buy three or more items. free shipping to active servicepeople at apo/fpo addresses. overseas shipping at actual marginal postage. on the other hand, i get a lot of people who are eager to drive 100 miles and pick the item up at my house to save $5. 

Operating in a global marketplace

Ron Rothenberg -- I heard the author of "the lexus and the olive tree" on radio last night. he said, "globalization is getting deeper and cheaper."

Richard Seltzer -- Re: globalization. I've had a merchant credit card account for about five years. For most of that time, it was just a cost -- I was paying more per month for the service than I was getting in credit card sales. Each month I'd kick myself -- why am I doing this? But I kept it up, thinking that eventually it could be very helpful, and setup is such a hassle it would be great to have it in place. Now I'm getting several credit card orders a day -- about half of which are from foreign customers, where the credit card greatly simplifies the transaction, because there is no need for currency conversion.
Ron Rothenberg -- Just sent a keyboard to brazil -- $30 for the keyboard, $40 for shipping. The buyer still thinks it was a bargain. 

Stock or drop ship?

Bob Zwick -- Ron - do you maintain stock of the items you sell or do you order and dropship on demand?

Ron Rothenberg -- no, I have a large stock of items. I buy them at wholesale auctions and clearances and liquidations. i would love to be able to dropship, but can't get anything at near the prices that some wholesalers are dumping them at. 

Want to sell without holding inventory (using drop shipping) -- looking for suggestions

Chris -- I hope someone can redirect me if this is not the right forum for this question. I'm trying to start an internet marketing/sales business where I can sell products without holding inventory. I have not yet found a product i'm interested or a resource/listing of companies/product out there to sell. Can someone help me?

Ron Rothenberg -- many distributors drop ship, Chris. This may be what you want. They ship the product with YOUR name on the invoice. You do the selling, they do the fulfillment.

Chris -- Thanks Ron! Where can I get a list of distributors/ products willing to sell this way.

Ron Rothenberg -- check "computer reseller news" for starters. chris, do you know what type of products you want to sell?

Chris -- Seems there is a large market for Diet drugs/products

Ron Rothenberg -- there is a large market, and a large number of suppliers, honest and otherwise. not sure where you would get those drop-shipped - I'm sure there are overseas distributors for any kind of pharmaceutical.

How many auctions can you manage at a time?

Bob Zwick -- How many auctions is it feasible for one person to manage ? Are there any tools you use to help?

Ron Rothenberg -- both amazon and ebay are promising better auction mgmt tools. I am finding it hard to manage 20-30 / day. Very confusing. People have one ebay name, then email you from a spouse's account, then re-email you from another account, then want an item shipped to their work address, which is different from their home address, which is different from the address on the check. it drives me nuts.

Richard Seltzer -- Bob Zwick -- I understand from Tracy Marks that there are a variety of auction-management software tools. You might want to email her directly. (You could find her email address in the last transcript www.samizdat.com/chat103.html As for me, I have little difficulty handling 40-60. I post them all on the weekend, so the auctions will end on weekend, which seems to generate more last-minute-frenzy bidding. If I were doing it for a living, I guess I'd post 2-3 dozen items each evening. (Once again the end time matters, for a largely US audience -- and the time you begin is the time you end. Ebay could/should provide sellers with more flexbility/control over the end time of auctions; but they don't).

Ron Rothenberg -- i could do 100/day, if people were more cooperative and consistent, and tools were better. The worst is when I just get a check in an envelope, and the price, name, address don't match up to anything! and no identifying info anywhere.

Richard Seltzer -- Ron -- the number of auction a person can reasonably manage depends very much on the type of merchandise. You probably get a high percentage of one-time one-item customers. I get a high percentage of repeat and multi-item customers. So 45 auctions translates to 15 customers and of those 15, probably 8 bought from me before, and I probably have credit card info on file for 4 of those. (When I run out of comic books, I'll still have a number of bottle caps to sell in that same mode. After that, I'm not sure. But I certainly will want to continue -- selling (not just buying) can be addictive).

Ron Rothenberg -- i get a reasonable number of repeat customers - those buying two or three things -- about 1/5 of the pkgs i send out each day have more than one item. But that actually makes my recordkeeping harder.

Ron Rothenberg -- amazon and ebay now have account mgrs for power sellers, but they do not seem to understand many of the problems sellers face.

Ron Rothenberg -- i get the highest prices in the evening -- i am surprised that no auction service lets you do proxy selling -- set up an auction to start in 3 or 6 hours. there is proxy bidding, but no proxy selling. sellers have to be there for the start of the auction.

Richard Seltzer -- Keeping track of customers and orders is in part why I (for the relatively low price items I sell) ship the merchandise immediately, as soon as the buyers tells me his/her address, without waiting for payment. That simplifies matters, leads to ecstatic customers, (most love fast delivery), and hence leads to much higher prices. (My record so far is $121 for a comic that cost me 15 cents when I was a kid). I trust people and they come through, time and again. No bad debts yet (knock on wood). (FYI - my good customer in Germany pays by sending cash through the mail. Everybody's different as to how they like to operate. But there are a lot of trustworthy people out there. And the feedback mechanism at Ebay helps keep them trustworthy.)

Ron Rothenberg -- i have only had 3 bad checks out of over 8000 personal checks. not bad at all.

Ron Rothenberg -- i cross-ship on request and on certain items.

Richard Seltzer -- Ron -- what does "cross-ship" mean? (pardon my ignorance).

Ron Rothenberg -- cross-ship means I ship the goods at the same time you ship the check = like we did. 

Wrapup

anthony alvarez -- have to run, take care richard

Richard Seltzer -- All, it's time to wrap up. I do want to continue this topic next week and probably beyond. There's much to learn from Ebay -- both about how to use it directly yourself for fun and profit and also lessons about e-commerce in general (such as the importance of relationships and reputation, as opposed to automated transactions). As usual, I'll post the edited transcript in a few days. Check www.samizdat.com/#chat Also please send me your followon comments for addition to the transcript seltzer@samizdat.com
Please join us again next Thursday. And please spread the word. (We'd love to have someone from an auction company join us and provide an inside perspective.)

Richard Seltzer -- Thanks to all. Once again I learned a lot -- and those are the kinds of sessions I enjoy most. 

Other auction articles by Richard Seltzer

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The full text of Richard Seltzer's books The Social Web, Take Charge of Your Web Site, Shop Online the Lazy Way, and The Way of the Web, plus more than a hundred related articles are available on CD ROM My Internet: a Personal View of Internet Business Opportunities.

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