ebay.co.uk

Not another eBay review? As the former operator of a full time eBay-based business I hope that I may be able to offer something useful. If not, I’m sure I’ll hear about it!

What’s it all about?
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eBay is the world’s largest online auction site… as most of us will have read at some time or another. What is an online auction? How does it work? Is it safe? Can I make a profit from selling? Can I buy a bargain? All these questions will be addressed (and maybe even answered).

In a conventional auction the winning bidder is the person who offers the highest amount (bid). Bidding continues, usually without limit, until nobody wishes to make a higher offer. Online auctions like eBay operate a time-limited bidding system. Under this method each item offered for sale has an end time. The winning bidder is the person offering the highest amount when the sale closes. This is an important difference and leads to one of the peculiarities of online auctions, ‘sniping’. This will be explained a little later.

eBay is a little like a car boot sale; there is a mix of ‘private’ sellers and professional traders. There are advantages to dealing with both classes but it is important to recognise the differences, more of this later! There can also be advantages for both classes of seller in using eBay.

Under the overall eBay umbrella there are a number of national sites of which the most useful to most Ciao UK readers will be eBay UK (www.ebay.co.uk). The importance of the national grouping is to identify those items which are offered in your own country as payment and shipping costs can introduce obstacles to smooth trading across international borders (not to mention possible customs charges). Some traders will choose to ship internationally but be sure to be clear about the costs!

How does it all work?
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Let’s start by examining the mechanics of using eBay before moving on to some of my hints and tips to get the most out of the experience. The whole experience is about buying and selling so logically we shall start with…

### Buying ###

Buying on eBay for the first time can be an intimidating experience but really it is quite straightforward, as we shall see! Before you can place a bid, or do much else, you need to register. If you have registered on other websites this should be a familiar experience. Don’t worry, unlike some organisations, eBay don’t seem to generate much extra email.

Once you are registered you can jump straight in and start bidding… STOP… just because you can doesn’t mean you must bid immediately. At least read some more of this review before taking the plunge.

Having decided what you want to buy (you did have something in mind, right?) you need to see what is being offered. There are two ways to find the items you want; browse and search.

Browse uses eBay’s ‘categories’. These are groups of similar items and are arranged in a tree structure. For example the main category might be ‘Books’, if you click on that you will find you have the choice of sub-categories, such as ‘Fiction’. Within ‘Fiction’ there will be many sub-sub-categories, let’s try ‘Science Fiction’. Having gone through this tree you will see a list of the items currently being offered. When I looked there were over 3,000 science fiction books for sale.

Search allows you to make a more detailed choice of item. Let us imagine that you wanted to buy a Star Trek novel (and why not?). If you select ‘Search’ from the main navigation bar you will see the search screen appear. There are a number of tabs for various options but we shall stick to the basic search which is the default. This searches the currently offered items and is most relevant if you are looking for an item to buy. Enter the search terms required in the main box, say ‘Star Trek’, then hit the search button. When I tried I got nearly 5,000 items listed. When I looked I found many were not books (DVD’s, models, collectables, photographs etc) as we wanted book we can narrow the search. Go back to ‘Search’ and try again. Enter ‘Star Trek’ again, but select ‘Books’ as the category. I now get around 700, still a lot of books, but a bit more manageable!

After either searching or browsing you will come to the same listing display screen. Each item is listed in order of the finish time with the shortest times first. If you look at the right-hand column on screen you will see ‘Time left’ which is to the close of the auction for that item. The items have a one or two line description, the current price and the number of bids received. To the left of the screen you may see either a thumbnail picture or a camera symbol. The thumbnail indicates that the seller has paid extra to attract attention (!), the symbol indicated that there is a photograph available in item listing. Clicking on the description takes you to the main item listing page.

In the listing you will see all the information you need to decide whether you wish to bid. At the top right is some information about the seller; the user ID, feedback ratings (see below) and links to their feedback comments and other items for sale. You will also see photograph(s), of the item, a more or less useful description, the time remaining on the sale, the current bid and bidder (if any) and the p&p charges (usually).

Assuming you decide to bid you enter the mysterious world of ‘proxy bidding’. As we said earlier, this differs from a traditional auction in that there is a time limit, which may be days away. So that you don’t need to site at the computer until the end of the auction you enter the maximum you would wish to pay. The system records this but registers only the minimum bid required. If others place bids later the system will increase your bid to beat them, up to your limit. This sounds more complicated to describe than in practice so I’ll give a demonstration.

You are the first bidder and enter a bid of £5
The starting bid is £1
Another bidder offers £1.50
The proxy bidding system bids £1.55 on your behalf

If no more bids are received you will win the item for £1.55. If another bidder offers more than your limit (£5) you will lose. The step sizes are determined automatically and increase with the current price.

There is one additional option here, if you are the first bidder the seller may offer a ‘Buy It Now’ (BIN) price. If you bid this amount you will win the auction immediately.

If you win you will receive an email with instructions for payment. Deal done.

### Selling ###

As you might imagine, selling is a little more complex than buying, but still not too difficult. As with buying you will need to have registered with eBay before beginning.

The first step in listing an item for sale is to decide on the category. In many cases this is obvious. If we go back to our Star Trek novel then it obviously belongs in Books/Fiction/Science Fiction, the best category for some other items may be less obvious. If in doubt the best way is to search for similar items and see where they are being listed.

You will be lead step by step through the process by eBay. You must choose a category, enter a description, a starting price and a length of auction between 1 and 10 days. Other optional settings include p&p (some sellers only advise after the sale), photograph(s), BIN and whether you wish to set a reserve price. You may also choose (at a price) to add various enhancements to improve the visibility of your advertisement.

Having checked that your ad looks as you expected and the details are correct you can submit it. Don’t forget to take a look how the listing fees add up. I’m not going to reproduce the whole eBay fee scale here, there’s no point as you can read the information direct from them and it should be up to date and correct! For a quick pointer, an item starting under a pound costs a basic 15p to list, from £1 to £5 costs 20p. Any additional features you have used, such as BIN or enhanced listing options, will cost you more.

You will receive an email confirming the details of you listing then all you have to do is sit back and wait for the bids to pour in. At the close of your auction you will receive a further email telling you whether the item sold and, if so, the price and buyer. You should have specified how you wished to receive payment and it is now up to the buyer to send the sum due – and in due course for you to ship the goods purchased.

If you managed to sell the item there is a further charge payable to eBay, the Final Value Fee. This is a percentage of the final price achieved and ranges from 1.75% to 5.25% depending on the price (the lower the price the greater the percentage).

Fees are payable monthly by direct debit or by automated credit card payment. Alternatively you may make one off payments by cheque or by credit card using PayPal.

### Feedback ###

In an attempt to give some guidance to participants, eBay offers buyers and sellers an opportunity to rate the service they have received. This is rated as positive, neutral or negative depending on your experience. A short comment is also left to explain the rating (eg – Very quick payment). A total score is shown for each member where a positive scores +1 and a negative –1. This helps to build confidence, if a member has thousands of positive comments it is probably safe to deal with him (her) again.

Hints and Tips
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You now have an idea of the mechanics of eBay so how about some of the hints and tips I promised earlier? First a little about buying (bearing in mind that I mainly sell!).

### Best buys ###

Before you begin decide what you want to buy and how much you want to spend. Then check the best retail prices! I have lost count of the times I have seen people buying second user items at a higher price than the new cost. Just because it’s an auction doesn’t mean it’s a bargain. When checking prices remember to include the p&p costs – these can sometimes be very steep on eBay. This can be justified to an extent, most sellers don’t have heavily discounted trade accounts with couriers, but it is also true that some sellers load the charges.

Beware sniping wars. I mentioned sniping at the start of this article. This phenomenon arises because of the time-limited nature of the sales. An item might be listed for ten days and attract no bids then in a sudden rush, last minute bidders come in trying to snatch the item at a low price. The idea is to avoid disclosing your interest then bid just above the existing highest bidder leaving no time for them to respond. Now you may be thinking that the proxy bidding system should prevent this. The point is that many people DON’T actually enter their highest price or resent losing an item by a few pence to a late bid. The secret is to know what you want to spend and stick to it.

Whether sniping or bidding during the run of the auction it is easy to become emotionally attached to an item – just one more bid, I don’t want to lose it for a few pence/pounds etc. This also happens in real life auctions so don’t think it is a uniquely online problem. Just remember the price you decided on. If the item sells for more than that price then you have not lost – the item was merely too expensive.

Take care when looking at feedback, read the comments as well as looking at the numbers and note whether most of the feedback is for a member buying rather than selling. Check out a few of the previous items sold and see if they are generally trading in the same area – should give some confidence that they know what they are doing.

Read the description closely. Don’t assume anything. Check the exact specification. Are all parts/accessories supplied? What’s the condition, is the item new/as new/second user/scrap? If you’re not sure, ask the seller. This is why you should avoid last minute decisions. Remember that most professional sellers aren’t sitting at the keyboard waiting for your question – especially at night or on weekends.

If you don’t want it, don’t bid. Remember you are entering a contract to buy.

If the trader is VAT registered, check whether the bid price (and p&p) includes VAT or whether it will be added later - either is acceptable to eBay.

Look at the accepted payment methods. Most sellers will accept cheques but it can by time consuming waiting for clearance. The most widely accepted online payment system is PayPal but some sellers add a surcharge to cover their costs. Check beforehand that you are happy with the options.

Finally, check that the seller is in UK or happy to ship here.

### Selling Secrets ###

Not secrets really but applied common sense.

Know your prices. You can sell anything… at a price. Before you list anything check what people are paying for similar items. Use the advanced search option to check on closed sales. Check that the items you are comparing are actually the same (small print can make a big difference). Look out for ‘rogue’ prices. Occasionally you will find that an item has sold for much more than expected, this may be because a particular buyer had an urgent need for this item on this day – don’t rely on it happening again. Also be aware that prices vary over time. If the price used to be higher but has dropped recently, take the lower price as your best guess.

When setting the start price remember that the listing fees are in bands. Is it better to sell an item for 99p or £1? Actually 99p makes you more money –

99p – listing fee (15p) – final value fee (5.75%=6p) = 78p
£1 – listing fee (20p) – final value fee (5.75%=6p) = 74p

So less really is more!

If at all possible include a photograph. It makes a tremendous difference to the success of your sale, not only does it give the buyer a chance to see what they are bidding for but it also, psychologically, makes the item ‘real’ for the buyer.

Make sure your picture is good. Make the best of your item. In focus, in frame and well lit should be the minimum criteria. If a seller can’t operate a camera then I would lack confidence in them…

Don’t worry if you go all the way without seeing any bids, they tend to come in the last few hours (or minutes).

If an item doesn’t sell then relist it. If it sells on the second attempt then your second listing fees will be refunded by eBay. Items often don’t sell simply because the right buyer didn’t come along at the right moment. Give them another chance. But… consider whether you should be changing the price, altering the description or whatever before relisting.

Make your sales end at a sensible time. Having said that most bids come in the last hour of your sale, does it make sense to end at 3am, or indeed 3pm, when there are fewer bidders around? Peak times are 7.30-9.30pm and Saturdays (in my experience) are best of all. You can time your auctions either by submitting the ads at the relevant time or by paying for a delayed listing start time.

Keep good records. It gets very confusing when you are listing a lot of items. Who has paid (how much), which items shipped (and when), which items need to be relisted, which are due to close, which buyers haven’t paid – speaking of which…

Non-Paying Bidders – the bane of all sellers’ lives. A proportion of buyers simply do not pay. Some never make any contact, others engage in endless communication without any sign of payment. Using your great database track payments. Send reminders, use the eBay Non-Paying Bidder (NPB) process, leave negative feedback if buyers don’t pay.

NPB Process – eBay recognises that some buyers are not honest. There is a system in place to give the seller a (partial) refund if they don’t get paid. It takes time to operate the system, as you must allow the buyer a chance to respond, but I urge everyone to use it. If a buyer has three separate reports against them they may have their accounts suspended by eBay (thus saving the rest of us later problems). If nobody reports then eBay can’t act.

Only ship on cleared funds. Usually only a problem for cheques – they do sometimes bounce so wait until the bank confirms the money is cleared before popping that £1000 laptop in the post.

Insure your goods in transit. Whatever some sellers claim, the goods are your responsibility until received by the buyer. My experience over some thousands of shipments is that around 0.5% fail to arrive and about the same are damaged. Some shipping methods include a degree of insurance, check it is adequate for the value of the goods. If you are not using insurance then put aside a contingency fund for losses. Don’t forget that you will be refunding not only the purchase price but also the p&p (and losing your eBay fees).

Consider using BIN with your auction listings – set the BIN price around the best price you would expect to get. I find around 20% of my item sell on BIN. This means less time to wait and less stress – straight to the final price!

Avoid setting reserve prices. I dislike reserves as they merely seem to upset buyers while achieving nothing of value. The idea is to attract buyers by setting a very low start price but you (secretly) won’t actually accept this price. For example, I’m selling a laptop. I want to get at least £200 which is what I set as the reserve. In order to attract lots of interest I set the start price at 1p. Hurrah a laptop for a penny! Until a potential buyer enters a bid in which case they are told that they are below the reserve. Next mouse click tends to be away to another ad.

Leave feedback – it is the best way of encouraging buyers to do the same.

State p&p up front, that way there can be no arguments about it later. Calculate the figure properly – it’s not just the cost of a stamp. Include packaging materials, time and costs of despatch (time queuing at the Post Office!). You may also wish to defray some of your charges here – such as payment handling fees. Remember that eBay do not include the p&p in the final value fee.

If considering selling on a worldwide basis think carefully about costs and check your weights beforehand - small differences can add up to costly mistakes. Another matter for overseas sales is the payment method. Really the only usable option is PayPal. Foreign currency cheques cost money (usually at least £5) to clear and can take 4 weeks or more. A final prolem is exchange rates - the maount you finally get depends on the exchange rate movements between the price being agreed and your receiving the payment (haence PayPal).

Be honest in your descriptions. Self-evident. I’d hope.

A Couple of Legalish Points
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Remember that the contract of sale is between the buyer and seller. Such contract as exists with eBay is purely in regard of the supply of services to the two parties.

If you are buying from overseas (especially outside the EU) check your liability for import duties! You can end up paying more than you expected...

VAT is chargeable on eBay's fees, as with most goods and services supplied within the EU. This was certainly not at eBay's instigation (as I understand it they avoided it as long as possible) and makes only a marginal difference to most sellers. The fees listed include VAT, if you are registered for VAT you can offset this as an input cost. If you are not VAT registered you can comfort yourself with the fact that you aren't required to charge VAT on your sales!

Can I Make Money?
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Well, as a former full-time eBay trader my answer would have to be, yes, but… It is equally easy to lose money and not even know it. Keep full records of expenses – especially eBay fees. A small profit can quickly turn into a loss when one accounts for all your associated fees.

The important thing is to research tirelessly. The more you know your market the better the chance of making a profit. You must know the value of the stock you are selling NOW not what it was a month or a year ago. Don’t buy stock unless you are confident you can sell it. You can sell anything on eBay – at the right price. Unfortunately that may not be the right price for you.

Finally, don’t forget the taxman. Keep those receipts so that you can defray your liability as far as possible!

Bargains Galore?
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Sometimes… Know what you want, know the value of the goods and don’t get lost in the frenzy.

And Finally…
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Apologies for the length of this review. There is still much to be said about eBay but you can read most of it in the help pages on the site. Tread with caution and it offers virtually boundless opportunities to buy and sell. Remember when selling that the cost is typically around 8% for eBay alone – in most cases you can add further fees for the payment transfers.

I have sold thousands of items and generally had no problems with eBay. The facilities continue to improve but the basics are already sound – a massive base of buyers and sellers.

Enjoy the experience and when you want an even more heady taste of excitement get down to a real life auction and get your hand in the air!

© Paul Morris 2004

Information is believed to be accurate at the time of writing. Readers should always check with the supplier of goods or services to confirm current prices and specifications.

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