Mistakes Sellers Make, Part 1

Let's get down to business.

by Brad and Debra Schepp
- Feb 05, 2014

As you read this article, we trust your holiday sales season of 2013 is fading into memory. Most retailers, both online and off, experience a bit of a lull once the holiday shopping season and the inevitable returns have come and gone. Is there a better time to take a good and close look at your operation and make sure you're still operating on solid ground?

No, we didn't think so either. This series of articles will address mistakes that sellers make, no matter what level of experience they have or how long they've been selling online. The wonderful thing about e-commerce is that it is ever changing. The terrifying thing about it is that it is ever changing!

This first installment in our three-part series will address overall business mistakes sellers may be making. In the next article, we'll look at listing mistakes even the big guys still make, and in the final article we'll consider what happens after the sale. To get some extra voices into the conversation, we've talked with dozens of experienced sellers to get their input, but we'll start with a tip that comes straight from the two of us.

Now is the time to set goals for 2014 and decide how you're going to achieve them, and how you will quantify those achievements

Where have you been and where are you going?

Take some time to set real and measurable goals for your business. The post holiday lull is the perfect time for you to consider where you've been in the last year, sure, but it's also the perfect time to consider where you want to go. People can't improve what they don't measure, so now is the time to set up some goals for 2014 and decide how you're going to achieve those goals, and how you will quantify those achievements.

The goals you set will be ones that come from where your business stands right now, and where you want your business to go, so no one else can do this for you. Once you've done the work, your goals will be as specific to your business as your fingerprints are to your hands.

If you set a goal to increase year-over-year sales 20 percent by June 30, you'll then be able to detail how you're going to do that. Will that be through better sourcing, more social media efforts to spread your brand, or better practices that will save you money on the inside of your operation?

Or maybe your goal is to integrate more balance between family or leisure time and work time. Every merchant feels a little exhausted after the holiday rush, but do you feel that way week after week? Have the other members of your family been struggling with your not being present enough in your non-work life? That may lead you to decide it's time to hire some more help or tweak your operation to make it more efficient.

By now, you've gotten the idea. You will be more successful as a business person and a human if you spend some thinking time before plunging right back into business as usual.

Know your numbers and mind them

A common mistake among newer sellers is to focus too much attention on how much money they're getting from their sales and not enough attention on how much their business is costing them to operate.

It's easy to get excited when the sales start rolling in, but… too many sellers focus on the sales and forget to factor in fees when they calculate their profits

"Not understanding that gross merchandise sales are not profits," answers Chris Taylor, vice president of marketing for Page Mage, a vendor of social and branding tools for online sellers, when we ask about big mistakes. It's easy to get excited when the sales start rolling in, but Taylor reminds us that too many sellers focus on the sales and forget to factor in listing fees and final value fees when they calculate their profits. It is easy then to overestimate just how profitable your business is.

Know your products and your competitors

One of the biggest mistakes sellers make is to panic and chase sales by price alone, notes John Olson, who operates a number of e-commerce sites including American Pond Wholesalers on eBay. He's certainly noticed this among his competitors, whose product costs he knows well.

"Time after time I see them lowering prices to a level that cannot possibly cover their product costs, shipping fees, eBay and PayPal fees, and their own labor or overhead costs," he says. These sellers might find themselves in a much better position if they looked at their products a little broader and deeper. He notes that we might need Captain Kirk here to "go where no one has gone before!"

"Far better," he explains, "would be to seek out new items or ancillary items that few, if any sellers are offering. Sure, it takes a little more work, but it is a billion times more productive."

Olson also recommends that sellers look for items they could group together for sale. This not only offers better value to customers, but it saves sellers costs on shipping and overhead, too.

eBay seller Robert Manigold, of that1otherdude, supports this idea of knowing your products and competitors well enough to find the niche that is yours alone. He notes that some sellers fail to understand when they should sell an item alone, or even when to sell the item versus selling the parts of the item.

"Selling a car one part at a time might be more lucrative than selling the entire car," he suggests. Of course, you won't know which way to go until you have a very clear understanding of your products and the products your competitors offer.

Although Top-rated Seller status offers reduced fees, the amount it saved didn't come close to the business we gave up to maintain our status

Don't always shoot for the top

Now that sounds like counterintuitive advice if we've ever heard it, but Ben Skigen, e-commerce director for Tool King in Lakewood, CO—an eBay presence since the very early 2000s—saw this as his company's mistake last year.

"I think one of the biggest mistakes we made this year was making Top-rated Seller status a top priority," he says. "Although Top-rated Seller status offers reduced listing fees and commissions, the amount it saved didn't come anywhere close to the business we gave up to maintain our status in the program."

Skigen explains that his company reduced eBay listings to include only locally stocked inventory that could ship within the mandatory 24-hour time frame required for the Top-rated Seller program.

"We've decided to start including items shipped to customers directly from manufacturers or distributors," he says. "Although these orders may take a little bit more time to process, we believe that the increased volume will more than make up for the savings we risk losing should these slightly longer processing times no longer qualify us for Top-rated Seller status."

So, now that you've come through the hustle and rush of holiday selling, and the nights are long and cold (at least they are here), you've got some thinking to occupy your time and mind. One of the most exciting things about operating your own business is the opportunity to re-evaluate what you do, and the autonomy to decide you'd like to branch out and try some things you may not have thought of before.

We hope you've found some of these recommendations thought provoking, and we'll be back before you know it with some specific advice about avoiding listing mistakes.

About the Author

Brad and Debra Schepp are the authors of 20 books, including eBay PowerSeller Secrets and The Official Alibaba.com Success Guide: Insider Tips and Strategies for Sourcing Products from the World's Largest B2B Marketplace. Their most recent book, which Deb co-authored with John Lawson, Kick Ass Social Commerce for E-preneurs: It's Not About Likes—It's About Sales, was recently named the 2015 Small Business Book of the Year in the social media category.

For further information, visit Brad and Deb's website, bradanddeb.com.

Opinions expressed here may not be shared by Auctiva Corp. and/or its principals.

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