Basic Auction Management

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Basic Auction Management

The biggest reason any business fails is due to poor management. The sad fact is that in most societies, citizens are trained to be good workers, not good entrepreneurs.

However, if you don't learn to manage your business well, it will fail. With your eBay business one of the most important parts to being a good manager is having the ability to manage your auctions efficiently.

No two eBay businesses are alike. They carry different types of inventory, sell to different types of customers, have different products sources, and so on. However, there are some aspects that are similar to all eBay businesses.

In this chapter, we'll cover the basics of good auction management that are common to most eBay businesses. Most of what you'll find here is for newer sellers that have not reached a high level of sales volume, but will give you a base knowledge of how to manage your business well enough to allow for growth.

Don't List What You Don't Have

This may seem like a very obvious and simple thing to do, and for the most part it is. But you wouldn't believe how many times I've heard from sellers that mistakenly listed an item more times than they had it in their inventory!

It's not too uncommon of a mistake. Chances are you'll do it at least once in your lifetime. Hopefully it won't be until you go to ship the item that you discover you've run out!

There's a very simple solution that I used to prevent this from happening. I organized my inventory into two separate areas. One area was designated for items that I have not yet listed on eBay.

When I was ready to start listing more items, I would browse through this section to find items that I wanted to list. I then grabbed those items and moved them out of the unlisted-items area.

Normally, since most of the items I sold were smaller, I would often carry the items right to my computer. One by one I would list an item (or prepare a listing for that item in my auction management software). After preparing the listing, I would take that item and place it in the area designated for items that had been listed.

Then I would go back to my computer and do the same thing with the next item. One at a time, I would repeat this process until all items were listed and placed in the area designated for listed items.

That prevented me from ever listing an item that I didn't have. It also let me more easily find items after they were sold so I could package them more quickly.

Some auction management software will also allow you to track inventory, and automatically adjust it when you list an item (marking the item as "unavailable") and again when you actually make the sale (at which point it removes the item from your inventory).

We talk more about that capability later in the section titled Making Life Easier with Auction Management Software.

Contacting the Buyer

After successfully selling an item on eBay, you'll naturally want to contact the buyer and afford them the opportunity to make payment.

Thankfully, eBay automatically takes care of this for you. When any eBay listing ends with a winner, eBay's system automatically sends the winning buyer an email letting them know that they have won the auction (or other listing, such as fixed price or eBay Stores listing).

Assuming you accept PayPal, the buyer will also be asked to submit payment through PayPal. A link to send payment to you is provided in the email. A PayPal payment link also appears on the auction page, as well as in the bidder's "My eBay" page.

eBay sends out a default message that is similar for all sellers. However, eBay allows you to customize your end-of-auction emails that go out to your buyers.

You may want to do this to let buyers know about the different payment methods you accept, and encourage them to get in touch with you if they have any questions.

To insert a custom message into buyer emails, log in to the "My eBay" portion of your eBay account. Along the left-hand column on the "My eBay" page, click the "Marketing Tools" link beneath the "All Selling" section. This will take you to your marketing tools page.

From there, scroll down to "Logos and Branding" and click the "Customize End of Auction Emails" link that appears below it.

Then click the "Change" link. This is where you'll be able to insert a custom message for all outgoing email to your buyers from eBay. You'll also be able to add a custom logo if you wish.

That's all you need to do! eBay takes care of the rest.

Modifying eBay Stores system emails


Modifying eBay Stores system emails step 2

Accepting Payment

This is a very simple task, and I actually thought about not including this section in this book. However, I decided to keep it if for no other reason than to encourage you to get a PayPal account.

PayPal is the most accepted and most often used form of payment on eBay as well as most other online auctions.

As long as you have a bank account in any of the 45 countries PayPal is available, opening a PayPal account is relatively easy. Simply go to PayPal's homepage and click the "Sign Up" link.

The first step is selecting the type of account you wish to open: Personal, Premier, or Business. I recommend getting a Premier account to start with. The Personal account is mostly for those who wish to send payment, but don't really plan to accept PayPal payments. The personal account is restricted to receiving just $100 per month, and is unable to receive credit card payments.

By opening a Premier account, you won't be bound by PayPal's $100 per month limit for accepting payments (meaning you can accept as many payments as you want) and you can also accept credit card payments.

After opening your account, you must go through a verification process. PayPal does this by making two small deposits to your bank account. You must verify the deposit amounts before your PayPal account will be available for use. Until you complete the verification process, you won't be able to send or receive any money through PayPal.

I highly recommend getting to know PayPal's policies well before you start accepting large sums of money through them. You can find all you need to know through the PayPal helpdesk.

Other very common forms of payment most sellers accept are cashier's checks and money orders. Here in the U.S., those are considered verified funds, as good as cash.

However, beware! Within most larger (wealthier) countries, laws regarding fraud are very strict. However, in less wealthy countries where laws are either far less stringent or law enforcement simply doesn't have the resources to combat it, fraud is quite prevalent.

We'll talk a little about that starting in the next section.

Avoiding Payment Scams

A common scam that often comes out of Nigeria and Indonesia is one in which buyers agree to pay a sum of money that is typically larger than what an item is worth. The buyer asks to have the item shipped to their home country, or sometimes even to a location in the U.S. (or whatever country you're selling out of).

The seller then offers to make payment with a money order.

After receiving the money order, a seller will often make the deposit (thinking the money order is as good as cash) and ship the item as the buyer instructed.

After a couple of weeks, the seller finds out that the money order was a forgery, and their bank has reversed the deposit. Suddenly the seller owes their bank a lot of money, and the item they shipped is long gone.

You can avoid this by simply refusing to ship to "high risk" countries such as Nigeria and Indonesia. That in and of it self will reduce fraud potential a great deal, but isn't a guarantee that someone in your own country won't try to scam you.

Your most important defense is common sense! Don't let the excitement of making a big sale cloud your judgment!

Let me tell you a story. A friend of mine decided that he was going to start selling plasma screen televisions through online auctions. He found himself a drop shipper and started listing his TV's.

Very quickly he started receiving email from several interested parties in Nigeria. These sellers made up some elaborate story about how they needed 10 televisions for some school and that they were willing to pay about 50% more than his asking price for them. The sellers would pay with a Fed Ex money order.

So my friend comes to me and asks my advice. Without hesitation, I told him to ignore the emails. "It's a scam!" I told him.

I went on to explain the scam regarding forged money orders. My friend was still persistent in wanting to complete the deal. After all, he stood to make thousands of dollars with his very first listing.

So I asked him, "Why would they pay you thousands more than what the televisions are worth? And why would they purchase plasma screen TV's in the U.S. for schools in Nigeria? Especially when they could easily get them so much cheaper elsewhere, not to mention the highly unusual fact that a Nigerian school would need 10 big screen plasma TV's."

My friend nodded his head in agreement. But it wasn't 15 minutes later that he came back to me with some scheme he had hatched to protect himself in case it was a scam.

"In case it's a scam?" I asked. "It is a scam! There's no question!"

He didn't want to listen to me. At this point he was blinded by greed (the one thing scammers count on the most). He wanted to make that thousands of dollars so badly, he couldn't even see the nose on his face for the dollar signs in his eyes.

To you and me, it's an obvious scam, right? That's because we are able to think clearly since we're not the ones having several thousand dollars waved in our face.

When this happens to you (and if you ever sell high priced items in high demand, it probably will), remember to use common sense. When you smell fish, then it usually means there are fish nearby. In other words, if things seem wrong they probably are.

Take a step back to clear your head so you can think straight. Once you realize something is probably a scam, put it out of your head and delete the email making the offer. If you don't put it out of your head right away, it will fester in your mind until you finally convince yourself that it's legit.

One more scam to watch out for is PayPal fraud. PayPal has built-in fraud protection, but to be covered under it you have to follow certain rules.

The rules are very simple. Just make sure you only accept payments from verified accounts and ship items to verified addresses (some countries are unable to verify addresses, but PayPal will sometimes still offer fraud protection in those cases). You must also use tracking or delivery confirmation on all shipments in order to prove that an item was delivered.

When you receive a payment, PayPal will tell you whether or not you're covered by their fraud protection. Your payment details will show an "eligible" or "ineligible" symbol like so:

PayPal Seller Protection

For more information regarding how PayPal protects its sellers, visit the Seller Protection Policy FAQ.

Create a Shipping "Assembly Line"

When you're first starting out and not doing very many sales, having a mess of things probably won't affect your business too badly. However, when you start ramping up sales to the levels of a PowerSeller, organization becomes a must.

If you are unorganized, running your business will require more of your time. Time that you could be spending doing what it is you would rather be doing, or time that could be spent making even more money!

One of the most time consuming parts of your eBay business will eventually become preparing and packaging items for shipment. The more items you end up shipping, the more important having an efficient system becomes.

During one of my busiest times as an eBay PowerSeller, I was receiving payments for between 30 and 40 items per day. My busiest day I received payments for around 70 items! But by utilizing my own "assembly line" type system, I was able to package and print labels for all 70 items in about 4 hours. But on average, packaging and shipping typically took up about 3 hours of my time.

The average profit on each of these items was about $8 at my peak. That meant my sales were resulting in an average of about $280 per day. With a typical day totaling around 5 hours, the hourly pay comes out to nearly $60 per hourů that's a dollar per minute! But, since I didn't work weekends, my weekly workday came out to 25 hours. That results in an hourly rate of over $80 per hour!

Had I not utilized my assembly-line system, the time it took to package and ship could have easily taken me 5 or 6 hours, meaning a typical day would have been a regular 8 hour day. That would have cut my hourly rate to about $50. That's a pretty hefty pay cut! Not to mention the fact that I wasn't the slightest bit interested in working an 8 hour day. If I was, I would prefer to spend that time making more money, rather than the same amount of money.

As you can see, your level of efficiency has a direct effect on your pay versus time. Remember: Time is money!

Your assembly line does not need to be complex. In my case, it was very simple.

I had a long counter where I did all my packaging. On one end was a stack of shipping boxes and padded envelopes. By taking a step or two to the right, you'd run into a bag of styrofoam peanuts. Another step or two to the right and there sat my packaging tape on a tape gun.

After checking orders in the morning, I would print shipping labels for all the auctions I had received payment for. I would then take the stack of shipping labels over to the boxes.

With experience, I quickly learned what size box I needed depending on the order. The first thing I'd do is attach the shipping labels to an appropriate sized box.

Next, I would place the first item into the first box. Taking two steps to the right, I'd secure the item by filling all the empty space with styrofoam peanuts. Two more steps to the right and the box was taped up.

Back to the start and to the next product. This would continue until all items were packaged.

If you don't have a counter like I did, a long table often suffices. Packaging materials can easily be stored underneath the table for easy access.

Next, we'll talk about how you can save more time by streamlining the shipping part of your business.

Streamlining Shipping

Most U.S. eBay sellers like to use the U.S. Postal Service. They are probably the least expensive for shipping smaller items (such as the cosmetics that I sold long ago), but delivery confirmation and insurance had to be purchased separately. They were not included as part of the regular delivery service.

However, most U.S. sellers travel to their local post office with all their packages, wait in line, have the postal worker weigh and stamp all their packages, then make payment.

For those of you who live in the U.S., you know this can be a very lengthy process. If postal workers where you live are anything like the ones where I live, they are never in much of a hurry to get anything done. As a result, time spent in line can run into several hours each week.

I never understood why sellers would put themselves through this. There is a better way!

Regardless as to where you live in the world, your best option for shipping is probably going to be a carrier such as UPS. And, since there's a very good chance you have access to them, we'll use them as an example here.

In order to streamline your shipping as much as you can, I recommend opening an internet account with UPS at their website.

With a UPS internet account, you'll be able to print out a shipping label right online. You can then schedule a pickup in which UPS comes to you and picks up your packages, or drop them off at a drop off location. You'll never have to worry about waiting in line!

UPS also has a service in which they'll email your customer the tracking number at the time you print out your shipping label. This helps you stay in contact with your buyer and makes for a more satisfying experience for your customers.

The same can be done with Fed Ex or DHL.

UPS does have one advantage over Fed Ex and DHL however, and that is that UPS is integrated with PayPal. Whenever you receive a payment through PayPal, you can print a UPS shipping label right from your PayPal account and have the costs deducted right from the payment you just received!

If you live in the U.S. and prefer to ship through the U.S. Postal service, then I recommend getting a Stamps.com account.

With Stamps.com you can print out shipping labels and postage right from your computer. After applying the postage to your packages, simply take them down to your local post office and drop them in the prepaid drop off areas. Again, no standing in line!

You can also have the post office pick up your packages. Call your local post office to discuss these options with them.

Whatever option you choose, you will need a scale accurate to the tenth of an ounce. This is so you can apply the appropriate amount of postage. Also, make sure that your packaging meets the standards of the carrier you choose to use. Give your local office a call for more information on packaging standards.

Tracking Profits & Losses

Once you start doing sales at the level of PowerSeller, you'll probably be ready for some good auction management software. Until then, there isn't much point to paying for a service that you're not going to get proper value out of.

Even though I was a PowerSeller for several years, I never choose to switch over to utilizing the power of auction management software to track profits and losses. Instead I continued using a spreadsheet that I had developed early on in my auction business.

I don't recommend you do what I did when you start doing high levels of sales. When the time comes, go out and find auction management software that will make life easier for you. By continuing to track hundreds of sales with my spreadsheet, I wasted valuable time I could have spent with my family or making more sales.

Next: Making Life Easier with Auction Management Software

Subchapters:

Basic Auction Management
Making Life Easier with Auction Management Software
Chapter 5 Summary & Takeaways

Jump to another chapter:

Chapter 1: Driving Traffic to Your Auction Listing
Chapter 2: Listing for Higher Profits
Chapter 3: Does Any of this Stuff Work?
Chapter 4: eBay Stores
Chapter 5: Auction Management
Chapter 6: What to Sell on eBay
Chapter 7: Finding Products to Sell on eBay
Chapter 8: Mining eBay's Traffic
Chapter 9: HTML Tutorial
Chapter 10: Acting Like a PowerSeller
Chapter 11: Final Words