Rising Costs Force Efficiencies for eBay and Amazon Sellers

The Royal Mail’s new pricing structure which came into effect on April 2nd has taken many marketplace sellers by surprise. Price increases have particularly impacted on sellers of smaller items (previously covered by packet post and now charged as a parcel) with some sellers reporting increases of more than 56% on their delivery costs.

Rising delivery costs coupled with Amazon’s recently announced increase in seller fees are making the business of selling online more expensive.

Any increase in costs will force many sellers to re-examine their delivery options in order to remain competitive. But delivery is just one area where marketplace sellers can build efficiencies into their business in order to drive profits.

6 Strategies to Take Control of Your Margins

  1. Test Delivery Options: Offering free delivery on eBay can improve your visibility in search and make your listings appear more competitive. However, if your margins cannot withstand the impact of higher postage costs you are either going to have to put your prices up, offer a cheaper (perhaps slower) delivery method or perhaps abandon free delivery altogether. How you handle this will depend on the nature of your product, your competition and the expectations of your customers. Before taking a leap of faith, take the opportunity to test various delivery models.
  2. Outsource Fulfilment: Consider taking your warehousing, packing, picking and dispatch completely out of the equation by outsourcing your fulfillment to a third party like Amazon’s Fulfilment by Amazon (FBA) program. Outsourcing will not only give you access to sophisticated delivery networks but also help manage returns and time consuming customer service enquiries. Outsourcing fulfillment will also allow you to scale up and down quickly and efficiently without worrying about the limitations of your warehouse and staffing levels. Outsourced fulfilment (even by Amazon) can take care of all your other marketplace (including eBay and Play) and own site sales.
  3. Invest in Software: Smart marketers find efficiencies through careful implementation of software. Inventory management software like SellerExpress, delivery management services like MetaPack, accountancy software like Tradebox can help you maximize your efficiencies, saving you time and ultimately money which you can invest in becoming a more competitive and profitable retailer.
  4. Drive Down Your Cost of Sale by Winning Repeat Business: The cost of acquiring customers via any channel can be very expensive. In the ideal world you should attempt to drive as much repeat business via your own website where you are more in control of costs. Email and social media marketing tools like iContact can help you build profitable retention marketing strategies even for marketplace sellers.
  5. Maximize Your Buying Power: The success of any retail business is often as much about buying than selling. Retailers with ready cash to buy in bulk and grab opportunities will secure the best prices and be able to manage the best margins. Companies like Kabbage can help marketplace sellers raise working capital and become more efficient buyers.
  6. Go Global: By increasing the number of international marketplaces you sell via you will increase you volumes and drive revenues. Companies like InterCultural Elements (ICE) can help with translating product descriptions as well as offering advice on the cultural expectations each international marketplace requires its sellers to adapt to.

How is your business affected by the price increase? Let us know via comments below.

John W Hayes is the author of Becoming The Expert: Enhancing Your Business Reputation through Thought Leadership Marketing available now in paperback ...
  • M
    Mark @ ThinkTraffic
  • April 7th, 2013
Number 4 in particular is one of the biggest opportunities for most eBay sellers in my opinion.

I also think that getting your own website and marketing it is important. Building an email list and getting repeat custom to your website can really take your business to the next level.
    Worth mentioning too that eBay is soon allowing Facebook Pages to be linked within seller profiles. If you're a seller, don't miss this chance! :)
  • S
  • April 17th, 2013
If anyone has any questions about point 2. Outsourcing fulfilment. Please let me know and let you know how it all works. It can be a daunting process of letting someone else handle your orders, but it can free up alot of time and streamline your business.
    Hi Sam, do you have any resources you'd like to share about fulfilment?
      • S
      • April 18th, 2013
      Hello Lace,

      I do not have any specific resources, but I can say that one of the biggest savings is time. The time taken to pick and pack can really add up, plus having to schedule in trips to the post office, or having to wait in for a courier. This essentially is dead time for retailers as they have the sale and the time/effort spent putting the order together is not the best use of their energy.

      In terms of streamlining, these are some of the key efficiencies...

      1. Stock is efficiently organised and linked across channels (cannot over sell)
      2. Premium + Broad Range of Packaging Materials; Can add to your product range /sell multiple items without worrying about how to package them up.
      3. Sameday Dispatch (we guarantee all orders received before 1pm will go sameday)
      4. Low postal rates due to volumes. Royal Mail business customers have not been too impacted by the recent changes, yes prices have changed a little, (2.5% fuel surcharge and some of the bandings have merged) but there are no size changes/limitations, like there have been for 'over-the-counter' services.

      Good savings can be made in postage, our RM prices are typically 30-40% lower than 'over-the-counter'. Plus we have a Global tracked service that can be half the price RM AirSure, depending on country. e.g France is £5.82 for 500g (ex.VAT). These savings we pass onto our clients and they usually cover the cost of using our services...

      Pricing varies from company to company, traditionally fulfilment is priced via a warehousing charge, and through the processes of RHD - Receive, Handle & Distribute. Anytime your stock goes through one of those processes you are charged. We like to price our services around each clients needs, rather than enforce an existing price / service to them, as every client is different.

      Ultimately when looking for fulfilment services you have to feel comfortable with the company you are looking to use. Also gauge the level of business you will bring to their current client portfolio so you can see the level of service you will be getting. I recently met a brand owner who was using a large fulfilment house, they had over 200 pallets of stock and they were not getting the service they required as they were too small!

      This is very quick snapshot of fulfilment, if you have any questions or require more detail please get in [email protected] / / 01799 513668

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