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Red Ink Diary

Latest posts.

Problem Sale What Would You Do?

Here is a not uncommon sales problem, one which could be a business killer on eBay. Elsewhere, not so much, just time consuming and annoying.

The problem

The story begins with a ho hum normal transaction. A $10 item is sold and paid for with Google Checkout. Shipping is included in the price, item is shipped within 24 hours, postage cost $1.64

Ten days later USPS returns the item as undeliverable.

Seller sends buyer a friendly email at the address provided by Google Checkout requesting confirmation of the shipping address, including the item description, venue and transaction date, explaining the package has been returned as undeliverable. Zero response from buyer.

48 hours later seller contacts buyer through the venue message system duplicating the first email and telling her that there has been no response from the Google Checkout email address.

48 hours later an email from the buyer arrives. A confused and confusing email.

“Adress  (redacted) Ihave already recevied fabric so should be in records   thanks”

  • Item sold was not fabric
  • It hasn’t been received, it is back where it started from 15 days earlier
  • The different address provided in the reply was in an abbreviated format only comprehensible to the buyer. USPS is quite definite, it is also undeliverable.
  • The telephone number on record at Google Checkout has no voice mail and is unanswered.
  • Cost of sale to date: $2.65 fees and postage, plus lots of time.

Possible solutions

  1. Send invoice for postage, ask for deliverable address, explain why there is a charge, use short words, big font.
  2. Refund purchase price less fees and postage. This may upset the customer.
  3. The bury head in sand gambit. Wait until buyer contacts to find out why item never arrived, then start over.

What would you do?

Y’all come back!
Henrietta!

Diversification, Duplication, Parity and Other Seller Nightmares

What are all these terms? What do they have to do with your online business? Ignoring them can have serious consequences. This article is a brief primer (def. #2) to get you started in the right direction and help you avoid the pitfalls that could put you out of business…

First and most importantly, these terms are all related. What you do to fix one may result in problems with another therefore an integrated solution is required.

Google (in theory) does not index Auction items because they are transient, (def. # 1 - 3) what follows only applies to fixed price listings, wherever you sell online.

Diversification & Duplication

These two are as intertwined as newlyweds on their honeymoon.

For the last three years eCommerce experts have been urging sellers to diversify their sales venues. In plain English Auntie May says the same thing, “Don’t put all your eggs in one basket”

If only life were that simple!

Diversification is not as easy as putting everything you have for sale on every sales venue you can find. That will run you into violation of Google’s fixed price item duplication policy and will eventually result in being dropped from their search as implementation rolls across the web.

While eBay has a duplicate listing policy the larger picture is that so does Google!

See Google’s policy. Google says

“If products are available on multiple sites under the same ownership, one site must be chosen to exclusively submit those products. For example, if you own two websites that sell the same product, you may not submit that product for both sites, regardless of pricing or promotional differences.”

Key words - “submit that product for both sites

  • If your venue is submitting feeds to Google products you should not submit feeds containing the same product for your website but instead rely on organic search.
  • If you are selling the same items on more than one venue, both of which submit feeds to Google products you should suspend one feed
  • Suspending a feed on a venue means you are relying on the site search for visibility. Since almost nobody browses looking for something to buy these days your item’s visibility will be severely impaired at best. Worst case scenario your feeds will be blocked by Google across the board.
  • Why bother? If one venue is the best thing since sliced bread why are you listing on multiple other venues?

My opinion: Best solution is to avoid duplication altogether. Pick your product for your venue, don’t sell the same item in multiple locations. If you want to shift an item from one venue to another end your existing listing at least 24 hours before doing it, longer is safer.

Parity

Parity (def. #1) as used in eCommerce is all about pricing. Just about every venue has a parity clause, this is not unreasonable and Amazon have been in the news recently for enforcing it.

Simply put Amazon does not want third party sellers pricing the same items they sell on Amazon lower on another venue, or their own website. You will read comments on various forums suggesting the solution is to use a different selling ID … my advice, don’t do it! There are too many ways to get caught. The consequences of breaking Amazon’s rules? They will suspend your account. Game over.

  • Amazon’s policy in the USA can be found here.
  • An excellent guide with FAQs to UK policy here.
  • eBay is now so complex I couldn’t find it, but I know it is there. If you know please make a comment with a link.
  • Bonanza prohibits listing items which

“(bb) are identical to other items you have for sale but are priced lower;
(cc) are concurrently listed for sale on a web site other than Bonanza’s”

What are you doing to diversify? Do you have duplicate listings on multiple venues? How have your views and sales patterns changed in the last six months? Discuss in comments!

Y’all come back!
Henrietta!

Related articles:

TameBay  “How do you cope with price parity on Amazon” November 2011 and January 2012
EcommerceBytes (formerly AuctionBytes)
Letter to the Editor about eBay’s duplicate listing policy.

Corporate Values

Two corporations contrasted. First the dog eat dog world of ex-Bain CEO John Donahoe’s eBay.

I read with interest Ina Steiner’s article on eBay’s fourth quarter 2011 report in EcommerceBytes. Several points in that article should make both the micro-seller still trying to sell on eBay and the would be investor pay attention.

“eBay’s growth in the number of global active users on its Marketplaces remained flat at 6% despite a television advertising campaign in the U.S. that promoted eBay’s “buy it new, buy it now” message.”

So, (as we say on eBay,) it does not appear that the undoubtedly expensive TV campaign produced a visible boost although it may have contributed to an invisible one, possibly the numbers would have been worse without it. We shall never know. What we do know is that thanks to eBay’s manipulated search, traffic to the site does not translate to sales for small or micro-sellers.

Much was made that GMV was up 10% year over year, the 4% drop in GMV from the previous quarter for what should have been the highest selling period of the year, well, not so much. However, some points to ponder:

  • The way to beat Wall Street expectations is to estimate low.
  • As Auntie May says “You can fool some of the people some of the time but you can’t fool all of the people all of the time, just ain’t nobody that dumb”
  • An increase in GMV does not necessarily equate to an increase in profits; for example according to Bloomberg, in 2010, GSI Commerce Inc earned less than a penny for every dollar in sales.
  • Approximately 1% of growth is attributable to the addition of sellers shipping costs to eBay FVF. Doesn’t sound like much until you realize how big the numbers are.
  • What percentage of the earnings gain for the fourth quarter came from the $8.5B sale of eBay’s stake in Skype to Microsoft?

The biggest shocker

(Donahoe) then made the surprising statement, “Over the last 3 years, I have replaced 75 of the top 100 people in this company,” making it particularly jarring later when he joked about using a hammer as a “new people management tool.” (An analyst from UBS jokingly asked if it the hammer was something Bain had taught him about management.) EcommerceBytes

My favorite analyst, Jeetil Patel of Deutsch Bank reiterated his ’sell’ rating on eBay,

“underlying weakness at the company lies ahead in 2012, especially as the U.S. dollar strengthens and comps get tougher in March and beyond.” He adds that with gross merchandise value and profit growth likely to slow ahead, “there is growing risk to Street expectations.”

although he was a little off in his pre-results crystal ball gazing, if I still had any eBay shares I would take his advice.

Costco

In the January issue of Costco Connection the cover story is “The Building of a Dream, the empire built on values” . As I read the article I was struck by the contrast in corporate philosophy between eBay and Costco, particularly when it comes to ‘people management’. No hammers.

Many of the C-level executives at Costco started their careers as box boys or cart pushers at now defunct FedMart. Outgoing CEO Jim Sinegal began his career unloading mattresses and dropped out of college, new CEO Craig Jelinek started as a box boy and maintenance worker at age 16.

Costco has been criticized by Wall Street for it’s generous employee benefits program. Jim Sinegal’s responses -

“Wall Street is in the business of making money between now and next Tuesday. We’re in the business of building an organization, an institution that we hope will be here 50 years from now.”

“Taking care of your employees and turning inventory faster than your people is good business. In the final analysis, that’s what it comes down to. You can have the loftiest goals in the world, but they’re meaningless if you don’t make a profit. If you can’t deliver on the bottom line, you’ll disappear.”

  • average pay for a Costco worker is $17 an hour with health insurance including dental even for part-time employees who have been with the company over six months.Hourly workers receive twice-yearly bonuses based on length of service and hours worked.
  • Turnover is highest in the first 180 days and approximately 6% thereafter compared with an industry average of 59 percent.
  • CEO Jim Sinegal’s 2010 salary was $350,000 - his 2009 bonus was $200,000. He is on record saying he considers himself well rewarded by his stock options.
  • Costco promotes from within, about 90 percent of management jobs are filled in-house and most managers work their way up from the warehouse floor.

Not everything is sunshine at Costco, a gender discrimination lawsuit was filed in 2004. At the time Sinegal maintained that Costco had not done anything wrong, and would not settle. At the same time, he admitted that the presence of women in manager and assistant manager jobs was low,16.2% and 17%, respectively.

“We don’t let ourselves off the hook on that,” he said. “We think we can do better. We know we can do better.”

The financials in brief

Notes: Costco’s financial year is different from eBay’s, eBay Q4-11 = Costco Q1-12. Costco operates on a paid annual membership plan which increased by 10% November 1st 2011. This provides a high degree of accuracy in ‘user numbers’. Unlike eBay Costco pays a a quarterly cash dividend on Costco Wholesale common stock; The dividend Q1-12 was $.24 per share or $.96 per share on an annualized basis.

  • Renewal rates were 89% in the U.S. and Canada and 85% worldwide. New member sign-ups in Q1 were also up 15% year over year.
  • Net sales (not gross) rose 13 percent to $21.18 billion, excluding membership fees
  • Earnings over the period were $320 million, or 73 cents per share, compared with $312 million, or 71 cents per share, a year earlier.

Thoughts to take with you on advertising and customers.

“Customers come first. Integrity is the cornerstone upon which we must build consumer confidence that creates customer loyalty.” Sol Price

“Imagine that you have 120,000 loyal ambassadors out there who are constantly saying good things about Costco. It has to be a significant advantage for you.” Sinegal (about Costco employees)

Y’all come back!
Henrietta!


Full disclosure: I am an ex-eBay (1999 - 2008) seller by choice, currently selling on Bonanza and my own website. I no longer own stock in eBay. I have been a Costco member since 1994. I have never owned stock in Costco.

The MoneyGram Scam

An old scam is making the rounds in Canada dressed in a brand new disguise, blackening the reputation of MoneyGram as it goes.

The scam is aimed at the “make money from home” market, a sector rapidly increasing as unemployed or underemployed families struggle financially. It will only be a matter of time before it crosses the border to prey on naive Americans too.

The con starts with a letter sent in the mail offering a job as a “mystery shopper”, tasked with testing out a retail outlet’s customer service.

Inside the letter, is a check, which the victim is asked to cash. A portion of the funds are to buy specific items at named retail outlets. There is always a balance remaining from which the shopper is instructed to deduct a shopper’s fee and wire the rest to a given name via MoneyGram. I have not found any mention of shipping the purchased goods, generally a part of such scams.

The check is of course counterfeit.

MoneyGram

MoneyGram International is a 14 year old money transfer business currently headquartered in Dallas, Texas. The company offers a variety of financial transfer services both domestic and international. It claims to be the second largest Money Order supplier in the USA through a network of retail outlets including WalMart. The MoneyGram Prepaid Debit Card (not an affiliate link) was popular at one time with eBay sellers looking to insulate themselves from PayPal access to their bank accounts.

MoneyGram was once a golden child of Wall Street analysts. Past CEO Philip Milne led the company to losses of more than $1.6 billion in 2008 from investments in securities backed by risky mortgages. During his four year tenure stock fell from a high of $289 in May 2006 to $7.20 in June 2008, later dipping as low as $1.18  For this he received a $13.1 million severance package. Currently trading at between $17 - $18 MoneyGram is understandably unhappy at the association of its name and services with a criminally fraudulent scheme.

Y’all come back!
Henrietta!