Posts tagged “Bonanza vs eBay”.

Bonanza, Is The Honeymoon Over?

diecut and embossed Victorian bride and groomOur third anniversary was in July so the honeymoon is probably over. We get along pretty well although there are the usual petty irritations which arise in any relationship but so far nothing serious enough to contemplate leaving. However, at the beginning of this month, September, there have been changes which will require a rethink of the way in which I have been doing business on the site.

The next few posts on Red Ink Diary will detail my thought processes as I assess and execute my revised business plan.

A little over two years ago I wrote about the constraints of my business. I said

“Because I live on an island my choice of product is limited. I must pay freight on anything I buy to sell unless I drop-ship. Freight alone can eat profit margins. What I have sold for years is low ASP (Average Sales Price), but lightweight.”

Back then I sold greeting cards, die cuts for decoupage etc. To make a long story short, the change in peoples’ mailing habits and corresponding decrease in sales made it evident I needed to find a new product line. I have tried several, simultaneously, with varying degrees of success. My best sellers on Bonanza these days are patterns. ASP is $9.00 and to be competitive I offer free shipping within the USA and Canada.

As a charter seller or old timer on Bonanza I have never (in three years) paid a commission or Final Offer Value (FOV) fee on sales under $9.99. Items selling between $10.00 and $50 used to cost me $1 or 2%. This has changed for me as I now pay 50c for any sale under$14.30 just like the vast majority of other (newer) sellers on the site.

Edited for clarity 9/12/2011:
Bonanza does not charge a per item fee. The fee is based per transaction with a minimum fee of 50c. If I sell one item at 99c the fee is 50c. If I sell three 99c items, one $4 item and one $7 item the fee is still 50c.

Please note I am not complaining, Bonanza has no listing fees and the FOV fees are very reasonable. There was plenty of notice of the impending change and there will be no further changes through 2012.

So wheres the beef?

Two beefs:

  1. Bonanza makes no allowance for shipping included in the price. None. Items which charge shipping receive a credit of up to $10 against FOV fees but those shipped ‘free’ do not.
  2. Tight margins on sales, this of course has nothing to do with Bonanza and everything to do with the economy.

Reality check

eBay; due to it’s severely skewed search, high incidence of hinky buyers and ever more complex rules and regulations is not a viable option for my business these days but I still use it as a comparison. Lets do just that.

  • Bonanza is a fixed price venue, therefore my spreadsheet compares sale fees only.
  • Insertion fees for a fixed price listing on eBay would increase costs further.
  • Bonanza does not charge listing fees.
  • Both venues appear in Google product search.
  • Payment processing fees are equal.

Click image to enlarge.

As you can see, for my $14.30 item eBay is 372% higher or $1.86. After adding in the 50c for 30 days fixed price insertion fee eBay’s cost of sale is $2.36 or a whopping 472% higher.

Fortunately there are other options
Y’all come back!

Are You In A Rush And If Not Why Not?

I moved to Bonanza (then Bonanzle) early in it’s Beta days, a couple of months after I quit eBay. It has, on the whole, been a learning experience and a happy one. I have found it to be a remarkably stress free venue and once I learned how to optimize my listings for the real world it became a profitable venue. Not as profitable as eBay was before 2006, but what is these days, certainly not eBay.

There have been many many changes in the almost three years I have been on Bonanzle/Bonanza. One of the more interesting is the site’s adoption of ‘The ‘Rush’ which is Bonanza’s second generation version of flash sales. Bonanza promotes The Rush by email and social outreach.

To define: a Rush is a category focused flash sale sale hosted on a single dynamic page with a duration of three to five hours. The minimum discount for a seller to participate is 15%.

Because The Boyz aren’t dim they do check to make sure that the discounts are real (I asked) based on selling prices over the previous 30 days.

Unlike eBay’s Daily Deals the Rush sale is open to all sellers who have merchandise fitting the category and who have declared an interest by opting in. The items are regular inventory, not special purchases. Here is a link to Seller FAQs on Bonanza.

The Seller’s Dilemma

Price to be competitive every day or price to still be profitable with discounts?

This is a particularly pertinent question for eBay sellers many of whom will now have to balance the pricing formula to include fees on shipping costs.

We sell to make money not just to make sales. Sales which generate revenue without profit are pointless. To define: Revenue and earnings are two different things. Revenue is gross income, the total income from your business before any deductions (basis, taxes, overhead etc.) are made. Earnings are the net income, the difference between income (or revenue) and expenses.

Deep discounts are a dangerous path in more ways than one. To put it bluntly buyers get spoiled, if it doesn’t have a screaming headline “100% off with free shipping” (I am being sarcastic) a certain class of buyer will not commit. There is also a depreciation in the perception of value, this can be a problem in that if you give too good a deal the buyer thinks the product is cheap garbage.

Unfortunately they are often right! As Auntie May says “Penny wise pound foolish” which means sometimes the cheapest price turns out to be a very expensive. But I digress, back to the Rush.

Do you price up so you can still make money on a rush?

This is probably not such a bright idea as on Bonanza the majority of sales come direct from Google searches. We know that uncompetitive pricing loses more potential sales than any other factor except unreasonable shipping. I am not sure how much sense it makes to forgo (def.# 1) everyday sales for the chance of selling at a discount.

I have chosen not to participate in a Rush to date, but probably will do so soon to move some stale stock off the shelves.

My thoughts

It all comes down to what you sell and how. The seller of used items, collectibles, vintage goods or antiques who is careful not to leave their profits at the source (don’t pay too much when you buy) has more profit potential and therefore room to discount than the straight retailer of new goods.

Is there a happy medium, a middle path? Discuss!

Y’all come back!


Full disclosure: I am an ex-eBay seller currently selling on Bonanza and my own website.