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Top Ten Risks eBay Sellers Face

Things that can go wrong for eBay sellers and what to do about them


Top Ten Risks eBay Sellers Face

As an eBay seller your business is subject to a number of risks beyond those typical of retail enterprises; you'll have to manage them well in order to succeed.

Photo: XLucas / Sxc.hu

There's a lot of "do" and "don't" information out there for eBay buyers, but it's sometimes hard to get a concise list of just what the risks are that sellers are meant to be avoiding by observing best "do" and "don't" practices. Here are ten of the biggest risks that eBay sellers face—apart from everyday concerns like failing to make sales, seeing demand for their stock dry up, seeing high return/exchange rates, or other things universal to the retail business.

  • Problem buyers. Yes, difficult customers exist everywhere, but on eBay things are a bit more complicated than they are for most retail venues. eBay customers can't inspect goods before purchasing, yet the range of goods to be found on eBay (new, used, top quality, discount import quality, recent, vintage, complete, parted out, etc.) means that customers don't know what to expect from eBay goods in the same way that they do from items at a big box retail store. At the same time, customers' certainty that they're about to get a fabulous deal, the distances that are often involved between buyer and seller, and the fact that buyers can publicly leave negative feedback or poor detailed seller ratings that can sink your business all make eBay retail particularly susceptible to the "problem buyers" problem. eBay sellers have to take extra care to use great photos and item descriptions, to provide clear condition information and disclaimers, to handle refund requests with their best customer service foot forward, to invest in and protect their feedback, to win the buyer protection battle if necessary, cope with chargebacks, and to block problem buyers from ever turning up in their backyard again.
  • Lockout due to feedback or chargebacks. Of course, all the measures in the world won't completely eliminate problem buyers or the chargebacks and poor feedback that they can create. These are a particular problem for eBay sellers not just because they're inconvenient, embarrassing, or affect cash flow, but because they can actually lead to the effective inability to carry on day-to-day business. Both eBay and PayPal are known (regrettably known, if you're a seller; happily known, if your a buyer) for locking or suspending accounts that see poor feedback or repeated (or very large) chargebacks. Once this happens, your doors are closed—you items are delisted, you can't create new ones, sales grind to a halt and/or all of the funds in your PayPal account and linked bank accounts become unavailale to you pending resolution of all outstanding customer complaints. Sellers that reregister after getting suspended aren't doing themselves any favors, since they're likely to be locked out almost immediately once again thanks to eBay's deep database cross-referencing abilities while at the same time doubling eBay's determination to keep them out. This is why the best policy for eBay sellers is that "the customer is always right," even when a problem buyer is very, very wrong. The alternative is often just the end of an eBay business or the long, arduous, and uncertain process of account reinstatement.
  • Non-transparent eBay sanctions. The arrival of best match search placement and detailed seller ratings in recent years has led to a shadowy set of rules and criteria by which eBay seems to make some sellers effectively disappear or suffer—by moving auctions to the absolute end of search results, preventing them from appearing on category pages for common items or even in search results, ending fee discounts and/or increasing fees, limiting access to customer service for sellers that previously had enhanced access, changing the buyer protection calculation based on past performance, and so on. At times it isn't enough to monitor your seller performance rating and dashboard; some sellers have been shocked and confused to find themselves "punished" in these ways, often losing a large percentage of their volume and revenue, even after years of determined attention to detail and customer satisfaction. On eBay, at least at times, it appears that the motto "Caveat venditor!" ("Let the seller beware!") is one that sellers need to take to heart, perhaps by ensuring that they have eBay alternatives amongst their selling partnerships to pick up the slack, should eBay decide to get fickle on them.
  • Poor shipper performance. As a "mail order" business in the most basic sense, eBay selling relies heavily on shipping carriers like USPS, UPS, FedEx, DHL, and others for the success of its sellers and the satisfaction of its buyers. Unfortunately, as we all know, shippers are a third party in this game, their performance often beyond the control of both buyers and sellers. Transacting and shipping promptly when a listing closes can help to mitigate things like weather delays, traffic delays, absentee deliverees, natural disasters, strikes, and other things over which shippers have no control, while packing carefully, using great packing materials, considering shipping insurance, and taking care to use a shipment method that provides package tracking can help to limit shipper damage and/or its effects on the seller-customer relationship.
  • Fulfillment problems. Sellers that use a fulfillment partner or service or that work with a drop shipper have to work with an additional layer of uncertainty in their transactions, as their performance is closely tied to the performance of their fulfillment or drop shipping partner. While most of the time full-on fulfillment services like ShipWire and ENL Global perform fabulously, ad-hoc fulfillment "partners" that are actually other retailers (orders placed directly on Amazon.com, Overstock.com, Buy.com, or other similar outlets and shipped directly to your customers, for example) are much more uneven, while drop shippers can be notoriously spotty and (if chosen poorly) can spell disaster for your fulfillment process. This is why it pays to carefully weigh the risks associated with various eBay business models, particularly the no overhead models, and to pay special attention to drop shippers and drop shipping best practices if this is the eBay business model you choose.

Already overwhelmed? Don't be. We're just halfway through. Read on for the other five risks that every eBay seller should monitor and manage.

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