The Twitter Effect...except for on-line auction sites!

I recently heard about how the so-called "Twitter Effect" basically killed the movie "Bruno" with almost immediate negative reviews posted and circulated like wildfire within hours of its opening.

So I wondered...how big is Twitter with the big auction sites and on-line stores like eBay and Amazon.

Well, let's look.

Here is a quick list of some of the bigger (and lesser-known) names in the field.

Company (twitterid) #followers
Amazon (amazon) 5,278
Amazon Gold Box (amazondeals) 14,452
Amazon mp3 (amazonmp3) 816,910
eBay (ebay) 1,685
eBid - no presence
ecrater (ecrater) 180
bonanzle (bonanzle) 561
CQout (CQout) 2
blujay (blujaydotcom) 51
OnlineAuction - no presence
Atomic Mall (atomicmall) 17



I only included twitter IDs that were the "official" ones, skipping the rest (such as fan sites and personal pick sites), and I also skipped some of the more technical IDs of these sites (such as Amazon's Kindle news and updates ID).

OK, now I have to admit that the # of followers for these sites may not be a great indication of their popularity, but I think it is rather telling about the demographics of Twitter and the demographics of the sites mentioned above.

For example, can I assume from these numbers that...

1. Amazon didn't just jump the bandwagon, they have the lead float in the parade. They obviously have embraced this technology and they know that younger people + mp3's + music downloads = a potentially profitable source of sales.

2. eBay has not quite fully embraced Twitter. Griff is on twitter as well (ID: ebayjimgriffith) with a not-to-impressive 281 followers.

3. Scrappy upstarts ecrater and bonanzle are getting their presence known, but slowly.

4. The rest? I think I can assume most of their sellers, if asked about twitter, would say don't need it/it's not for me/it won't help my sales/it's just a waste of time/etc.

Agree? Disagree? Think I'm nuts for spending any time at all on this?

Let me know what you think.

Selling On Amazon at Christmas: the "warning" letter

I want to give you a little heads-up if you want to sell on Amazon at Christmas, specifically toys and games.

About mid-year, AZ sends out a letter to their sellers to give them a bit of a warning about their cut-offs. In order to provide the best customer experience for xmas buyers, AZ limits sellers of toys and games during the season. We just got ours today.

What do they do exactly? Well, there are two things they do:

1. After mid-September, AZ won't accept any new sellers for toys and games. You can be a new seller and sell just about anything else...just nothing in the toys and games categories. Why? Well, if you're new, they have no idea if you are an honest seller or not. So...better to error on the side of safety. Remember, AZ is watching out for their own reputation.

2. As of mid-November on, the sellers who passed the above screening process can sell toys and games ONLY if their seller performance meets certain criteria. The criteria isn't difficult to match, but if you don't hit the numbers they want, they can effectively block out the toys and games you have for sale at any time.

The criteria? Low defect rate (which includes negative feedback, chargeback claims, and Amazon A-to-Z claims), low late shipping rate, low rate of orders cancelled by the seller.

Get just one of these numbers a bit high, and you can't sell your GI Joe action figures or your Monopoly games.

About 95% of our xmas sales were toys and games. It's basically all we bought and all we had listed, and we sold out of a lot of it before mid-December. And we were still getting plenty of orders up to December 21st.

The lesson? If you want to sell in these categories at Christmas, keep your sales going, keep the positive feedback high, don't cancel orders on customers, ship fast and don't misrepresent your products.

Now most of that was easy for us, since we use Fulfillment by Amazon. So if someone ordered something from us, that meant that it was in stock at the time of ordering (since AZ handles the inventory for us); shipments were made fast; items were well-packed, so less chance of returns.

So FBA definitely helped us make the cut and make sales during the season. Yes, it's an expensive program, but we could not have handled the 1000+ orders we got in that short 5-week period.

Bonanzle vs. ecrater: the battle continues

So...some fellow bonanzlers have already counted out ecrater as heir apparent to the coveted #3 spot right behind ebid and ebay.

Well, guess what happened?

As of this evening, ecrater has a rather firm hold on #3, with bonanzle falling behind. At one point Bonanzle was up about 50,000 listings over "the moon". Now they are about 14,000 listings behind.

Any lesson here?

Well, first, do NOT count out any competitor unless you can visually see them gasping for breath and they are just a very distant shadow behind you. 50k listings is nothing to gain or lose when you have 70-100,000 sellers on each site.

Second, why focus so much on ecrater in the first place? Don't worry about the guy right above you, you're aiming higher...right? "WE'RE NUMBER THREE" really doesn't sound good.

Basically, yeah it sucks that the ranch is #4 right now. Who cares. When/if the ranch comes close to chomping at the heels of the bay, then I'll REALLY start to get excited.

Onlineauction.com: sales growing - NOT a good sign

Usually, when you hear that a company's sales are growing, you think "Aw, nice. They are obviously doing well."

Then...there is the "other case".

The "other case" may also be known as the "Aw, man. They must be getting desperate."

Case in point: onlineauction.com.

This other ebay-wannabe has been around for a couple of years and perhaps had shown the greatest promise when it first materialized. But you can probably already figure out what happened and where it's headed. Poor customer support, no buzz, weird fee structure...it all added up quickly and now they are battling for the #7 spot with buyitsellit and UsiFF (two more not-big-names).

I figured they are at least holding on so they might be around for a bit. But I recently got an email from them that makes me think they might be in some serious trouble.

The email was sent to the email account I used to set up my account there...which I haven't used since probably mid-2008. I logged in and checked the message.

It was a wonderful letter stating how their sales have increased dramatically since 2008. In fact, their sales for 2009 alone have exceeded their TOTAL sales for 2008 (or something like that). And they showed an impressive pie chart to prove it. (side note: pie charts are horrible vehicles to show growth...ratios, yes...distributions, yes...not growth).

And then it hit me: this is what desperation looks like. I set up an account there and never listed an item, never bought an item, never even looked at many items. So it seems that they are digging away at the vast dead pool of former buyers and sellers and saying, "Hey, look at us. We're still around. And we're growing."

And that scares me. They obviously have done some right things to get their sales increase (or they have former Enron accountants "working" their sales figures) so perhaps the increase is legitimate. But blowing your own horn, saying in essence that you have gotten all the way to the upper middle isn't all that impressive. It's actually rather pitiful. In this case, "we're growing" to me at least equals "we haven't gone under yet."

What would make me sell on their site? How about hearing about the site from a friend, neighbor, the woman in front of you at the grocery store, hell...anyone other than them.

Sadly, I think they have further alienated themselves from some potential sellers. A recent thread on ebay has many people talking about receiving the same email I got (some called it outright spam) and saying how they were screwed over by support, never sold anything, had to jump through hoops to get their account cancelled, got their credit cards charged too much...blah, blah, blah. So this brainstorm of sending this email out pretty much did nothing more than bring back bad memories and more bitterness towards the site.

"OK....mister smarty pants, what would YOU have done?"

Well, yes, old former users are a potential gold mine. So of course I would have used this list. But I probably would have gone with a softer, more welcoming approach. More like a...

Dear _________

We miss you!

We notice you haven't looked at onlineauction.com since July, 2008.

Well, we want you back!

Wonder what we've been up to since you've gone? Well,

(list of functions, features added over the past year).

And...our sales have INCREASED xxx% since the last time you looked at us!

We want you to become part of the exciting growth our site has experienced.
Sell your items on onlineauction.com and pay ZERO monthly fees through
2009. So no fees to list, no fees to sell, no fees at all!


So please, take a few minutes, visit our site and blah blah blah.


Sincerely,
The sales team at onlineauction

At least something like that.

In other words, don't tell me how successful YOU are, tell me how you're going to help make ME successful.

Santayana knew what he was talking about!

"Oh, yeah. I have their album Abraxas. I LOVE Oye Como Va."

No...not Santana...Santayana.

The guy who said: "Those who cannot remember the past are condemned to repeat it."

THAT Santayana.

I recently posted a thread in the Bonanzle forums about how certain ebay-like sites are gone or going under.

Their response? Meh. Dumb thread. Who. Take your pick.

But in general, people didn't really care to hear about the failures.

So, why did I post it? See the above-mentioned quote.

People joined the failed/failing sites hoping to find a friendlier, less expensive and less restrictive place than ebay to sell there goods.

They found those places. And those places failed.

Now people are moving to Bonanzle from ebay to find (again) a friendlier, less expensive and less restrictive place than ebay to sell there goods.

They found Bonanzle. And Bonanzle may or may not succeed.

So far, Bonanzle is doing the right things: counting on their sellers for good items and good service, making it as cheap as possible (while still actually charging), and NOT spending a gazillion bucks on advertising. They are slowly creating buzz...incredibly effective and horribly cheap!

My point is that I don't want Bonanzle sellers (or Bonanzle) to think they are immune from the problems that plagued and brought down those before them. I want the sellers (and Bonanzle) to learn from those mistakes.

So hopefully in a couple of years, I will be reading about the incredible success Bonanzle has become.

And not reading their obits on google.

So Bonanzle...PLEASE learn from the mistakes of Wagglepop and all the others. Don't think you're immune.

My nominee for next "ebay wannabe" to die: WebStore

Seriously...

"webstore"? Is this the catchiest, most imaginative, cleverest name you could come up with for you, er, well...web store?

But that is far from the biggest reason why I think webstore (probably originally billed as "the next ebay") will likely be "the next wagglepop".

Reasons...

1. The name. Yeah, the name stinks. Google. Yahoo. These are cool to say. "webstore"? Boring. Besides, who doesn't already have a "webstore". "You sell on line? Cool. Where's you web store?" "Oh, it's on webstore." Wow. The originality makes me want to stick my head in the oven.

2. The numbers. 43,500 items. ebay probably has this many listings close without bids in like 5 minutes. Maybe 1 minute.

3. The fees. Webstore is "sponsor-paid". No seller fees at all. "Sponsors" provide the income for the site, usually via banners, flashy boxes, stuff like that. Ick. "ads by google" banners everywhere. Links to hosting sites everywhere. It's not a web store...it's a blog that OD'd on "pay-per-click" injections.

4. The look. In a nutshell, it looks like something out of a box labeled "My First Website" with a sticker on the bottom that says "recommended for ages 3 and up". Seriously. Get a designer.

5. The news. The liveliness of a site IMO can be measured in what info they provide about themselves. Outages, maintenance times, etc. are GOOD things in my book. It shows the site gives a crap about its users. Telling me bad news is better than me finding out the hard way. Webstore's latest post is about their set-up with ViaWest (perhaps "the poor man's Cable and Wireless") which provides operations hosting. "server array". Wow. "Redundant array of disks". Wow. Boring. Who cares. What the hell are you doing to get customers?!??!

And this ViaWest thing REALLY gets under my skin. So NOW you are worried about the reliability and uptime of the site? NOW 24/7 is important to you? This should be a non-issue; your site should have had all this hardware redundancy in the first place. The "news" is that you got away without it for this much time!

OK....deep breath...calm down...happy place time....OK, now I'm better.


Now, I do have to give them credit. They really do seem to be trying. RSS feeds, affiliate programs, new store categories.

But all that brings me back to my first question...

"webstore"?

On-line detritus

Well, wagglepop is officially dead. But still available for sale for a staggering $40,000.

Anyone have $40k they don't want to throw down the garbage disposal but still want to permanently say good bye to, give the former wagglepop owner(s) a call. I'm sure they'll be glad to hear from you.

And it seems that there may be two other ebay wanna-be sites that are biting the dust, or at least scooting up to the table...

tazbar: This statement has so far brought up huge cries of "Who?" from people. Yes, tazbar, one of the great unknown ebay slayers looks like it's going down for the count. And what a count! About 44,000 items listed (compare that to ebay's 28 MILLION!). It's officially lights out on July 16th.

plunderhere: Again...another "Who?". And with good reason. About 50,000 items listed. Will not be missed.

What do these two have in common? Hmmm....well...

ZERO name recognition. Forget the big ad campaigns. They don't work. What does work is word of mouth, from both buyers AND sellers. None of either equals our "who?" response.

Support. OK, this should say "lack of support". Both got dinged by former sellers for their extreme lack of help and support for sellers. Funny, I heard the same thing about wagglepop.

The "not the chicken NOR the egg" syndrome. "OK, what the hell does that mean, Rich?" Simple: these kinds of sites always get the question: what makes the site successful, lots of items listed, or lots of sellers buying? The answer is simple. Neither. Or both. Both factors have to grow together, and in parallel increments for the site to make it. These sites had neither the listings nor the buyers. Hence, no word-of-mouth ad structure. Hence, no more site.

Money. Actually, none. No buyers and no sellers is the way these sites start, but eventually both sides of the equation have to build. Otherwise, no revenue. If you build a site like these, you either need to:

1. burn through money like bras in the 60s before you see a single cent of profit

...or..

2. LOOK like you're spending cash like you have a dozen VC's in your back pocket

...lest people start to suspect you aren't gonna make it.

They did neither. They always looked like amateurs.


So...again...I ask...who's next?

Check out my next post.

Shipping and handling: model 5 - profit center

Some sellers price their items at whatever they can to undercut the competition.

Some sellers just try to squeeze out any penny they can from their customers.

So, what to they do? Simple...charge higher shipping.

People will gladly pay $3 rather than $6 for a cable on ebay, even if shipping is $5 for the $3 cable and free for the $6 cable. Or, maybe they just don't understand that they need to add the shipping cost in.

And some people will gladly pay a high shipping amount for an item they either really REALLY want or the item is just hard to find and are willing to pay anything for it.

Hence..."shipping as profit center" was born.

If you don't already know where I stand on this, please...let me repeat: don't do it...find another way to sell...find another way to make money...don't make the rest of us look bad.

To me, making a profit off of shipping is like Best Buy charging you to walk through their doors, or your local grocery store charging a $1.50 to use their shopping carts. It's a service that you provide when you sell your product. Unless you are a professional packer or shipper, it should be as free as you can make it. Otherwise the customer will eventually feel that you ripped them off.

And they likely won't return. That hurts you.

And the likely will be turned off by the whole on-line buying experience.

And that hurts all of us.

Shipping and handling: model 4 - flat rate

What's flat rate?

In the days of catalog shopping (who remembers getting one from Speigel or Montgomery Ward?) flat rate shipping was the only way to go.

Buying $1 to $50 in merchandise? That will cost you $5 to ship. $50 to a $100? That'll be $9 for shipping, please.

Flat rate holds a lot of promise for sellers because you can get buyers to buy tons of your stuff but not get reamed on shipping. So your sales could be fantastic...but you may have to eat a bit of the postage.

You therefore have to be careful with this.

Use it only if the following is true: your profit margin on a multi-item order is great enough that you can eat the additional postage and still profit enough for you to justify using flat rate shipping. If you can't sleep at night knowing you lost money with flat-rate shipping, this model isn't for you.

But for some people (especially those in the small electronics or jewelry business) it's a godsend.

Shipping and handling: model 3 - S&H fee

This is a legitimate way to handle extra expenses incurred with shipping: charge the actual shipping costs plus a bit more for "handling".

This "extra" amount is usually only a buck or two. A fine and justifiable amount (for both buyers and sellers) for what I call "medium" items...items that could never go first class, but aren't oversize.

Handling fees should never equal or exceed the actual shipping cost. That's just plain freaking unfair for the most part. Unfortunately I've seen it a lot. People charging $80 to ship something that costs probably around $30-$40 to ship.

Notice I said "for the most part". There are a few (very few) cases where this is justifiable, but usually in cases where the item is fragile (as in a large ceramic vase), comes in multiple pieces (like a set of china), or requires specialize packaging (like perishable goods).

Do you fall under these cases? Then fine, you can charge the extra, since many buyers expect to pay extra for that anyway. But again, the amount MUST be reasonable.

Buyers will see right through you if you try to scam them on "handling charges", so use these charges freely, but with caution.

Shipping and handling: model 2 - actual shipping

The fairest model (from the customer's viewpoint) is the actual shipping model.

USPS charges you $12.85? Then you charge the customer $12.85. No bump-ups, no hidden fees...nothing but the actual price.

OK, you still need to cover supplies and so on, right?

Wrong.

These costs should be built in to your operating expenses and spread out over all the prices you charge for all your items, or at least built in to the price of the item you're selling.

Again, nickel-and-diming is NOT the way to go...unless you want to lose your customer base.

Shipping and handling: model 1 - free shipping

OK, yeah I know. There's no such thing as free shipping.

Most people do one of two things to offer "free shipping":

• Bump up the price to help cover the costs, or
• Eat it, which is more common than your think, especially with small light items that only cost a buck or so to mail.

If you decide to do the bump (the price, not the dance), then you really need to be reasonable on what the bump should be. In my opinion, the bump should never be more than the actual shipping amount - as in what the PO or UPS or Fedex will charge you. Don't nickel-and-dime your customers to death with built-in charges for gas, supplies, your time, etc. Be fair (to the customers), be reasonable (to the customers) and your sales will do fine. Overcharge, and I can guarantee they will find other places to spend their money.

Shipping and handling - the debate rages on

There was a thread recently on bonanzle about what someone should charge for shipping and handling.

Let me say right off the bat: if you tell your customer you charge x dollars to help cover your costs of boxes, bubble wrap, tape, labels, gas and your time...stop selling - get out of the business - find something less destructive to do. Because when you do that, all your are doing is (short-term) lining your pockets with a few extra coins and (long-term) making the on-line buying experience more painful for your customers.

So, seriously, go away.

I want my thingie I bought from you, and I will pay a reasonable charge for shipping. And I'm not so stupid that I think a 3 pound item will cost 12 bucks to mail, especially since I know I can go to the USPS website and figure out the cost myself.

So...in the name of fairness, I want to present to you the basic S&H models. Each takes some (in the words of Ricky Ricardo) 'splaining to do", but I think it will all be worth it.