Over the past decade there have been dramatic changes in how small home businesses are run. It used to be you could sell tangible goods on eBay. But the catastrophic changes in PayPal’s payment policies have done away with that. All of eBay’s money goes through PayPal, sometimes behind the scenes and sometimes not.
Etsy came along as the craftier version of eBay (owned by eBay) for small home businesses specializing in handcrafted items to sell their products. They had the same problems as eBay–namely PayPal handling all the money.
Amazon came in next with a way for small home business owners to sell on their marketplace. They have their own payment processing service which completely bypasses PayPal. However, they charge a hefty 30% from each sale.
So now where does the average small home business owner sell his/her products? The answer is nowhere.
Below is a short preview of what to expect selling on any of these three platforms.
Selling on eBay
EBay charges a minimum of 35 cents per listing. If you want a larger search photo add another dollar. If you want other options, like colors or sizes, add another fee for each of those. The fees for one listing can easily go up to $20 per product. That’s for listing the item, not for selling it. You pay that fee regardless of whether the item sells.
As of March 2019 eBay has changed their policies regarding listings. If you choose to list a product for more than 7 days you are required to choose the GOOD UNTIL CANCELLED length which runs for 30 days then automatically relists your item and charges you again for the listing fees. Again, this is not for selling the product, only for listing it. If you have a lot of products for sale this can easily become incredibly expensive, into thousands of dollars per month.
EBay charges 10% selling fees on every item sold. That does not include the PayPal fees for getting paid. EBay also charges an additional 10% on the shipping charges. That does not include the PayPal fees for collecting the money for postage. What this means is that the total money collected, cost of item + shipping cost, is charged selling fees + PayPal fees. This selling fee is 10% charged by eBay plus up to 10% charged by PayPal. Normally PayPal charges 4% on money transactions, but over the past 15 months they’ve been penalizing sellers for eBay transactions and those additional fees add up quickly.
EBay starts off sellers with 5 listings. That’s not a typo. You only get 5 listings. After your first sale, your account will be reevaluated in 30 days and you may get more listings. You also may not. It takes sellers on eBay years to get enough listings to run a business. Buying a “store” on eBay and paying the store fee of $39.95 each month does not mean you will automatically get 1,000 listings. It means if you are already allowed to list 1,000 items on eBay you will not have to pay a listing fee for those first 1,000 listings each month (provided you use the basic listing tool).
EBay used to be great when it came to attracting customers. Part of that was because of their listing software. EBay allows up to ten photos per listing, more than any other venue. Those photos are catalogued by Google, Bing, Yahoo, and other search engines which attract customers looking for your product. That’s provided you have some incredible photos of your actual products.
Where eBay completely fails in attracting customers is in their revised search engine. In January 2018 eBay “upgraded” their search engine. What their programmers in India did was to associate brand names with categories. If you search for a product on eBay and use a brand name in the search you are taken to a specific category rather than a brand name. You will only see sellers who have listed in that category, which is a very small fraction of the listings on eBay for that product. Shortly after this revised search engine was released on eBay thousand of sellers noticed their sales completely stopped. There was no explanation from eBay. There was nothing.
Below are several examples showing the large number of listings which are automatically omitted from search results when you enter a brand name on eBay.
If you enter the Parker brand in a search you are automatically redirected to a specific category. If you enter “parker pen” you are redirected to the category “pens”. Any listings under “collectibles”, “business & industrial” or other categories are completely omitted from the search results. You will only find 26,679 listings.
If you click on the ALL category to the left of the search results you will see all of the listings for “parker pen”. There are 32,718 listings which means over 6,000 listings were omitted from your search results when you just entered “parker pen” in the search box on eBay. That’s a lot of listings and a lot of sellers whose products are never being found.
Vera Bradley Brand
One of the most successful brands being sold on eBay used to be Vera Bradley products. If you enter the Vera Bradley brand in a search you are automatically redirected to a specific category. If you enter “vera bradley” you are redirected to the category “women’s bags & handbags”. Any listings under “clothing”, “collectibles”, “health & beauty”, or other categories are completely omitted from the search results. You will only find 60,660 listings. That means if you listed pill boxes, cosmetic bags, or other Vera Bradley products correctly they will never be shown to buyers.
If you click on the ALL category to the left of the search results you will see all of the listings for “vera bradley”. There are 118,326 listings which means over 57,000 listings were omitted from your search results when you just entered vera bradley” in the search box on eBay. That’s a lot of listings and a lot of sellers whose products are never being found.
If those 57,000 listings were charged the cheapest listing fee of 35 cents each, that’s $19,950 in revenue that eBay charged in listing fees each month for listings they intentionally never showed. That’s for only one brand.
As you can see selling any kind of brand name product on eBay is an expensive home business that will product little to no profit. It would require an enormous amount of money to educate your customers in how to search on eBay under their new search engine.
In 2018 eBay announced it was cutting its ties to PayPal. That was actually a lie. They allowed sellers to take direct credit card payments, but all of the payment processing was done in the background through PayPal. As a result none of those payments were actually secured on the seller’s behalf. At the same time that eBay announced cutting its ties to PayPal (which they didn’t), PayPal instituted a Draconian system of verification for all PayPal accounts which resulted in the closure of hundreds of thousands of PayPal accounts, mostly seller accounts. Payments from buyers were seized by PayPal and those sellers were never paid.
This system of verification was never explained to sellers or buyers and was never outlined anywhere in the user agreements either on eBay or on PayPal. Once PayPal discovered this mistake they continued to keep the money and keep the Draconian system of verification. Eventually this resulted in millions of authentic PayPal accounts being shut down and hundreds of thousands of sellers leaving eBay.
You will probably never read this in the news because eBay and PayPal expended considerable effort in covering up their mistakes.
In March of 2019 eBay’s new CEO announced they were once again in bed with PayPal. They failed to mention that they’d been in bed with PayPal all along in the background.
This time both sellers and buyers were put through the verification process in both eBay and PayPal. Every user’s first name, last name, address, and phone number were compared to IRS’s database and if they were not real people their accounts were summarily closed. Transactions were NOT cancelled, and eBay kept the money they had spent on purchases as well as any money they’d earned as sellers.
If the user account was under a company name, the company’s name, address, and phone number were compared to IRS’s database and if they did not match perfectly their accounts were summarily closed. Transactions were NOT cancelled, and eBay kept the money they had spent on purchases as well as any money they’d earned as sellers.
Next the company’s name was compared to the state corporations and dba (doing business as) database. If they did not match perfectly their accounts were summarily closed. Transactions were NOT cancelled, and eBay kept the money they had spent on purchases as well as any money they’d earned as sellers. It didn’t matter if your state had no dba (doing business as) filing requirement, they still checked and if they didn’t find it your account was closed and your money kept.
IF an eBay seller made it through the eBay verification process for both the person and the business (you MUST do both) then they were put through the same Draconian system of verification by PayPal. That’s four verifications that must take place, six if you count the state database separately. If any item does not match up perfectly the account is summarily closed with no chance for appeal. They also keep your money and you don’t get paid.
For some sellers this may seem simple, but not if you’re doing business on eBay or using PayPal as a payment processor. EBay and PayPal give buyers the address, phone, and email of the seller they buy from. In the past this has resulted in eBay buyers showing up on seller’s doorsteps demanding to get their items without paying a shipping cost. Or demanding to inspect they item before it is shipped. There used to be horror stories all over the web from sellers who were horrified to learn their personal information had been given away to strangers and scam artists on eBay.
Now sellers usually have a PO Box as their business address. As part of EBay and PayPal’s new Draconian system of verification, they no longer allow PO Boxes to be used as addresses. If that is what is on your business license you cannot be verified.
Getting an Unused IP Address
As the last step in verification, both eBay and PayPal check your IP address against any other business or users on either system. If anyone has ever used your IP address and their account has been closed, your account is automatically closed. There is no discussion. There is no appeals process. Your money is kept and your account is closed. This has resulted in closing hundreds of thousands of valid accounts on both eBay and PayPal. It is very easy for scam artists and spammers to fake IP addresses and they could choose yours next.
That’s a great question. Sales on eBay have been steadily declining for more than 11 years. Over the past 15 months they’ve dropped precipitously because of the changes mentioned above. Even if eBay and PayPal were to reverse everything they’ve done over the past 15 months they will never get back buyer or seller trust. That will take a lot longer, maybe more than a decade.
Click here to read Small Home Businesses on Amazon.