eforcity announced that they are the biggest seller on eBay.com. InflatableMadness publicly declared a revenue goal of $4M per year. How are they doing?
I researched their September 2007 eBay sales using eSeller Street.
- eforcity
Sales: $99,423
Quantity sold: 38,654
Sell Through Rate: 19.52%
Ave Sold Price: $2.57
Listings:176,687
Items Offered: 7,707,691 - InflatableMadness
Sales: $74,929
Quantity sold: 10,531
Sell Through Rate: 6.21%
Ave Sold Price: $7.10
Listings: 169,502
Items Offered: 169,502
They are both in very competitive markets. eforecity sells consumer electronics and accessories (cell phone cases, phone cards, cables, batteries). InflatableMadness sells music CDs, DVDs and videogames. Both create approximately the same number of listings each month (e 177K, i 170K).
74% of eforcity’s listings are auction format where 82% of InflatableMadness’s listings are store format. Just on insertion fees alone, both sellers are paying approximately $25K monthly in eBay fees. The final value fees are approximately: eforcity $5.2K, inflatablemadness $4K.
My estimate for their net monthly sales minus eBay fees:
eforcity: $69K
InflatableMadness: $46K
I further venture a guess on their employees – 1 person per 100 items shipped per day @ $6 per hour:
eforcity: 13 people, $18,700 wages
InflatableMadness: 4 people, $5,760 wages
That leaves eforcity with ~$50K per month in income to pay for inventory and fixed costs (warehouse, insurance, administrative costs) and InflatableMadness with ~$40K for the same. I don’t know what these guys pay for inventory. But applying the typical rules of low cost, high volume markets, the sales price is usually pretty close to the cost of inventory. If the cost of inventory was lower than the sales price, a seller would attempt to undercut everyone else until they hit their cost point.
Conclusion:
These guys are high volume! But certainly not the biggest sellers on eBay. One very quiet seller of cameras brings in $1.5 M per month. That’s more than 10 times more than these sellers.
My recommendation is (and always has been) to upsell. Pick inventory that is scarce and sell its features. Take good photos, write good descriptions, deliver good service. Leave the low priced, high volume items to the guys with the capability of reducing their costs with economies of scale.
What you don’t know is that eforcity actually has 4 different screen names on eBay. They have itrimming, eforcity, everydaysource, and accstation. The reason they have such high sales is because they list items at .01 and .02 BIN with high shipping charges which cheats ebay out of Final Value Fees probably costing them thousands of dollars a month. They also flood the market with identical items from these 4 user ID’s breaking eBay’s “15 identical item rule” which states that a seller cannot have more than 15 of the same items out there as fixed price/auction at the same time. If you want do see for yourself, search for V3 Car Charger and see how many items you see that come out between these 4 User IDs. I’m going to say you’ll see between 150-200 listings. How about a follow up story with that?
Comment by Anonymous — April 21, 2008 @ 9:06 pm |
Interesting eBay rule. I’ll follow up on it.
Michelle
Comment by estreet — April 22, 2008 @ 7:23 am |
I’m also amazed how they are handling all the listings, inventory and the cost of insertion fees for the unsold listings. How can they make any money when they sell something only 2.98 total with free shipping? even if the product is free but the high cost of shipping, pacakaging, lost packages, RMA, chargebacks, complaints, negative feedbacks which putting them at a low search priority with the new stupid “ebay” rules. It’s so hard to believe how they can stay in business. Any thoughts about that?
Comment by Joseph — June 24, 2008 @ 3:14 pm |
very intresting angle that the differnt stores use i have been to both shops there set up phat with deep stacks i agree the people who shoot out i am the number one seller (are not ) but they are kicking some ass there are some big question in this formula like overhead you touched on a payroll expense , inventory cost where do they get that junk and how much they got to pay for it. and thats my brothers is where the rubber meets the road.it sounds like at the end of the day there driving toyotas home not the 08 sport bently. like most things worthwhile in life it takes alot of blood swet and tears.
Comment by kelly nation — November 12, 2008 @ 8:26 pm |