Since its inception, online selling has been called the "perfect market" approach. In simple terms, the concept asserts fair market value will always be obtained for goods when buyers and sellers come together to transact, the result being the current acceptable market price for goods.
When serious economic uncertainty creeps into the marketplace, however, the perfect market can become a problem for sellers who see prices continue to drop and profits erode as marketplaces such as eBay maintain—and even raise—fees on merchants.
If all of this gives you heartache and tempts you to bail out of online selling, wait—you can still be successful even when all signs seem to point to a loss. Here are five tips to consider and employ in your online auctioning and marketing that can help you navigate a way to continued profitability even when the waters become undeniably choppy.
1. Be selective in what you sell
At times when final sales prices—as dictated by the marketplace—are dropping, it's time to swap higher-priced goods for a higher volume of lower-cost items. Buyers are looking for the goods they want, but they're also looking for bargains.
Rather than fight this reality, embrace it by shifting to marketing goods that cost $20 or less. Most buyers will avoid more expensive items, especially if these are indulgences. At the same time, most buyers know they can't expect to find top-value goods for bargain basement prices. They understand how price sensitivity affects the sorts of goods available in a depressed marketplace.
When sellers offer goods that match buyers' expectations while recognizing spending constraints, transactions can continue. More important to the seller, by reducing availability of costlier items, the seller can protect the value and/or investment in such items to avoid taking a loss in a down-turned market.
Establish your prices among the lowest but not necessarily the lowest
2. 'Enticing price' isn't necessarily the 'lowest price'
Although buyers are certainly attracted to the lowest possible price, some prefer (and justify) spending a bit more for an item that delivers higher quality. Buyers can appreciate how a few extra dollars will make their purchase truly satisfying and prevent wasting money on an inferior product.
Therefore, establish your prices among the lowest but not necessarily the lowest. Through careful price research for goods like yours, you can establish your offerings within the acceptable market value, then go on to demonstrate how your goods are a better value, dollar for dollar. At the end of the day, you'll see how just that slightly higher (yet still enticing) price will pay off in profit that you otherwise would have needlessly forsaken.
3. Cut costs to shore up profits
When times get tough for sellers, tough sellers renew their efforts to squeeze out further costs that rob their bottom line. On the surface, this approach sounds like a campaign for removing services, reducing quality, yet hoping buyers will still buy in an inferior experience—not so!
In times when prices are under severe pressure, smart sellers eliminate costs (such as "convenience" costs that might include sub-contracted storage or pricey presentation and packaging fees) to sustain a profit margin while also attracting buyers who aggressively seek out goods that aren't overpriced by unnecessary frills. Sellers should seek ways to offer lower-cost shipping and utilize free packaging supplies to reduce those costs and enable a still-profitable lower price to attract sellers. Then drop any listing upgrades that—though they look pretty—only take away from the seller's bottom line and do little to sway buyers.
And sellers should even consider reducing the number of goods they offer, especially if a large percentage usually goes unsold and only gives the seller the good feeling of having plenty to offer. Eliminate the labor and fees associated with stocking virtual shelves with stagnant goods and focus on the precise goods that are selling, using week-to-week rotation to provide variety.
Avoid proclamations of 'times are tough' within listings and resist imposing hard-lined policies that would dissuade buyers
4. Put on a happy face
More psychological than tactical, the emotional environment of the buyer's shopping and buying experience is nevertheless bankable. Avoid proclamations of "times are tough" within listings and resist imposing hard-lined policies that would dissuade buyers from looking much further than your virtual front door. Instead, be positive in the adjustments you'll make to your lineup of offerings and the methods in which you'll manage transactions. Let buyers know you'll work to save them money (through lower-cost shipping alternatives, for example) without forsaking the quality of what you'll offer and how you'll offer it.
Keep your spirit high as you alter your approach in circumventing tough financial times and you'll find buyers will appreciate your positive attitude and find comfort in buying from you.
5. Offer higher-priced goods… where there are no fees
Lastly, don't be bashful about trotting out your high-priced goods even when it seems few have the means to make such a purchase—some do have the means and desire and you'll still stand a good chance of making a big sale amid economic turmoil. Of course, fee control and elimination is the order of the day so open your own Web presence or develop a customer catalog where you can actively advertise such items without having to pay fees for their temporary visibility.
This book ends the first tip in that, while you'll actively promote your lower-cost goods to the masses, you can also maintain availability of higher-value goods for the discerning buyers who are still among us. Keep your offerings well rounded at all times but be precise in how and where you'll offer the varied items to control costs and protect value. An always-on Web store doesn't entail a per-item sales fee nor does an inexpensive item catalog included within each package you send out.
All told, when the economic climate is challenging, sellers needn't pack up shop and call it quits. Astute sellers recognize that every market presents an opportunity and, with some deliberation and determination, a difficult market can still yield a positive return when the economic ill wind blows.