The debate you see most often on public selling forums, as well as in the mind of any enterprising web entrepreneur, is whether it is better to sell on eBay or through your own website.

The Economics Of Selling On The Web

A major part of economics has been devoted to the understanding of the behavior of costs. Let’s examine it for a web-based business. It is basically a choice between the eBay fees and the costs associated with owning and maintaining your own website.

The eBay fees are variable. This means that they have a direct relation to the number of units you sell. So you pay only for what you use. So if you don’t put any listings or don’t sell anything, you do not have any costs.

Whereas in setting up and owning your own website, it becomes a fixed cost. This means that irrespective of the fact whether you sell a unit or not, you will have to pay those expenses.

You do not have to be a mathematical genius to figure out what this means. This bottom line gets to one word and that is called “volume.” If you are selling goods in large volume and have a steady base of loyal customers, then your own website is a better alternative. On the other hand, if you have a lower volume and would want to keep costs under control, eBay is your most cost-effective bet.

How About Using EBay To Build Volumes?

A large percentage of web-based businesses fail. In fact, some people estimate the failure rate to be 97 percent. Web businesses do not fail because they do not provide a better offering or a better price, but because consumers don’t trust them. This is where eBay succeeds; it has the trust of millions of buyers over the Internet who knows that if eBay is involved, there are few chances that anything will go wrong or go against what was promised.

But the best part of this story is that after a few transactions the buyer begins to trust you and that is the time when you can convert them into your own captive customer without having to pay eBay the fees.

When you start up your business, you should try and sell on eBay and interact with customers, giving them great service and ensure that there are no complaints. Once these customers have seen and experienced the quality of your services, they are sure of what they are going to get, you can win them over to your website.

This means that eBay is in effect your marketing agent. Think about the thousands of dollars you were planning to spend on promoting your website. Wouldn’t this cost much less and at the same time help you gain much more momentum and build volume faster?

So here is what not to do:

• Do not include any links in the auction: eBay is smart enough to understand that if you are posting something for sale on its website and at the same time offering it cheaper at your own site, soon buyers will start flocking to you, and eBay will be out of business. Remember trust, which is what eBay does. It adds credibility to your resume till the buyer figures out you are a genuine seller.

• Do not include links in your eBay store: For the same reasons mentioned above, make sure that there are no links redirecting to your website on your eBay store.

• Do not set bad expectations: Some people tend to take this strategy too far. Do not engage in discount selling to win over customers by taking losses. Although initially you will think that you are doing well as your database of customers will seem to be growing at an exponential rate.

But in reality, all you would have done is attracted the wrong type of customers. Most of them will be bargain hunters, who will shift loyalty when they see a higher price from you. The key to this is to set a price which you can deliver consistently, if not reduce once they come over to your website.

• Keep Track of the Rules: eBay constantly keeps updating its rules pertaining to the buyers and sellers. You need to ensure that you are on the right side of the eBay rules to avoid all your credibility being damaged. You could subscribe to a periodical or a newsletter to make sure you stay abreast on all the latest happenings in eBay.

Do’s Part One: Winning over Customers on EBay

• About Me Page: Here is the Achilles heel in the eBay arsenal. Although they can prevent you from marketing yourself in any way, they cannot prevent the buyer from knowing more about you. So this is what eBay does: It gives you one page that lets you write anything that you have to, including posting your link on their website. But make sure when you deal with the buyer that you do not overtly say that they can make their purchase there. Instead, get them to click on the link by offering a value added service or a freebie like “this is where you can track your package delivery.” These will them to click on your link.

• The Package: The next most important area where you target the customer is the package that you send. EBay just passes on the order to you and passes on the payment. It does not know what you are shipping. So use the package to let a customer know that you exist. Send your brochures that describe your entire product line and your off-eBay prices, which you should quote as less. If you are using inaugural discounts, make sure they are just for the first few purchases. But without the listing fees, you should be able to price competitively. If you add the buyers trust on your customer service level, what you get is a formula for success.

• Related Products: Another strategy that can be effectively used is to sell a related product on eBay and offer the other related product through your own website using either the package or the link to tell that to the customer. Once again, this will give you a customer on your website, and eBay just did the marketing for you.

Do’s Part Two: Keeping Customers for a Lifetime

• Database: It is often said that in web marketing a database is your most important tool. Once you do this strategy for a couple of months, you will have an enviable database. You would have made a profit or at least broken even and your customers will have a 100% brand recall if they pay attention to who they buy from. It can be used for understanding customer needs and analyzing what they are likely to buy and even for conducting marketing research to improve your product line.

• E-Mail Marketing: The next step in the database is to obtain permission from buyers and put their email IDs on your mailing list. Use this to prop up sales of unsold inventory by offering discount coupons, which will keep you in touch with them, as well as keep them interested. Make sure they can conveniently unsubscribe if they do not want to receive your emails.

• Loyalty Programs: Offer points for every purchase made and then give back a part of the profits on reaching a certain number of points. This is based on the principle of customer lifetime value. If you can get the customer hooked to you using a loyalty program, it will be much more profitable as it becomes a steady source of cash flow.

• Affiliate Programs: Now you not only reward customers for shopping with you, you pay them for getting their family and friends hooked to your own website. Affiliate programs can work wonders, if there is really no selling involved. Their friends and family may have wanted to buy the products anyway, but they will buy it from you because their loved one benefits. And if you are charging a similar price and give great service, they may want to be your permanent customers.