How to handle Very High “Item not as described” rating

[worldwide_ship]

Hello ebay community,

For the first time I have a very high return rating for "cell phone" category. I sell high priced phones ($800-$1500) and the extra 5% fee is costing me an extra $50-$100 each phone that I only profit around $20-$30. I'm losing big money on every sell. I calculated this is going to cost me $10,000 to $15,000 in extra fees this month! How should I handle this? Should I stop selling the phones until it goes back down? It's a highly competetive market so if I raise prices I won't sell any.  Any advice?

[luckythewinner]

For the first time I have a very high return rating for "cell phone" category.

Have you examined your business model to see why you are attracting so many returns?

Should I stop selling the phones until it goes back down?

Are these used phones? If so, don't used cell phone prices degrade over time as new phones are released? If so, I would be worried that if I waited, my inventory value would degrade and make them unprofitable even without the added fees.

[worldwide_ship]

Have you examined your business model to see why you are attracting so many returns?

My business model hasn't changed in years. Same suppliers, same listings, same phones. I just had a bad month of returns for some reason. 

Are these used phones? If so, don't used cell phone prices degrade over time as new phones are released? If so, I would be worried that if I waited, my inventory value would degrade and make them unprofitable even without the added fees.

Yes they're used. So I guess just bite the loss and keep it moving?

[playwithitagaintoys]

Advice would be to describe your items correctly so you don't get item not as described returns. 

[worldwide_ship]

I greatly appreciate this advice. You are an asset to the ebay community 🙂

[broto_64]

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My business model hasn't changed in years. Same suppliers, same listings, same phones. 

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Well there you go, many businesses have gone under for failing to keep up with the changes.

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I just had a bad month of returns for some reason. 

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Failure to accept responsibility and lack of motivation in terms of finding the reason so that it can be prevented would be another.

[buyselljack2016]

@worldwide_ship 

You need to determine why "you" are "very high" compared to your "peers".

"You" need to decide if "less profit" until you drop from "very high" is the better choice than "no profit" (not selling any) until you drop from "very high".

[farmalljr]

Were it me, I would not sell something at a loss. I would find a venue someplace else to sell it so I can make a profit. Otherwise you would be better off to stop selling those items and liquidate the inventory for at least your costs in it so as to NOT lose money. 

[luckythewinner]

My business model hasn't changed in years.

eBay, the competition, the marketplace, and buyers can all change over time. So even if you business plan has not changed, it might still need to be revisited.

I just had a bad month of returns for some reason. 

That is new information. Was there any 'theme' to reason for the recent spate of returns?

[luckythewinner]

Were it me, I would not sell something at a loss. 

That makes sense if you don't already own the merchandise.

But based on the numbers the OP gave, selling $1K phones where the 5% penalty fee causes $12k in extra fees would indicate he is selling somewhere near 200 phones a month.

So I suspect he may have significant existing inventory.

[worldwide_ship]

So I suspect he may have significant existing inventory.

Yes correct. I have a lot of phones here. Currently going through my returns to figure out what happened but I don't see anything different than previous months. Maybe my "competitors" suddenly started getting less returns. Great idea from ebay though. They have to be making a killing off of these fees. 

[fern*wood]

I'm sorry for you predicament.  I can't get past the line where you state you only make $20-$30. on an item that sells for $800. to $1500.00.   The risk in this would be so off the charts for me.  I'd start looking for a new line of items to sell here that isn't so risky.

[broto_64]

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@fern*wood wrote:

I'm sorry for you predicament.  I can't get past the line where you state you only make $20-$30. on an item that sells for $800. to $1500.00.   The risk in this would be so off the charts for me.  I'd start looking for a new line of items to sell here that isn't so risky.

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It's usually the case, sellers who sell in such volume fall prey to the trap that they'll make it up in the long run. 

But with defects quite the opposite is true, the less you sell the lower your defect rate will be, it truly is a simple numbers game. So to increase profit and decrease defects (and remain or get back to TRS+) the simple solution is to raise prices by a good 10%.

A 10% increase in prices will decrease sales, increase profits, and allow the old defects to slide off the chart over time as fewer new defects come to take their place. As well, a decrease in sales frees up time that a business owner can spend reviewing and polishing up their methods.

[worldwide_ship]

I'd start looking for a new line of items to sell here that isn't so risky.

I hear that a lot, but I've been doing this successfully for 15 years. The competition is simply too tight in this category. I have to compete with major retailers for this inventory and this profit. This is the first time having the issue with returns though.  

[worldwide_ship]

A 10% increase in prices will decrease sales, increase profits, and allow the old defects to slide off the chart over time as fewer new defects come to take their place. As well, a decrease in sales frees up time that a business owner can spend reviewing and polishing up their methods.

This is what I'm thinking about doing. I'm thinking about raising prices 5%. That will pretty much take me out the market temporarily but I'd rather that then give ebay $10,000-$15,000. That way I will split the difference and take less of a loss and hopefully a sell with trickle in here and there.