STRAIGHT, NO BULL- The real reasons (hint: taxes) why eBay is losing sellers and revenue!

[step_up_your_game]

Here's the staight dope...

AMZ courts large sellers hard. It is hard for eBay to convince large sellers to spend time listing here. It takes a lot longer to list on Ebay, and more often than not the products take longer to sell, and/or they sell for less.

In contrast, AMZ hates the little guy. They don't want Joe Anybody listing the cheap pair of cheap clearance sneakers he found at Kohls, along with a bunch of other random stuff in his garage that he bought to flip. This should be eBay's opening to capitalize.

There are millions of Joes, and their money adds up. The problem is - this is not Joe Anybody's primary source of income. If he's not making at least $500 on every $1500 he sells, it's simply not worth his time. Sure, Joe could decide he's happy with $200 on every $1500 of sales if he can sell 3 times as much, but Joe does not have the time or capital for that. There is a more important factor at play however...

Joe does not want to cross the $20k tax threshold. He has no intention of having to deal with the government for his eBay business. Yes, yes, shame on Joe for his evil deeds here but without getting into the morality of it all, let's just face the music -Joe is probably in the majority of the small sellers regarding obligations to Uncle Sam.

If Joe can sell $18k at $9k profit a year, it's a nice little source of extra income. If Joe does $18k but at only $3k profit, he's making less than minimum wage for his effort. He doesn't want the tax hassle so he won't jist try to sell more to make up for the low margins. 

It seems like eBay is doing whatever thay can to push Joe to sell at a miniscule profit. They tell him his price is too high if he lists it at anything but the lowest. They default his listings to best offer and hide it so he can't tell. He gets rid of the best offer and they automatically enable it again a few days later. Bootleg knockoffs are allowed to flood the site and will not be taken down if they are reported.

Joe decides he's done. EBay lost the large seller money, and now they've lost Joe and millions of other Joes like Joe. eBay decided the Joes weren't giving them enough sales. Now the Joes aren't giving them any sales.

It doesn't matter what eBay does now with short-term sales driving schemes. There is nothing they can do to make more money but convince the Joes to come back. I sincerely hope that this post finds it's way to an exec at eBay and sparks an "aha!" moment. I don't see a lot of hope for the site if things continue the way they are.

Improve the seller and buyer experience, gain membership - more items will be available and sales will grow organically. Otherwise eBay's future may be just a fire-sale acquisition of AMZ. 

[step_up_your_game]

Haha true.

And btw, remember that time when you were young and you traded that thing to your friend for that other thing that turned out to be worth a lot more?

Pepperidge Farm remembers...

And Pepperidge Farm remembers that you didn't pay taxes on the gain when you sold it  😉

(sorry, Family Guy reference if it makes no sense)

I'm willing to bet even the most avid tax police have unknowingly slighted the gov't at some point.

[coolections]

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@timemachine777wrote:

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 I've made boat loads of money and not only, not paid any tax on it, but got lots of money back from credits.  

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Oh' boy. You've made over a million dollars and never paid taxes ? I sure hope IRS doesn't catch you as either you are loosing when purchasing items, to claim that much, or are cheating the IRS terribly.

[timemachine777]

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@luckythewinnerwrote:

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@yuzuhawrote:
It's not even worth purchasing something to resell unless you can at least double what you spent on it.

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Selling two $500 items per week that you spent $300 on: 

+$525.00 received

- $300.00 item cost

- 25.00 shipping cost

- $52.50 final value fees

- $15.53 PayPal fees

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$131.97 profit per item

x 104 items per year

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$13,724 in profit

That seems worth it for  selling two items a week. 

When it comes to determining whether your time is worth the income, I find that comparing the time to the income answers the question better than comparing the time to markup percentage. 

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You forgot the economic cost of doing business here on eBay.

So lets see...

Costs to: 

Locate item; includes vehicles costs

Bring it home/business

Clean it if needed

Prep to Photograph & take photos

Do all related photo work

Prep listing

Research item

Fill in listing fields

Upload listing

Store item

Answer any questions if needed

If item sells;

Pull item from it's stored location

Package it and label etc

Cost of all shipping mat

Ship it

Do feedback

Upload tracking if needed

If it doesn't sell do all revisions as needed

Deal with all shipping issues if needed

Deal with all customer issues that arise

Cost of the space, utilities and taxes, used and paid for all business activity

Value of time to do all of the above

$131.97

-(above)

________

Profit +/-

I may have missed something (It's late). Anyway, it takes a lot of work to sell something on eBay. Most sellers don't factor in all the above work. Many treat all their labor as valueless, including the cost and wear an tear on all their equipment involved also.

[timemachine777]

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@luckythewinnerwrote:

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@yuzuhawrote:

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 In Joe's case, if he's selling $18k but only bringing home $3k in profit, he really needs to rethink his business plan.

Again, you seem to be doubling down on the false idea that your profit percentage determines your hourly wage.

That is simply not true. 

If Joe is putting in 400+ hours to earn that $3k, he is indeed working for less than minumim wage.  

But if Joe is only putting in 100 hours to earn that $3k, he is making $30 an hour - which is a very nice part-time job. (The average worker in the USA earns the equivalent of $22.50 per hour). 

The percentage of sales that is profit has nothing to do with the hourly rate. 

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I don't know where that number is estimated from. Most states have a median hourly wage in the mid to upper teens. so when you avg them out you end up in the high teens. Maine is 16.50 an hour, though most of those better paying jobs are down on the southern tip of the state and the state capital. The rest of the state is closer to 9.00 min wage. 

[timemachine777]

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@coolectionswrote:

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@timemachine777wrote:

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 I've made boat loads of money and not only, not paid any tax on it, but got lots of money back from credits.  

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Oh' boy. You've made over a million dollars and never paid taxes ? I sure hope IRS doesn't catch you as either you are loosing when purchasing items, to claim that much, or are cheating the IRS terribly.

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I didn't tell you what I make. If you think that just because someone makes a lot of money, than they have to pay taxes on it, your wrong. Warren Buffett pays less taxes than his secretary does. 

[magikalnight]

 I enjoyed reading this but there is nothing that you said that an executive doesn’t know already and will not have any aha moment based on what you wrote but it was enjoyable I don’t agree with it all there’s a lot of flaws in what you said but there are good points it sounds like you were burned a little  because what you said is not the case at all it’s not a bottom feeder situation if you notice the markets mimicking each other, so just because toys r us ( now out of business )signed up with them doesn’t mean that they’re better you need the two different companies that offer two different options there’s a lot of silliness in what you said but it’s ok you’re upset  I would suggest finding different product since there’s tons of liquidated businesses and other options to make money more people spend money on line and in e-commerce then ever before in the history of the Internet what you said has tons of flaws and is untrue  if somebody’s worried about the $18-$20,000 threshold they should look to sell different items and make more money get outside the box  

[step_up_your_game]

Thanks I appreciate even if you don't fully agree. Just basing off the fact the same product sells better and for more $ on AMZ. Wish it was good on both sites though. I think it could be that way with some improvements on eBay. That's the goal. Not trying to bash the site. Want the glory days back haha, eBay used to be my go-to.

[kamry1234]

Not as thrilled as they'd be to NOT pay taxes on 20+ thousand sales a year, this I promise you... just sayin'

[kamry1234]

I'm not sure you can call it and incorrect gross amount when they are charging the seller final value fees on the shipping charges. It all counts towards the profit slopped into the troughs for the swine at the top.

[mrconran]

I think a lot of you folks are a bit hung up on the tax issues. Ebay doesn't care about the seller's tax issues. That is between the seller and the government.

Ebay should care about the seller but doesn't. The seller creates Ebay's income. 

You might same I am a "Joe". I paid a lot and I mean a lot of money to Ebay  last year. I am on track to pay them a lot more this year. Except that I am working on leaving. I just put my store on a month to month billing cycle. 

The 80/20 retail rule applies to Ebay. 20% of it's seller's account for 80% of it's income.

[ted_200]

I suspect the $20,000 mandatory 1099 rule did have some effect on smaller sellers on eBay, mostly in the year or year after it went into effect.  People turning a good profit with capacity to increase over $20K gross are probably willing to do that and pay the taxes on it, unless it caused them to lose benefits or tax breaks elsewhere.  Sellers with low profit might well have decided it wasn't worth all the effort (and even lower profit) and made s concious decision to remain below $20K... or quit selling.

I think a much bigger impact was probably with sellers making way over $20K gross who had been dodging taxes for years.  I suspect they reduced sales below $20K or quit after the reporting came about, since getting a 1099 would suddenly make their activities visible to IRS and potentially expose them to tens of thousands in back taxes, penalties, and interest. 

Relatively speaking, the "safest" way to be a tax cheat is to deal in cash, so I think a lot of eBay's luster for tax cheats went away in 2008 when they banned paper payments. 

Irrespective of tax cheats, I do think the tax code, and taxes, discourage a lot of economic activity.  I'd rather the tax cheats sell on eBay to live and cheat on their taxes, than do nothing and live off of my tax payments. 

[ted_200]

Ebay doesn't care about the seller's tax issues.

I think they do, they're always lobbying sellers to lobby Washington against more taxes. 

eBay wants to squeeze sellers for every possible cent, so they're basically competing for revenue from sellers with the government... if the government taxes profit high enough, sellers will quit, and eBay loses their fee revenue.  There is a point at which taxes + fees + shipping rates gets too close to creating zero profit for sellers, and then they've killed their golden goose.

[luvshoes60]

I have to say....Please don't blame it all on the sellers.  I have had issue with Ebay's multiple item listings.  In the past year, I have sold items under the multiple item listings, and I was out of stock.  It seems that when the listing renews, Ebay had renewed it with the original amount of items.  Hence, my item was previously sold and no longer in my possession.  I had had this happen multiple times.  I finally realized how this was happening and contacted Ebay.  The rep said that there was a glitch and they were working on it.  Unfortunately, the buyers do not see that end of it.  It is very hard to keep up with EBay glitches and when you have a lot of listings, it is hard to continually monitor them.  There is not enough time in a day!  I had spoken with another Ebay seller, and they also were having the same problem.  So please, realize there sometimes are two sides to a story!

[thatsallfolks]

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@richards*rock*collectionwrote:
I think barroom was referring to today, the stock fell 6 points, your right, its going up overall.

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eBay's stock fell 1/3 of one point yesterday. Whatever source of info you're using, you should replace it.

[the*dog*ate*my*tablecloth]

Joe's going to be in for a rude awakening if he lives in one of the States that is starting to require 1099s for any money over $600 which is commonly seen as the yard sale amount. So far it is MA and VT but I expect to spread. Many people didn't know about the 2016 change until a month or so ago so by then it was too late to do anything about it if you were a cheat.

Then I believe the tax people can go back 3 years and charge tax, interest AND penalties.