At eBay OL, they discussed the fact that Top Rated Sellers account for 45% of the value of goods sold on eBay in the U.S. which means that low DSRs can really put you at a big disadvantage when it comes to sales. I talked about tips for increasing your DSRs in this segment from eBay Radio but I know it’s an issue we can’t really talk about too often. Top Rated Sellers (aka TRS) get increased search placement AND discounts making it highly desirable for any seller.
But 45% of sales? Those numbers really sort of change the game a little. Being a Top Rated isn’t just a nice thing to have… it’s essential for a successful eBay business.
Let’s think about this a second. Become Top Rated means more sales because of the increased exposure and savings because of the extra 20% discount off of eBay fees.
In any other aspect of your business, you’d be willing to spend a little more if you it meant more profit in the future, right? After all, you need to spend money to make money, that’s just a fact of business. Why not apply that philosophy to achieving Top Rated?
In our eBay store, we have several very popular items that we just break even on so we’re all but giving it away. Part of the problem is that we offer this at a very low price which limits how much we make and also offer free shipping on this item which eats up even more of our profit. Well, you say, why not start charging shipping? Or raise the price? And I say to you, ” Never.”
Because this cheap little item with its free shipping means an automatic 5 stars for shipping cost every time we sell one. The rest of the items we sell rarely have free shipping. We do a lot of international sales and also ship a lot of unusual items with sometimes hefty shipping costs. But we hold on to our TRS status because of those not-profitable items and their free shipping. It’s worth it to us to lose out on potential profit on these items to ensure we keep our TRS status which of course means more profit and discounts in the long run. Those items with zero profit effectively ensure that we can continue to sell the items that DO make profit but helping us keep our TRS badge. And we feel that the increased sales and fee discounts for being a TRS well make up for any potential profit we could make on increasing the cost of those items.
Sure, you’d lose money if you offered free shipping on all or some of your items. But how does the amount you’d lose compare to the volume of sales you could make if you had the badge? You may even make that loss back with the 20% discount off your eBay fees. Not to mention that you don’t need take a loss on every item or all the time. Occasional sales and special offers where you know you’ll be taking a profit hit can sometimes be an effective way to secure future profits.
To tweak the phrase, sometimes you have to lose money to make it.
(I know that writing DSR ratings is like saying Detailed Seller Ratings Ratings. It’s a SEO thing. Leave me alone.)