The Case For eBay Stores
by Katie Sween
eBay Stores Marketing

In light of recent price changes in eBay Stores, I want to take some time this month to show how selling in an eBay Store makes sound economic sense. First, I will look at the costs of selling in the Store Inventory format and offer recommendations on evaluating whether to list in Store Inventory given the new Final Value Fee structure. Then, I will compare the costs of selling with a Basic eBay Store to a comparable independent Web storefront.

New Store Inventory Final Value Fee Pricing
eBay Store sellers have more selling choices on eBay – you can list in Auction-style as well as Fixed Price formats plus in Store Inventory format. Store Inventory format is a listing format available only to eBay Store sellers. Store Inventory comes in longer durations (30, 60, 90, 120 days, and Good ‘Til Cancelled). Store Inventory listings have a much lower insertion fee ($0.02 per 30 days regardless of quantity) than Auction-style or Fixed Price listings because they have relatively less visibility. They appear mainly in eBay Store sellers' Stores and in search results that display fewer than 20 Auction-style or Fixed Price listings.

Beginning February 18 th, the Final Value Fee (the fee charged upon a successful sale) for Store Inventory items changed from $5.25% to 8% for items with final values between $0 and $25. To see all Store Inventory Final Value Fee changes, click here.

Store Inventory listings save you money with longer duration and multiple quantities
Auction-style (and Fixed Price) listings have more visibility on eBay, but are available in shorter durations. Store Inventory listings have relatively less visibility but are available in unlimited duration. They also have no additional insertion fees for multiple quantity listings.

Below is a comparison of listing fees for an item that sells for $15. The table is a comparison of the listing fees for this item in the Store Inventory format with fees for the same listing in the Auction-style format (assuming a starting price $9.99):

You'll notice there isn't a big difference in fees between the Auction-style listing and Store Inventory Format listing if you compare them listing to listing. However, you should bear in mind that, compared to Store Inventory listings, Auction-style and Fixed Price listings have more visibility in search and are, therefore, more likely to sell.

So, all other things being equal – if you plan on just listing once, it will usually make more sense to list in Auction-style or Fixed Price rather than the Store Inventory format.

However, the cost savings from using the Store Inventory format increases when you want to list:

• for extended durations,
• or in multiple quantities.

The extended duration of Store Inventory allows sellers to have inventory on the site for extended (even indefinite) periods of time without having to relist. To make an Auction-style listing available for 30 days would require relisting multiple times, resulting in increased listing fees.

Store Inventory listings can also be more affordable than Auction-style or Fixed Priced listings when listing in multiple quantities. Insertion fees for a single Store Inventory listing with 10 items costs only $0.02. A similar listing with a $15 Buy It Now price in the Fixed Price format would be $2.40.

By choosing the right listing format strategy, you can make both Auction-style and Store Inventory formats work to your advantage.

Consider these techniques to optimize the benefits of both these listing formats:

• Use your Auction-style and Fixed Price listings as marketing and advertising vehicles for your Store. With this approach you can drive buyers to your Store where they can then find all your items.
• List one item in Auction-style format and within that item description link to an identical Store Inventory listing, encouraging buyers to “Buy the item immediately.” You can list multiple quantities of the item in Store Inventory format and have the listing live in your Store for extended periods.
• List faster-moving items (or items that you know buyers are searching for) in Auction-style and Fixed Price listings to drive buyers to your Store.
• List slower-moving, or less searched-for items (for example, accessory-type inventory) in Store Inventory format so that you can always have merchandise in your Store.

Compare monthly costs of selling online
In February, we also changed the monthly fee for the Basic Store Subscription, from $9.95 to $15.95. It's the first time in more than three years that the Basic Store Subscription fee has changed. During that three year period, we have significantly improved and added features to the Basic Store subscription, including Sales and Traffic Reports, additional customization features to help you enhance your Store's look and feel, increased exposure for Store Inventory and additional marketing and promotion tools to help get more buyers to your Store.

Even with the new subscription fee, we feel that eBay Stores still provide outstanding value when you “do the numbers” and compare it with other alternatives.

Let's compare the cost of selling online in two channels available to you: selling in an eBay Store vs. selling through an independent Web storefront. To start, the major costs for selling online include:

1. Storefront services (hosting, design, inventory management, and tracking)
2. Payment processing
3. Customer Acquisition costs (fees spent marketing your store and products to attract buyers)

The table below shows a comparison of the approximate monthly costs of selling online in an eBay Store and in an independent web storefront.

While payment processing fees and monthly subscription fees for both selling channels are comparable, eBay Stores sellers have a huge advantage when it comes to customer acquisition costs. Your eBay Store and the items you list there receive exposure to millions of buyers. Not only is your store exposed to over 135 million members on eBay, it's also visible to buyers searching the Internet using major search engines.

Sellers setting up their own Web storefront typically depend on online advertising through paid placements on search engines to drive new customers to their stores. Currently the average cost of purchasing a keyword on most search engines is $0.48 per keyword. Assuming 2-3% of people who click on an ad actually purchase an item, sellers would have to spend hundreds of dollars each month to drive buyers to items in their independent Web storefronts.*

* Cost per click average is from Yahoo in Q4, 2004 as reported by Goldman Sachs. The average cost per click and click-to-purchase conversions vary by item and selling strategy.

When you add it up, the cost of selling online with an eBay Store subscription continues to be much more affordable than other independent Web storefront options.

As a savvy seller mindful of the fast-paced changes in the world of eCommerce, you know what strategies work best for your business. eBay Stores continues to be one of the best channel alternatives available to you, reaching millions of buyers and continuing to provide cost-effective solutions and features to meet your growing business needs.

To keep abreast of new offerings and features in eBay Stores, check out the Latest News.

Next month: Build buyer loyalty by using the features in your eBay Store to distinguish yourself on eBay.