Tuesday, September 23, 2008

eBay can blame itself - info products found its weak spot

eBay can blame only itself for its performance - info products found its weak spot

While eBay moved over onto all-solid products, "eliminating" its digital downloads (which still exist here and there), it still has this problem in its fee structure which info products continue to drive large trucks through.

Here's the basics: eBay charges less for smaller entries and lower prices. They make their money on higher-ticket items. Now Skip McGrath tells me that there is a sweet spot for middle-range items where the profit is larger and you don't have to sell as many to make a living. He's got a few hundred items or so that he offers weekly on eBay. And that is a real business you have to work at.

The Internet, meanwhile, was built on information exchange - pure and simple. eCommerce really just allows the payment of a commodity called money for another commodity called information. Rare or exotic information can command top dollar as long as it remains rare or hard to get - something which is time-based, in our file-sharing modern world, so you can get that top dollar only for a little while.

Now, eBay and info products collided when some smart people realized that once you had a sale, you could continue to make sales by offering other items directly to that customer - because you now had his email address and he was a paying customer. In other words, a qualified lead - or the beginning of your "reverse funnel."

And so the rush toward cheaper goods being sold, which depressed the market for people who were actually trying to make a living off selling info products on eBay. Especially, since you had free delivery as it was a digital exchange - no UPS or FedEx to take your package anywhere. And you had unlimited supply, since it was only a file on your computer.

When eBay said you had to sell your info product CD, this didn't change the equation - at all. Ok, so you had to burn a CD and paste a label on it, then ship it. A blank CD costs you as little as $.20 at Wal-Mart, and you can get labels to print for about that at Staples. I've gotten one CD from a person which cost him $.53 to mail. Now we are up total to $.93 to create and ship a product out. (I spend more for that, but I want repeat customers.)

If you set your eBay price for $.97 and shipping/handling for $2.95, you cover your cost of production and your eBay fees. The guy sees your product and snatches it up because it's such a great deal. And you have someone who will pay at least $3.00 for something.

On that CD, you set up an autorun program that takes her to your website for the latest and greatest. There, she opts-in to your mailing list and starts to get your other offers through her email. If your sales pitch is continually great, and you consistently give her valuable data as well as good products, she'll remain a client of yours and your sales pretty much go on automatic. Your time is freed up to find more products to offer and deliver.

Now, on top of that, you can get your CD's drop-shipped through Kunaki - or have a company burn your CD's in bulk for less than I outlined above. So you only have to print off the postage and put it in a mailer to them. Again, you set your fees so that the client pays all your overhead when they buy any given product.

Basically, for a small investment, you get a proven list of buyers. Note that - Buyers, not visitors. The traffic coming to your site is now proved that they have available income to spend on your product. And if you take care of your buyers, they'll continue to buy from you from here on out.

To be fair, eBay didn't see this coming - and I don't see any way around this for them. They make their money off big ticket items, like everyone. So the low-end stuff really just got them complaints - which they mostly got rid of by making people offer CD's. That forced the real scammers to find somewhere else to play.

But it still left them a large hole in their marketing scene. You see, realistically, they don't take a final value fee on shipping and handling. They'd have a big revolt. But shoppers like free shipping - so they encourage you to offer free shipping - meaning that they can then take a final value fee off your total amount, which is higher to cover those same shipping costs.

Other than irritating, those fees really just ensure you keep to the standard shipping fees instead. You'll get the savvy shopper that way - someone you might want, instead of the blind "gottahaveitnow" type.

The bottom line - eBay isn't prepared for and can't handle the pure Info product. But you can - and use info products to improve your own bottom line.

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