I read this week on AuctionBytes the story of how some eBay Trading Assistants (or consignment sellers as they are called in the US) had gone out of business as a result of the introduction of eBay’s Detailed Seller Ratings programme. They had fallen below the minimum selling standard and the sellers seem to be blaming everyone but themselves for their failure – their business model, their customers and the marketplace. In this article, I reflect on the consignment business model and how the DSR system represents a good way of polling buyer opinion. There is certainly more flexibility that eBay could show in their journey to become a better business partner, but many of these sellers had no one to blame but themselves.

The Trading Assistant Business

There is much to recommend the Trading Assistant business. For our clients, it’s not just about knowing how to use eBay or saving time, but research shows that as a result of our reputation, size, experience and pricing know-how we get higher prices in the marketplace than casual sellers. Many of our best clients are experienced eBay sellers who recognise the value in having someone else deal with the logistical and communications hassles. Furthermore, the service is anonymous so celebrities and Olympic Torch runners can sell without fear of negative publicity.

However, whilst it might seem like a simple business – and many start-up from home as we did – the fixed costs can be very high so sales commissions are easily swamped if you are too small. The sellers in the AuctionBytes article seem to be at a scale that they weren’t able to offer exceptional customer service to their buyers and to take the everyday rough-and- tumble of partial refunds and a bit of buyer goodwill that we all know are just the cost of doing business. I’d be embarrassed to admit that I dropped below minimum selling standards for the sake of a £30 refund.

Furthermore, despite multiple warnings from their buyers, they hadn’t figured out that they had to agree with their sellers to include postage in the sales price. Buyers are annoyed by separate postage (depends on category, but true in many) and care only about total cost of sale. By charging separately they made that hard to calculate and suffered their buyers’ wrath.

Detailed Seller Ratings

Since DSRs were introduced, there has been much to grumble about – buyers being unreasonable or uncaring, the anonymity meaning you can’t know which products (or buyers!) are causing problems, and the vast differences seen between categories – we get hit so much harder when we sell second-hand ladies fashion than brand new business supplies. For all these faults, it does provide some average insight into customers views, albeit with considerably random noise on top, and allows us to track improvements over time. For example, when we experimented with a new courier arrangement for some of our items, we were very quickly able to see that our delivery DSR (sorry, “dispatch time”) suffered and we moved away from the courier. Great feedback. Happier customers.

The biggest real gripe that sellers have, however, is how rigidly eBay interprets the DSRs and then uses them as carrot and stick. A strict rule-based system (now with added rule-based soft-landing zone) takes little account of trading conditions, category variations or other one-off random interferences. Even for large sellers the difference can be a handful of customers in a month – and who knows whether they carefully considered their feedback or left it in a bad mood after an argument with their spouse? They aren’t yet held to account, so what incentive is there for them to care?

Becoming a better business partner

There is no doubt that eBay is serious in its intention to become a better business partner. Over the past 5 years, I’ve seen considerable changes in the marketplace and great leaps towards openness and support of the seller community, and I get a genuine sense that the issue of protection from unreasonable buyers is getting some serious thought. Comments at the recent Catalyst event implied they are streets ahead of Amazon, and could build a real source of competitive advantage here.

However, it is still a constant fear for any seller that – despite being a good citizen – the marketplace will shut them out without discussion. Business investment thrives on confidence, and the rules-based culture is one of the biggest hurdles to building long-term businesses on eBay. When I speak to investors about giving us money to expand our eBay business, I explain the risk by comparing it with sharing a bed with a gorilla – you never know if they are going to roll over and crush you in their sleep.

Giving increased power to the Customer Service and Account Management teams and releasing them from the rigidity of Trust & Safety would be a great next step. It would allow sellers to commit more to the marketplace and improvement to flourish within a trusted relationship. It’s too late for the sellers mentioned in the article, but for those who are left, it’s time for the conversation to move on from jumping through hoops to selling more and making customers happy.

The Facts

The news that Google is scrapping its free comparison shopping service in the US will undoubtedly be sending shockwaves up and down the spines of retailers on both sides of the Atlantic. Small retailers, who have struggled to find margin in paid search, will be particularly concerned.

Google Product Search is quite simply a massive driver of traffic and revenue and is much loved by marketers because, bar a little optimization, needs very little management. For many retailers, it is the only cost effective channel for marketing their entire product range.

With the demise of Google Product Search retailers will need to come to terms with three basic facts.

Fact #1: it’s going to get a lot harder and more expensive to remain visible on Google

Fact #2: As acquisition marketing becomes ever more expensive, retention marketing (i.e. marketing to your existing clients) will become more important

Fact #3: With free traffic in decline, retailers will need to start optimizing their sites to ensure higher conversion rates and maximise organic opportunities through SEO and social media activity

Google Product Search has for many years provided a somewhat “lazy” marketing solution. Now there is, soon to be, no such thing as a free lunch, it’s time to get strategic and start working towards making up for the shortfall.

3 Strategies to Counterbalance the Demise of Google Product Search

1. Optimise Your Email Marketing Lists and Campaigns: Your existing customers provide the most lucrative and cost effective marketing opportunities. Email Marketing works at its best when it is engaging and relevant. Take your time to segment your lists according to previous interactions and only deliver targeted campaigns. iContact provides a low cost email marketing solution perfectly suited to small and medium-sized business and offers a free 30-day trial to test the waters.

2. Optimise Your Content Marketing Strategies: Google loves regularly updated content. If you don’t have a blog on your site, it’s time to consider adding one now. As with your email marketing campaigns, your content needs to be relevant, engaging and informative. Great blogged content will not only aid your SEO efforts it will provide much needed content for your email and social media strategy. Remember without content you have no social media strategy.

3. Optimise Your Landing Pages: Make it as easy as possible for customers landing on your site to convert. This would ideally be a sale, but you should also plan to make it as easy as possible for a visitors join your email marketing lists or to engage with you either socially, via email or (if possible) by telephone. Analytic tools such as Google Analytics will help you understand how well your pages perform. Constant testing will help you improve your landing page performance – so start experimenting and tweaking.

From Saturday 2nd until Tuesday 5th June private sellers can list up to 100 items with a start price of £1 or more for free. The normal limitations apply – your account must be above the minimum seller standards, not professional listings tools, no business sellers.

Whilst it seems like a pretty good idea to have four days of free listings, the limit of 100 auctions does seem a bit tight fisted by eBay. In the US they’ve had promotions for 50,000 free listings and with the speed you can list barcoded items using the eBay mobile apps it won’t take long to do 100.

Of course if you’re like me you’ve got more than one eBay account knocking about and could probably list 100 items on each without too much trouble. Start zapping the barcodes on all your old books, CDs and DVDs and you could turn a profit out of a wet weekend.

Alternatively maybe the guys at the Met Office have got it wrong and we’ll have a gloriously sunny weekend for the Queen’s celebrations. I wouldn’t count on it though, Bank Holidays generally equal rain in Britain.

What Product Listing Ads mean for Google

The first thing to realise is that the way Product Listing Ads are surfaced in search results is different to Google Adwords. Google Adwords appear at the top and side of search results, except that the side Adwords are totally missing on mobile devices. This means that Google miss out on a chunk of revenue and retailers miss out on a chunk of leads.

10% of eBay’s UK traffic is now via mobile devices so that’s a reasonable baseline figure to use across the Internet, and it’s growing fast. Product Listing Ads sit much better in the middle of search results and don’t rely heavily on the side bar as do Adwords. Google needs the revenue and will need to replace more and more Adwords revenue as mobile usage grows.

It’s likely that some Adwords revenue will be cannibalised as retailers look at budgets for Product Listing Ads. Google won’t care about shifting budgets though – it doesn’t matter where you spend your money, what matters is how many of you will spend more money with Google instead of getting traffic for free.

What’s the impact for retailers?

I spoke to Eric Best of Mercent today. Mercent help large brand name retailers reach and convert consumers shopping online on platforms such as marketplaces, paid search, shopping comparison channels and affiliate networks.

Eric told me that over the last year they’ve been strongly encouraging their clients to experiment with Google Product Listing Ads and seen them rapidly growing to becoming a significant part of their retailers’ business.

The big change for retailers is that it will force them to focus on products that perform. However Eric made the point that often consumers will click on an advert for one particular product, but may then go on to buy a different product from your website. The products may have different selling prices and different margins which makes the return on investment tricky to manage.

To complicate things further although Product Listing Ads have an element of keyword bidding, Google are nuts about delivering the most relevant search results. It doesn’t matter how much you bid, if your ad doesn’t perform then it’s not going to be surfaced. This could in work in the smaller retailers with niche inventory’s favour as not only will their products be rare but will have correspondingly low bid prices.

Some retailers have already got to grips with Product Listing Ads, but they should now be closely monitoring bid prices, click throughs and conversion rates. As retailers lose Google Product Search more will switch on Product Listing Ads and competition is likely to rise.

Implications for marketplaces

Marketplaces have had a troubled relationship with Google Product Search. Before Froogle appeared they were doing pretty well. Then eBay built the ability for individual sellers to upload their own feeds to Froogle. Years later Google Product Search banned individual feeds from sellers and insisted that only the marketplaces could upload feeds (why would Google want all those duplicated products from sellers?). Marketplaces could take the decision to lose the chunk of traffic and sales or could embrace Product Listing Ads.

Smaller marketplaces will face starker choices. eBay and Amazon could survive without Google Product Search. Smaller marketplace appear almost entirely dependent on generating free traffic and don’t have the revenues to pay to drive traffic. Don’t be surprised if these sites either have to raise fees or possibly go out of business – they won’t go bust if they’re creative and have a sound business model, but if their model is totally reliant on free traffic from Google that’s about to end.

Where even the largest marketplaces will fall down is that it’s not all about the money. If they wanted they could jump onto Google Shopping and outbid every other merchant – marketplaces might not be making much money according to their shareholders, but they generate telephone number profits. Money won’t help here though as Google are building in relevancy, although to be fair that was also the case on Google Product Search.

Amazon are in better shape than eBay as they have structured data – essentially a catalogue from which they can choose what to bid on. eBay’s data is in the main largely unstructured and whereas before they could simply upload everything to Google Product Search, now they’ll have to pick and choose. There will be a lot less garbage on Google now that everyone has to pay for exposure.

Marketplaces will have one other small disadvantage over retailers – They won’t get the Google Trusted Stores badge and Google won’t back them with the $1,000 lifetime purchase protection guarantee available for purchases from eligible retailers.

Options for Retailers and Marketplaces

1) Do nothing: This option means you simply lose the traffic that’s been generated by Google Product Search. That’s going to be a big deal as this was essentially free traffic. Amazon and eBay especially are going to have to decide if they can afford to lose the chunk of business that’s come from Google Product Search and if not how to best replace it, retailers have the same choice. Realistically it’s unlikely that the loss can be made up from alternative comparison shopping engines, especially if you already use them.

2) Increase Adwords spend: This is the safe option, it’s measurable and marketplaces already spend a ton of money here. They know what the return on investment is likely to be but there’s a cost and they’ll have to throw a additional chunk of money to make a difference. However for all the reasons that Google will lose revenues, marketplaces and retailers will also see diminishing clicks as consumers use mobile devices more frequently.

3) Spend on Google Product Listing Ads: Retailers and marketplaces will have to experiment, monitor and iterate their strategies to make Product Listing Ads work for them. Shifting some of the Adwords spend to Product Listing Ads may make sense and there’s definitely potential to balance revenues and costs between the two programs.

Final thought

At the end of the day, if the financials stack, up no one minds spending money to make money. It just sucks that we’re losing the ability with Google Product Search to make money without spending any.

With the announcement “We are starting to transition Google Product Search in the U.S. to a purely commercial model built on Product Listing Ads” the Internet just had a seismic shift, which will affect millions of retailers around the world. And it’s going to cost you. Google Product Search, one of the few totally free and arguably one of the most effective shopping comparison engines will cease to exist and if you want exposure for your products on Google you’re going to have to pay for them.

Google say that they “believe that having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date. Higher quality data—whether it’s accurate prices, the latest offers or product availability—should mean better shopping results for users, which in turn should create higher quality traffic for merchants“. In other words the days of bunging a product feed on Google and waiting for the sales to roll in have well and truly gone. You’re going to have to pay and if your product price or offering isn’t compelling Google either won’t surface it (no clicks = no money for Google), or they’ll show it and you’ll be paying for clicks that don’t convert.

Almost all of Google’s revenues come from advertising, around 96% of their total revenues. That income us under threat however as more and more people use mobile smartphones to search Google they will see less advertising from Adwords and over time clicks will drop. Now with the Google Shopping announcement if you want people to find your products you’re going to have to pay for it and that’s going to massively bolster Google’s revenues.

Google have been playing for some time with the “Shopping” tab, sometimes you’ll have seen it at in the Google bar at the top of Google pages and other times it’s hidden in the drop down under “More”. Expect to see this lowered more permanently in importance as the new Google Product Ads come into play as they’re the new money spinner for Google, Google Shopping used to be free.

If you want to continue having Google display your products to buyer then you simply create Product Listing Ads within your Google AdWords account. If you don’t want to pay then you’ll need to rethink your entire business strategy as you’re about to lose the tranche of business that currently arrives from Google shopping.

You can read more on the Google Shopping blog post announcement or by visiting Google Shopping. Currently the announcement affects the US only, but it’ll roll out around the world soon enough. Google won’t want to delay too long before they can enjoy massively increased revenues more accurate product feeds from merchants

The explanation appears to be that HMRC simply fired out letters to everyone they know to be trading online. Doubtless they’ll find a number of people who are either behind with their tax or hiding, but there will still be thousands of traders who didn’t really need a letter.

The first question we at Tamebay asked is where did they get the data from? We asked a number of people, and when I received a copy of the HMRC mailing I rang up and asked again. The only marketplace they could have got my address from was from eBay and HMRC frontline staff simply stated that they “got the file of names direct from the e-marketplaces”. It seems strange that they didn’t also get my VAT number which is freely displayed alongside my name and address on all my eBay listings and eliminate me from their mailing.

Did eBay or Amazon hand your details over to HMRC?

eBay have told us that they “haven’t handed over seller data to HMRC”. That’s no surprise but we had to check. For the past 15 years eBay have refused to hand over seller data en masse to authorities around the world and for good reason, it’s incredibly valuable and confidential and if it fell into the wrong hands would totally compromise their business. Any competitor would have a field day if they had the 180,000 eBay UK business sellers’ names and addresses to market to.

Amazon take the same stance as eBay, there’s no way that they would hand over their entire seller database without being dragged kicking and screaming through the courts.

Cross checking data and cost of the HMRC e-marketplace campaign

It appeared to us that HMRC could have saved a substantial amount of money on postage, production of letters and call center time if they’d simply cross checked the data they’d gathered with their database of tax payers. The letters explain that if you’re up to date with your tax you don’t need to do anything but that leaves the cross checking to be done at a later date. The alternative is that HMRC will start chasing everyone they wrote to at some point in the time.

I’d recommend that if you receive a letter you give them a call and confirm your tax references to save being chased in the future. I suspect HMRC would quite like you to do this but didn’t say so as it would simply flood their hotline with calls.

HMRC response to Tamebay

An HMRC spokesperson told us:

HMRC gather information from a large number of sources including: online advertising, seller rankings, our hotlines, and from the eMarketplaces themselves where UK and EU law allow it.

Customers trading on eMarketplaces who are behind with their tax still have until 14th June to come forward and let us know that they want to put their affairs in order.

We wrote to as many people as possible in May who we knew to be selling on eMarketplaces, to let them know about the opportunity. The letters explain that if their affairs are in order, they need do no more. We wanted to do this well ahead of 14th June deadline so that customers would still have time to act if they needed to.

Since the letters were sent we have gathered more information and now hold data on over 100K people. HMRC are assessing this data, and we will begin contacting customers who have chosen not to come forward after 14th June, if we have reason to believe they owe tax.

Our thoughts

This campaign is intended to give anyone owing tax an opportunity to come forward and clean up their tax affairs and avoid the full penalties that normally apply for late disclosure, intentional non-disclosure or late payment. HMRC probably gathered the majority of their data from “Seller Rankings” or in other words scraping eBay for Business Seller names and addresses.

It’s likely that it’s cheaper and more effective to simply mail all (or a large proportion of) online sellers than to cross check the data prior to mailing. It’s also probable that some businesses trade off-line and use marketplaces for disposal of distressed stock and may not have been fully disclosing their online sales.

This is just the start of the campaign and it’s still in it’s awareness stage. HMRC aren’t going to chase you before the 14th of June but time is running out if you are behind on your taxes and haven’t contacted them yet. From that date onwards expect them to start chasing down anyone that they wrote to that hasn’t taken the time to call them.

For a limited time they’re giving traders the chance to check whether your global sourcing procedures are safe and secure. It’s a two step process and takes less than five minutes. You can then learn how to improve your process to source with confidence.

You’ll be able to take a short survey on your sourcing standards to discover your personal Safe Sourcing Score and download Alibaba’s Safe Sourcing Guide that can help you improve your procedures, save money and avert a sourcing disaster.

The guide covers:

1. Vetting Suppliers
2. Financial Considerations
3. Inspections & Audits

This includes everything you need to look for when choosing a supplier, what hidden financial costs there could be, and how to get your intended manufacturer audited and inspected to ensure that they can fulfil your requirements.

While some of these suggestion in the guide may not apply to your business, these details could mean the difference between a smooth, successful transaction and a costly and lengthy process that could impact many aspects of your company. If you’re sourcing from overseas, whether through Alibaba or a third party, take the Safe Sourcing survey and download the guide today.

An £82.5 million StartUp Loan scheme has been launched aiming to give the next generation of entrepreneurs the finance and support to potentially start over 30 thousand new businesses, in a move to boost enterprise and economic growth.

Any young people aged 18–24 accessing the StartUp Loans can expect to receive expert and personal support to help develop a business plan and access training. Where the business plan is robust and approved, they will be able to access financial support in the form of a loan typically in the order of £2,500 with a repayment period of up to five years.

According to Lord Young the newly-appointed chairman of the StartUp Loans Company not every young person that applies for the loan will be accepted, but importantly every single applicant will receive business advice and mentoring from a seasoned business person to help them construct a business plan and get their idea off the ground and running as a business.

The StartUp Loans Kit, launched by StartUp Britain and Enterprise Nation includes a recession busting £2,500 loan, and over £500 of free business essentials provided by ekmPowershop.com, PayPal, VistaPrint, KashFlow and other market leading business service providers. They’re offering capital to new businesses, as well as a boost in essentials such as ecommerce, payment processing, accounts software, business cards and more.

Antony Chesworth, owner and founder of ekmPowershop, who are participating in the StartUp Loans Kit (£500 of free business essentials provided by ekmPowershop, PayPal, VistaPrint, KashFlow and other market leading business service providers), was himself a young entrepreneur, who started ekmPowershop from his bedroom. He told us “It’s fantastic to see a scheme like StartUp Loans, and I’m happy to be involved in helping young entrepreneurs get started. When I set up ekmPowershop at 22, I was on Job Seekers’ and ran up credit card debt to get my business off the ground. If this had been around then, I would have taken advantage of all the great benefits that the Startup Britain and Enterprise Nation teams have put together. Now we’re offering some real value for these start ups by offering them a facility which can often be costly and essential in modern day business – ecommerce”

StartUp Britain is a national campaign by entrepreneurs for entrepreneurs, harnessing the expertise and passion of Britain’s leading businesspeople to celebrate, inspire and accelerate enterprise in the UK. Emma Jones of Enterprise Nation has worked tirelessly to kick start StartUp Britain and if you have applied for a StartUp Loan and have a StartUp Loan Kit you can redeem your offers on the Enterprise nation website.

All collections and deliveries will take place as normal, however due to the congestion caused by the games delivery timings may change. There may be some mail which is delayed a day because postmen and women will start their rounds earlier due to the extra traveling time required because of the transport restrictions.

Households and businesses in Central and South London areas (E, EC, N, NW, SE, SW, W and WC postcodes) are advised, if possible, to post their mail earlier in the day than usual. Customers posting mail to these postcodes are advised, if possible, to post a day earlier or of course be prepared for it to take an extra day to deliver.

Whilst they can’t guarantee that eBay and Amazon customers won’t leave low DSRs or open A-Z claims during the Olympics, Royal Mail have done what they can to keep Londoners informed. They have written to two million households and businesses letting them know about Olympic delivery arrangements and have set up a dedicated team of Royal Mail Olympic advisers who can be reached on 0845 607 2012.

Royal Mail have a dedicated website to help you cope with the inconveniences of the Olympic Games at www.royalmail.com/2012. There may also be some minor delays to local deliveries in the vicinity of the Olympic Torch as it’s convey trundles around the country.

They are even making arrangements to complete many collections and deliveries on foot, which considering this is a parcels business probably isn’t going to be fun for the Parcelforce staff who have to undertake them. If you’ve ever looked in the back of a courier van you’ll know just how big and heavy some parcels can be!

The exceptions to normal Parcelforce service is a £1 surcharge for deliveries to the worst affected London postcodes and special arrangements for deliveries to Olympic Games venues.

Due to the UPS closed shop for deliveries to the Olympic Games Parcelforce will have no access to the Official London 2012 venues and Olympic village. They are offering two options for deliveries to these locations:

1. Parcels destined for delivery directly to Olympic Games venues can be handed to UPS for the final mile delivery. All items will incur a UPS imposed final mile delivery charge starting at £5 per parcel, plus a “security” charge of £20 per parcel again imposed by UPS. Although Parcelforce are maintaining normal delivery guarantees on the Express24 and Express48 services across the rest of London, UPS will have acceptance cut off times at each venue which may mean Parcelforce deliveries to the Olympic Games could be delayed for 24 hours.
2. If you prefer, items can be delivered to an alternative address, including a local Post Office branch for the recipient to collect. Although this might be inconvenient, especially due to the additional traffic around the venues, it does mean that Parcelforce can get items to Olympians without the extortionate UPS imposed £25 surcharges.

Parcelforce have been busily recruiting additional staff and obtaining extra vehicles and equipment to prepare for London 2012. Whilst they are aiming to maintain normal collection times if this will change on certain days then they will contact you. If you have a scheduled collection and wish to alter your opening hours during the Games period just get in touch with your Parcelforce account manager.

Parcelforce have a dedicated website to help you cope with the inconveniences of the Olympic Games at www.parcelforce.com/2012. There may also be some minor delays to local deliveries in the vicinity of the Olympic Torch as it’s convey trundles around the country.