posted on August 27, 2007 07:12:56 AM
When I got my Power-Up last week, I said to my husband, I can believe Ebay actually put this in their newsletter:
"eBay has stirred up criticism with the latest issue of its newsletter for PowerSellers called PowerUp. The newsletter contained an article, "Sourcing for Profitability," which includes a tip called "Returns mean low risk."
"When sourcing at retail, check the return policy before you buy. If items are returnable, you can always return the inventory if you find it doesn't sell at a good profit."
Karen Dudnikov of Tabberone.com poked fun at eBay over the newsletter's advice in a parody article entitled, "Ebay Tells Sellers To Cheat Stores To Sell Merchandise On eBay!" The article states, "Retail stores are not in the business of consigning merchandise to eBay sellers." (http://tinyurl.com/ywl9up)
Chris Dawson of the Tamebay blog also wrote about eBay's advice on retail returns, stating, "I'm not sure just why eBay would give this advice in the current climate of retailers scrutinising eBay." (http://tinyurl.com/2z7ydd)
AuctionBytes has written about increasing restrictions from manufacturers, distributors and retailers on online and eBay sales, an issue that was also raised at eBay's annual conference in June." from auctionbytes
Now the controversy is hitting on all cylinders!!
I have tried selling items I have purchased on sale from retail stores, but usually because I changed my mind and thought it would be easier to sell it than return it. I have never made enough money to make it a game plan!!
What do you think?? Is Ebay losing it!!
[ edited by merrie on Aug 27, 2007 07:13 AM ]
posted on August 27, 2007 07:53:57 AM
When you say, "Is ebay losing it." I think we need to remember, in times of declining profits, Companies can do stupid things to try to increase sales... including asking it's customers to buy stuff at stores and try to sell it online.
posted on August 27, 2007 08:01:50 AM
I believe in the same issue, eBay featured a seller who touted miscategorizing items for better sell-through. She put vintage ads in the Toys category.
posted on August 27, 2007 08:49:10 AM
Pixiamom, you're right. It is sad that they are stepping so low, or that they are not thinking recommendations through.
I now recall years ago on TV, I think it might have been a 60 minutes feature, that they featured a seller of high end women's clothing that bought their items when a retail store had huge sales. That still seems like a hard way to make a consistent profit, but at least they were not encouraging people to return the items if they could not sell them profitably on bay.
Online resales worry retailers
By Elaine Hughes, USA TODAY
Triss Budoff of Houston spent about $1,000 on 25 Rafe handbags that were available for a limited time at Target. But Budoff didn't use the purses. Instead, she posted 10 of them on eBay and earned about $750 in profit.
"I viewed it as a low-risk investment," Budoff says. "Anything I didn't sell I could return to the store within 90 days and get my money back."
More than a million people like Budoff make a portion of their income from selling products on eBay (EBAY). And that has some retailers worried. To protect their businesses and their brands, they are taking steps to curtail customers who are buying products for resale.
Retailers are especially concerned about reselling of clothing and accessories, a category that has grown 73% on auction website eBay the past two years.
For retailers, "Jewelry and handbag sales are especially hurt by e-commerce," says Ken Nisch, chairman of retail consulting firm JGA. "More of these items sell online because people don't have to worry about clothing sizes."
Luxury leather goods maker Coach (COH) sends letters telling people that they can't shop at its stores if they are found selling Coach products on eBay. "Unauthorized distributors lack the proper commitment to the Coach product," says Andrea Resnick, the company's spokeswoman.
Companies often can spot potential resellers by their purchasing habits even before they get to the Web. EBay users are more likely to buy identical products in bulk because it makes selling them on the Internet easier. Selling 50 shirts of different colors would require making 50 posts on eBay, but 50 shirts of the same color can be sold on a single posting. "It increases productivity, and it's just easier," says Donna Klein of Birmingham, Mich., who sells plus-size and bridal lingerie on eBay.
Because of this, many stores limit the amount of merchandise a person can purchase at one time. Gymboree (GYMB), a clothing store for kids, won't allow customers to buy more than five of the same item.
"We need to protect our image," says Jamie Falkowski, Gymboree's director of public relations and advertising. "We can't ensure a product's quality on eBay, and we don't want people to think we're selling things on eBay."
Target limits a small number of collectibles and special promotional products. The company cautions consumers about the quality of products on resale sites. "This is a largely unregulated marketplace where stolen and fraudulent goods have appeared," Target (TGT) spokeswoman Paula Thornton-Greear says.
Besides purchasing limits, retailers can do little to prevent their products from being resold on Internet auctions, says John Devlin, an attorney who represents retailers such as Nordstrom (JWN), Home Depot (HD) and Nike (NKE).
"EBay is like a modern-day yard sale," says Devlin, who works for the firm Lane Powell in Seattle. "The Internet just allows people to reach a larger audience."
The top-searched clothing labels include Hollister, Abercrombie & Fitch (ANF) and Nike along with high-end designers such as Prada, Gucci and Marc Jacobs, eBay says. The most popular fashion items are dresses, shoes and handbags.
Some eBay sellers make huge profits on sales, especially for items available in limited quantities. An Anya Hindmarch white canvas bag printed with "I am not a plastic bag" sold in stores such as Whole Foods (WFMI) for $15. But quantities were limited, and buzz about the bags drew long lines of customers, many of whom were left empty-handed. So when the bags showed up on eBay, they fetched as much as $450.
A blue silk Proenza Schouler designer top that sold in limited quantities in the spring at Target for a bargain-basement $34.99 sold on eBay for $255.
Budoff monitors eBay sales and plans to sell the other 15 Rafe bags she has when buyers are willing to pay top dollar.
Why do people pay more for the products? Often, they have limited access to stores or limited time to shop, says Constance White, eBay's style director. "Plus, they're still getting designer items at a good price, even with the markup."
posted on August 27, 2007 10:22:32 AM
glassgrl: I loved that article. Read it earlier. There is really nothing retailers can do to stop people from reselling their items. Once I have purchased an item, it is mine, but I am astounded that Ebay would encourage people to return items if they did not sell profitably. I think we can all figure that out for ourselves, but for Ebay to put it into a newsletter is pretty sleazy.
Target has been reviewing their return policy. I had to return an item that was bought for a baby shower. I had the receipt, but it was quite a hassle and the clerk told me it was because of this issue that Target is cracking down on returns.
posted on August 27, 2007 10:51:11 AM
At first I agreed with you, Merrie.
But then I remembered that businesses have always been pretty nimble when they find their returns policy being abused.
Case in point: Costco. Costco had long had a "return it whenever, for whatever reason" policy, but found that people were abusing it with computers. Now their policy is still whenever, whatever except for computer purchases. The limit there is still a quite-liberal 6 months.
DOES it hurt a company financially when someone buys 25 widgets to sell on eBay, planning to return the ones that don't bring enough money? I'm not so sure. Yes, you the shopper have the widgets, but they have your money. It's an interest-free loan from you to them. Companies that institute a restocking fee have an even better deal going for them. If you want to bring it back by golly you'll pay for the privilege.
As far as people snapping up multiples to resell, many companies have long had quantity limits on certain items. This is nothing new, although some magazine writer might want you to think it is.
fLufF
--
[ edited by fluffythewondercat on Aug 27, 2007 11:45 AM ]
posted on August 27, 2007 04:05:19 PM
I have no problem returning items to a retailer, but to base your Ebay buying habits on buying items from a retailer with liberal return policies seems short sighted and not very well thought out. (Hope this translates well after 2 Cosmos, have my doubts)If you have to rely on return policies, then the product probably wasn't that profitable to begin with.
Plus, the real reason for this thread was the audacity of Ebay to mention this as an incentive to sellers.
posted on August 27, 2007 04:05:58 PM
Yes, you the shopper have the widgets, but they have your money. It's an interest-free loan from you to them. ////
I would not call store purchase an interest free loan from customer to retailer.
You have the goods,they have your money,fair exchange.
Returns hurt retailer margin-inventory carrying cost until the item is sold,the clerk salary and fringes,store rent and the utilities and phone and god forbids,the credit card processing fee plus prorated corporate overhead are all expenses already incurred.
I dont know how it works for the Walmart of the world,but as a small retailer,there is a time limit on reversing the credit card transaction (say 7 days),after that I have to issue a credit and pay a transaction fee and a discount fee to to do so.
And the fee which I paid to the credit card processor for the original transaction is not refundable.
So for an average transaction of 50-100 dollars,a small retailer could be losing 4-8 dollars.
posted on August 27, 2007 04:11:13 PM
When Ebay said-
When sourcing at retail, check the return policy before you buy. If items are returnable, you can always return the inventory if you find it doesn't sell at a good profit."
///////////////////////////////////
In retail industry,the phrase 'sourcing retail' means retailers sourcing goods to retail from wholesalers.
AKA retailer buying from wholesaler,so Ebay could mean -
You as the retailer,when you buy from wholesaler,look for those who allow for returns.
Some do,like book wholesalers/publishers have a policy that you the retail bookseller can return unsold books at the end of the year for refund.
Other wholesalers allow returns as well as long as you notify them first.
*
Lets all stop whining !
*
[ edited by hwahwa on Aug 27, 2007 06:35 PM ]
posted on August 27, 2007 04:29:59 PM
They also said #3 "Discount chains like Loehmann's and T.J. Maxx carry brand names at wholesale or reduced prices. You can often get full price or better for these items on Ebay."
Ebay is making a profit on these tips, not the seller or the discount chains.
Check out the thread about people banned from Coach and Pottery Barn outlets.
posted on August 27, 2007 04:58:33 PM
I'll see your two Cosmos and raise you. I was in the dentist's chair waiting for the second shot of Novocaine to take effect for a root canal when I posted that.
(It still wasn't enough. Now I have to see a specialist.)
posted on August 27, 2007 06:32:14 PM
"Discount chains like Loehmann's and T.J. Maxx carry brand names at wholesale or reduced prices. You can often get full price or better for these items on Ebay."
//////////////////////////
may be ten years ago ??
*
Lets all stop whining !
*
posted on August 28, 2007 06:06:29 PM
i, too, thought eBay's suggestion to buy with a "back door"/escape route of returning things to stores was pretty tacky. but then eBay is pretty tacky.
posted on August 29, 2007 06:35:40 PM
A while back Filene's Basement (a large, mostly clothing discounter in our area) got in the news for banning two women for excess returns. Although it wasn't in the news story, as soon as I heard it I figured they were buying for eBay, and returning if no bid.
Can stores stop this? Probably not easily, but I bet the next change to return policies will state something to the effect that purchasing multiples over a certain amount will trigger a restocking fee or other limitations on returns.
