eforcity announced that they are the biggest seller on eBay.com. InflatableMadness publicly declared a revenue goal of $4M per year. How are they doing?
I researched their September 2007 eBay sales using eSeller Street.
Quantity sold: 38,654
Sell Through Rate: 19.52%
Ave Sold Price: $2.57
Items Offered: 7,707,691
Quantity sold: 10,531
Sell Through Rate: 6.21%
Ave Sold Price: $7.10
Items Offered: 169,502
They are both in very competitive markets. eforecity sells consumer electronics and accessories (cell phone cases, phone cards, cables, batteries). InflatableMadness sells music CDs, DVDs and videogames. Both create approximately the same number of listings each month (e 177K, i 170K).
74% of eforcity’s listings are auction format where 82% of InflatableMadness’s listings are store format. Just on insertion fees alone, both sellers are paying approximately $25K monthly in eBay fees. The final value fees are approximately: eforcity $5.2K, inflatablemadness $4K.
My estimate for their net monthly sales minus eBay fees:
I further venture a guess on their employees – 1 person per 100 items shipped per day @ $6 per hour:
eforcity: 13 people, $18,700 wages
InflatableMadness: 4 people, $5,760 wages
That leaves eforcity with ~$50K per month in income to pay for inventory and fixed costs (warehouse, insurance, administrative costs) and InflatableMadness with ~$40K for the same. I don’t know what these guys pay for inventory. But applying the typical rules of low cost, high volume markets, the sales price is usually pretty close to the cost of inventory. If the cost of inventory was lower than the sales price, a seller would attempt to undercut everyone else until they hit their cost point.
These guys are high volume! But certainly not the biggest sellers on eBay. One very quiet seller of cameras brings in $1.5 M per month. That’s more than 10 times more than these sellers.
My recommendation is (and always has been) to upsell. Pick inventory that is scarce and sell its features. Take good photos, write good descriptions, deliver good service. Leave the low priced, high volume items to the guys with the capability of reducing their costs with economies of scale.