How to Become an eBay Power Seller

eBay prides itself on its egalitarian community, but does have its own elite class: PowerSellers. Being designated a PowerSeller means generally that your business has a high level of sales and your customers have had good experiences with you. Benefits of the designation include special treatment by eBay and the fact that future buyers are more likely to trust your business. For your eBay business to be designated a Power Seller, average sales must reach at least $1000 per month, and meet other performance standards. Once you hit these markers, you’ll likely get an invitation from eBay to join the elite.

The Elite World of PowerSellers

When you see the PowerSeller logo (above) in an eBay listing, you can be sure of four  criteria:

  • The seller averages a minimum of $3,000 in annual sales or 100 annual transactions

  • The seller has had 98% positive feedback,

  • The seller has been an active eBay member for at least 90 days, and

  • The seller has an eBay account that's eBay considers "in good financial standing."

The PowerSeller world has its own hierarchy — from Bronze level (sellers who achieve the minimum goals above) to Silver (who average $36,000 per year in gross revenue) all the way to Titanium level (sellers who average $1.8 million per year). eBay reviews its PowerSellers' accounts every month to ensure they continue to meet PowerSeller standards. eBay has posted some  FAQs  if you want to learn more about PowerSellers.  eBay rewards those who reach PowerSeller status with special  benefits, including access to PowerSeller conferences, bulletin boards, PowerSeller letterhead and business cards, health insurance solutions, invitations to special eBay events and of course, the right to display the PowerSeller logo on your listings. The logo is an important marketing tool, as it communicates stability and reliability, both important factors in online buying decisions.

Besides these more concrete benefits, attaining Power Seller status implies that you have successfully grown your eBay business. If that is your aim, your strategy will be no different than that for realizing success in any small business. To do so, you need great products or services, effective marketing, and reliable customer service.

Achieving PowerSeller status comes down to some personal soul-searching and number-crunching questions: How big do you want your business to be? How hard are you willing to work? How much inventory can you finance and manage? How big is the market and how much sales volume can you handle in a way that will satisfy customers? In other words, PowerSeller status is really about setting personal goals and figuring out how to achieve them.

10 Things All Power Sellers Have in Common

Here are some common characteristics among those eBay businesses that have achieved PowerSeller status.

PowerSellers run businesses that reflect their personal interests.  Whether it's the fascinating world of collectibles at  Collecticom, the wholesale sportscards sold byBlowoutCards, or the wide-ranging variety of antiques offered at  Anderson Valley Antiques, it's evident that PowerSellers tend to have some personal connection to the products they sell and a passion for their business. The more you are interested in what you do, the more likely you will gain knowledge about it and improve your skills. Of course, any gain in knowledge and skill increases your chance of success. As PowerSeller Brad Schepp (author ofeBay PowerSeller Secrets)  notes, "There is no such thing as a PowerSeller who is lukewarm about his business."

That makes sense. Long before eBay existed, business guru Michael Phillips came to an interesting conclusion after analyzing 650 San Francisco Bay Area businesses. Owners who loved their type of business had a failure rate 70% lower than business owners primarily motivated by profits. Phillips concluded that business owners motivated primarily by profits quickly become disenchanted. So, whether it's collectible beer cans or oil paintings of pets, your chances of achieving PowerSeller status increase with your interest in your eBay business.

PowerSellers maintain an eBay store or website.  Running auctions is rarely enough to achieve PowerSeller status. Instead, PowerSellers need a second Internet location for centralizing their selling activity. As PowerSeller Marsha Collier, the author of  eBay Business: All in One Desk Reference for Dummies, explains, "An eBay store provides you with your own little corner of eBay where you can leverage your good relationships with your customers and sell directly to them." Considering that eBay stores have over 60 million unique visitors per month, it's no wonder that PowerSellers seek to expand their presence using these online outlets. For more on eBay stores, see  Open an Ebay Store. For more on attracting customers, see Driving Traffic to Your eBay Store or Website, below.

PowerSellers know the rules.  PowerSeller Adam Ginsberg, in his book  How to Buy Sell & Profit on Ebay, describes his early days selling pool tables on eBay. Ginsberg watched in horror as — minutes before they were to close — his auctions disappeared from eBay, losing thousands of dollars and angering customers. Why? Ginsberg's listings had violated various rules that Ginsberg was unaware of, and eBay pulled the plug. Keep in mind that eBay, does not police listings for violations, but instead relies on other eBay users to report them. .Rule breakers may be reported by community-minded eBay members seeking to maintain the quality of the eBay experience, or by a competitor eager to see your listings disappear. In any case, PowerSellers like Ginsberg quickly learn that a key to success is mastering rules of the eBay game. For more on eBay rules, see  Rules, Disputes & Feedback.

PowerSellers keep learning.  PowerSellers take advantage of every service and knowledge base available within eBay, such as its  Learning Center, as well as third-party resources such as the  AuctionBytes  website and Marsha Collier's  Cool eBay Tools newsletter. All eBay sellers seem to agree that the best advice about eBay comes from other eBay sellers in  eBay Group,the  Community Answer Center, the  Community Discussion Boards, and in eBay user-createdReviews and Guides.

PowerSellers make their products stand out.  An accepted truism among eBayers is that whatever you're selling, somebody else is selling it, too. Studying the competition may help you   learn what factors will help to distinguish your items and auctions from others. Additionally, PowerSeller Scott Wingo (author of  eBay Strategies)  suggests that effective selling strategies will always take into account what he calls the "Five Ps." Analyzing these five factors, will help would-be PowerSellers best distinguish their products and auctions.

  • Product.  Have you analyzed every aspect of your product — that is, everything from its profit margin to its likely customers?

  • Price.  What's the price that will allow you to make a profit while staying competitive?

  • Promotion.  How can you better promote and market your products?

  • Placement.  How can you best place the product, whether in a category, auction, website, or eBay store?

  • Performance.  How effective are your activities in increasing sales and profits? PowerSellers continually analyze what is and is not working in the other four categories, and make the adjustments necessary to improve their overall performance.

PowerSellers work really hard.  There's no question that PowerSellers live a different lifestyle than casual eBay sellers.PowerSeller Brad Schepp (author of  eBay PowerSeller Secrets)  puts it this way, "If your goal is to become a PowerSeller, accept that you will live, breathe, eat and sleep eBay every day." Adam Ginsberg likens PowerSeller status to a mild addiction. If spending endless hours in front of a computer screen doesn't appeal to you, it might be time to rethink those PowerSeller dreams.

PowerSellers are automated.  Because PowerSellers must work so hard, they look for any technical means possible to automate their business. Shortcuts may include using systems for creating batch (groups of similar or related items) or multiple listings, managing inventory, tracking sales, or calculating and managing shipping and email responses. For more information on technical tools, read  Auction Management Tools.

PowerSellers know what to sell. As every eBay expert agrees, the biggest challenge in moving from casual eBay seller to PowerSeller is finding the right items to sell. For more information, review  Find Something to Sell.

PowerSellers know their numbers.  Knowing your numbers (or "vitals" as Scott Wingo describes in  eBay Strategies)  is a crucial element for PowerSeller success. Wingo notes that successful PowerSellers closely track the numbers listed below in accounting software or spreadsheets and update them regularly:

  • Gross GMS.  GMS is your gross merchandise sales, or total revenue received per month..

  • NPB Rate.  An NPB is a non-paying bidder, or someone who wins an auction for one of your items, then does not pay for it.. Your NPB rate is determined by dividing the dollar amount not paid by NPBs by your Gross GMS. For example, if you had $1,000 in Gross GMS and your NPBs failed to pay $20, your NPB rate would be two percent.

  • Net GMS.  Subtract the amount that your NPBs failed to pay from your gross GMS and that's your net GMS. The smaller the difference between gross GMS and net GMS, the less time you are wasting time on bidders that don’t pay.

  • ASP.  Your ASP, or average sale price, is determined by dividing your net GMS by the number of items sold. If you sold 10 items and had a net GMS of $240, your ASP is $24. In general, the higher the ASP, the better. As your ASP increases, your sales become more efficient; i.e., you are making more on each sale using the same amount of effort. (Remember that this is not a measure of profit, but of efficiency.)  AOV. Your AOV (average order value) is determined by dividing the net GMS by the number of orders during that period. In general, and like the ASP, the higher the AOV is, the better. Each order requires processing, packing, and shipping, and the more you make per order, the less effort and perhaps cost you will expend.

  • CR.  One of the most important measurements is the CR (conversion rate). In a nutshell, CR refers to your success rate. Wingo determines it by dividing the number of items sold by the number items posted over the same time period. If you posted 1000 items and sold 400, you would have a 40% conversion rate.

Becoming familiar with and monitoring these vital signs enables PowerSellers — and those who would like to be — to set and achieve goals. Understanding where your business stands with respect to these measurements can inspire strategies for improving your business without necessarily increasing costs. For example, one means of increasing GMS without investing in more inventory is to increase your conversion rate, or sell more of what you have. Similarly, if you seek to increase your AOV, you may try to get buyers to purchase more items with their order by offering "specials," such as a discount for multiple items in an order. Monitoring these measurements will let you know if your efforts are successful.

PowerSellers use their "About Me" page. As mentioned in  Welcome to eBay, using your "About Me" page is a great marketing tool, and according to. PowerSeller Adam Ginsberg, an effective means of "building and maintaining your brand." The About Me page is the only place on eBay where you may link to online locations outside of eBay, so it's the only place where buyers can click through to your store or website.

Warning: Becoming a Power Seller Doesn’t Mean Becoming a Power Debtor            

eBay buying and selling is fun; out-of-control debt is definitely not fun. If your credit card balances are greater than 80% of your credit limits; you’ve already got a credit card problem and you should avoid using your card(s) to finance your eBay business. Additionally, bankruptcy laws make it much harder to get rid of credit card debts even if you file for bankruptcy—particularly if your income is greater than the median income for your state.  Nolo  offers more information on credit issues and credit repair.

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