I am looking into starting my own business. I intend selling through Ebay and Amazon initially while I build my own website and then try and increase traffic to it.
However, I see that Amazon fees and Paypal can take a large chunk of the margins and I was wondering if there are better ways of going about this. I doubt I'll be doing enough sales initially to make a merchant account viable but I have not looked into this yet.
If you had a shop you'd pay rent, rates, electricity, insurance, etc, etc , etc. If you advertise in a magazine or newspaper you have to pay for the space, design etc. Treat ebay costs and PayPal the same as any other business expense.
Backing up what Greedyboy has mentioned, Paypal is not as expensive as people make out... Plus, it is convenient for the customer (security, ease of use, well known etc..)
When selling on eBay, you need to add the fees involved (Listing, FVF, Paypal etc) on to the cost of the item to work out what you need to sell the item for.
For the amount of people that look at your products, and possible purchase, the fees that ebay / paypal charge works out alright.
Just think about it for a second, look into takeing out an account that allows you to accept credit cards, then build a good website / web shop, get to the top of google, next run an advert that will get 1000000's of hits to your website!
When you fatore all that in, ebay / paypal is a good option!
Not only that, while when you have an apprecialbe volume a merchant account is cheaper, it is only marginally so. If you sell online you WILL pay 2 % plus and there is also a transaction fee of at least 25 cents. Plus gateway fee, statement fee, etc.
Over maybe $ 3,000 per month a merchant account is a bit better, but you can't sell on ebay without PayPal.
Either way, it is a cost of doing business and if you cannor factor it into your selling price and be competitive, back up and start over with another product.
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March 2010
