Ebay Revises Shill Bidding Policy

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It has been a long standing policy with eBay that the friends and family of an eBay seller could not bid on a seller’s items. The reason for this policy was that eBay had concerns that the seller’s friends or family would bid on an item to increase the price, but actually have no intention of really buying it. This is a practice commonly known as “shill bidding.”

This past summer, however, eBay quietly decided to change its Bid Shilling policy shillbiddingwithout telling anyone. Unless you happened to stumble onto the policy for some reason,you probably wouldn’t have even known about it. What the updated policy says now is that friends and family can bid on a seller’s items, but they are considered “Restricted.” This basically means that eBay gave itself a loophole and if they suspect that one of your friends or a family member is helping you raise the price of an item, you are still in violation of the policy.

This policy change may not seem like much, but it is actually a rather big deal because last year eBay had updated its policy and “online friends” of sellers were prohibited from bidding on items as well. This may seem rather puzzling and you are probably wondering — why change the policy now? Well, after a little digging, this change appears to coincide with a lawsuit in which an eBay drop-off store owner (who just happens to have a reality television show) sued someone after someone made accusations on a Forum that the owner was involved in shill bidding. EBay cleared her of these charges and strangely enough — the policy changed shortly thereafter.

Even with the policy change, the controversy doesn’t end there. For one thing, it is against U.S. Federal law to participate in Shill Bidding, so if you are caught you could still face charges for breaking the law. Plus, eBay buyers can still accuse you of Shill Bidding and eBay does take accusations seriously. So, while your Facebook “Friends” and Twitter “Followers” can now bid, I would advise that everyone proceed with caution until all the dust settles and we see how everything lands.

 

 

 

 

 

 

 

The Four Types of Amazon Buyers

100-amazon-card-for-65-usd-contact-giftcard-live-cn-728beAs an Amazon seller since early 2000s and an FBA seller since 2004, I’ve come across many different Amazon customers. Although there are an infinite number of varieties, I’ve been able to separate the vast majority into four main groups. In the interest of ‘know your customer’ I share them here for other Amazon sellers.

In my opinion, the vast majority of Amazon buyers can be pigeon-holed into one of these four categories. I would love to hear your comments and perhaps additions to my list.

The True Believer – First we have the True Believers. In their world, if Amazon doesn’t have it, they don’t need it. They have purchased from Amazon so often their neighbors think they either work for Amazon or are paid product testers. Their UPS driver is on their Family & Friends plan and they wouldn’t even THINK of shopping elsewhere. There aren’t a large number of these True Believers and they can be swayed to another marketplace but it takes a lot of work. For your purposes, Amazon seller, just enjoy them and appreciate them.

 The Loyalist – Next we have the much larger percentage of Amazon buyers, in my experience. Loyalist buyers are the Amazon Prime members who ALWAYS search Amazon first and will only purchase at another marketplace if there is a significant price advantage. These are a large portion of your target buyers, Amazon FBA seller. They are extremely loyal to Amazon and do not mind at all paying a premium price to buy from their trusted marketplace and have their trusted partner (Amazon) handle the customer service and shipping. Again, just enjoy it!

 The Opportunist – Now we are into the meat of the matter. The Opportunist buyers are heavily price driven. They like the convenience and security of buying from Amazon but for the most part are not willing to pay more for it. They will search Amazon for their product. Then they will search the entire web and choose based on price. IF they purchase from you on Amazon and discover they could have gotten it cheaper somewhere else; you will pay. They will either demand a partial or full refund or they will leave you negative feedback based on price. Sometimes you will be able to convince Amazon to remove it but usually not. What is my idea for avoiding these buyers? Do NOT be the lowest priced seller for any product on Amazon.

The Reluctant Amazonian – These are usually buyers who are actually loyal to another marketplace, typically either eBay or they prefer to buy from small mom & pop shops. The Reluctant Amazonian will, however, given the huge product availability and normally lower prices, purchase on Amazon, but like the Opportunist buyers, they will complain loudly and mightily if they find a better price elsewhere. Again, your best offense is a good defense against these buyers. Do NOT play the low price war. They will typically purchase from the lowest priced seller. You don’t want these buyers for your customers? Try not to be the very lowest price.

 

Things You Should Look For In a “Reseller” Agreement” By Cliff Ennico

I thought this column would be of much interest for our FBA sellers trying to negotiate exclusive sales agreements. Thanks, Cliff!

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“I have started a new business that will act as a professional sales organization (PSO) for a much larger company that is selling services to professionals.  We would receive a commission on the sales we make for this company.

I am expecting that they will send me a contract for review next week.  What are some of the things I should be looking out for in that contract?”

First of all, since this is your first time dealing with a large company, you should have an attorney review this contract for you as very often these documents contain “traps for the unwary” that an unskilled eye won’t see.

Second of all, this does not sound like a true “reseller” agreement, where you are buying the large company’s services and then reselling them at a profit.  If you are merely selling their services and taking a commission on the sales you make, that’s more properly called a “sales representative agreement” or “sales agency agreement.”

Looking at the contract itself, here are some questions you should ask your attorney:

Are we getting any exclusivity?  You should try to negotiate an “exclusive” agreement with the larger company if you can.  Exclusivity can take a number of forms.  For example:

  • you could ask for an exclusive territory (for example, “the northeastern United States”);
  • you could ask for the exclusive right to sell certain specified products (since you are a small business, this may be granted only for the company’s less-popular or poorer-selling products); or
  • you could ask for the exclusive right to sell to certain classes of professionals (for example, if the company sells to the medical profession, you could ask for the exclusive right to sell to “dentists” or “optometrists”).

Is it crystal clear how much and when we will be paid?  You would be amazed how many contracts fail to spell these out in detail.  Your commission rates should be clearly spelled out, along with any volume-related adjustments (for example, “X% for the first $1 million in sales, Y% for the next $1 million in sales, and Z% for sales over $2 million”).

Most “reseller” agreements will provide for monthly or quarterly payment based on sales during the preceding period, for example “within 30 days after the end of each calendar quarter for sales booked by Company during the immediately preceding calendar quarter.”  Make sure you know EXACTLY when your monthly or quarterly commission checks will arrive.

Is the time period for payment reasonable?  If the payment is monthly, requiring payment more than 30 days after the end of each month is unreasonable.  If the payment is quarterly, anything over 45 days is probably unreasonable.

Do we have the right to confirm that payments are correct?  You should ask for the right to review the larger company’s books and records at least once each year to determine if their payments have been correctly made.

Will we have the right to receive commissions even after the agreement is terminated?  Most agreements of this type will allow the larger company the right to terminate the relationship at any time, for any reason, upon X days prior notice to you.  Make sure that “notice period” gives you enough time to close any pending sales.  Also, you should continue to receive commissions on any sales made during the notice period and for a period of X days thereafter as such sales were presumably the result of your hard work.

Will the company support us in our marketing efforts?  While you will be doing most of the work, the larger company should agree to:

  • give you a dedicated page or a “link” on their Website, or agree to forward to you any online inquiries from within your “territory”;
  • provide you with enough copies of their printed marketing materials and product samples “on demand’ and without charge for you to use when selling to professionals; and
  • give you access to their senior marketing executives for guidance on what representations and warranties you can make about their services (requesting this will make the company feel better about doing business with you).

Will we be able to work for other companies?  Watch out for “noncompete” provisions that prohibit you from working from any of the company’s “direct or indirect competitors”.  If the company insists on such a “noncompete,” ask them to name specific companies for whom you cannot work, and make sure the “noncompete” expires when the agreement is terminated.

Watch out too for “nonsolicitation” clauses that prohibit you from “soliciting or otherwise doing business with” the company’s customers after the agreement terminates.  These clauses should prohibit you only from “diverting” to a competitor the customers you actually generated for the larger company.

When dealing with larger companies, remember the words of the late comedienne Jackie “Moms” Mabley, “the Lion may lay down with the Lamb, but the Lamb isn’t going to get much sleep.”

Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.

 

Thanks to Kabbage for Publicizing This – Please Join Me!

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Join Us Tomorrow for a Moment of Silence

Posted by KabbageInc on December 19, 2012 · Leave a Comment

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Tomorrow, the Kabbage team will be participating in a national moment of silence in honor of the victims of the Sandy Hook tragedy. Called for by Connecticut Governor Dannel Malloy and scheduled for tomorrow, Friday at 9:30 am EST, December 21st, we will be spending several minutes of silence to reflect upon this horrible event that has deeply saddened each and every one of us.

We encourage you to join us in this moment of silence, too. To learn more about tomorrow’s event go tohttp://www.causes.com/momentforsandyhook

I will be joining with Kabbage in this and hope you will too.

{TKR} That Kat Radio – Episode 4 – Amazon Profits & eBay Tools – Karen Locker & Jake Becker

My Podcast is also available on iTunes here.

THIS WEEK’S SHOW WAS ABOUT . . .

  1. Amazon profits Spreadsheet – how to track your profits on Amazon, how to use Spreadsheets to upload inventory and download reports. Purchase Karen’s Spreadsheet here. Use code ThatKat for $5 off.
  2. EBay Tools from WatchCount’s Jake Becker. Tools to replace eBay Pulse and the * Wildcard search we can no longer access.

That Kat Facebook Grouphttp://www.facebook.com/groups/ThatKat – click on the “Join” button and I’ll add you to the group ASAP!

Do you have a question about eBay, Amazon, Website Selling, FBA or any of other eCommerce Topic? Send your question via email kat@katsimpson.com for inclusion in an upcoming podcast or post on the Facebook Group or Page and immediate input from several sellers.

REVIEWs From Listeners – please add one on talkshoe or itunes

Learning so much from FBA Radio – Reviewer: SeacoastBargain 10/04/11 07:31 PM EDT
Full Comment: I am thoroughly enjoying FBA Radio. The guests (Lisa Suttora, Skip McGrath) have been great and Chris is a wealth of knowledge. I’ve been downloading the podcasts and I listen on my noon walks. I am learning so much – not only about Amazon selling but sourcing products too.

Next weeks show….. Enjoy Your Family for Christmas Eve! We’ll be back with a special show on December 30th.

Should You Dissolve Your Corporation Before Year End by Cliff Ennico

“I have been running a service business for the past several years, but business is way off and I’m thinking of calling it quits. I have a corporation and am thinking of shutting it down by year-end so I won’t have to file tax returns for the bloody thing after next year.  I’m worried, though, that I might be exposing myself to personal liability if I’m sued after I shut the corporation down. What do people normally do in a situation like this?” The decision to shut a corporation down is never easy, but if you’re going to do it, the end of the calendar year is a great time. Here are some of the questions you will need to ask your advisors: (1)               Is there’s a risk I might be sued in coming years?  Generally, when a corporation dissolves, it continues in business for the sole purpose of “winding up its affairs.” This means that it can’t take on any new business after it dissolves, but it can clean up old business such as collecting accounts receivable, paying debts, and so forth. In most states, this applies also to lawsuits – if your corporation has breached a contract or injured someone, and you did not personally guarantee anything, the plaintiff would be forced to sue your corporation even if the suit is brought after your corporation is dissolved. Of course, your corporation probably will not have any assets to satisfy a judgment, so this increases the likelihood that a plaintiff will attempt to “pierce the corporate veil” and attach your personal assets, on the theory that your dissolving the corporation was done solely to cheat the plaintiff of its day in court. If your corporation was properly formed, and you have been scrupulous about your corporate paperwork, that argument probably won’t stand up in court.  Still, if there’s any doubt about whether or not your corporation is liable to someone, you should:

  • see if your corporation’s liability insurer will issue a “tail” policy covering any lawsuits brought from the date of dissolution until the expiration of the appropriate statute of limitations period (usually three years) – if it does, have your corporation buy the “tail” policy before it dissolves;
  • talk to your attorney for advice if someone has threatened to sue you, or something has happened (for example, a “slip and fall” accident) that you know is likely to lead to a lawsuit; and
  • if you don’t know of any pending or threatened lawsuits, publish a legal notice in two or three local newspapers announcing to the world that you are dissolving the corporation – many states require such publication, but even those that don’t will often bar any lawsuit against your corporation that isn’t brought within a certain time period (usually 90 days) after the legal notice is published.

(2)               Does the corporation have any debts for which I would become personally liable if it shuts down?  Generally, if you haven’t personally guaranteed any of your corporation’s debts, only your corporation will be liable (see above).  However, some states have statutes imposing personal liability on shareholders of a dissolved corporation (that’s you) for certain corporate debts.  For example, in New York the “five largest shareholders” of a closely-held corporation are liable for wages and benefits due to employees when a corporation dissolves.  Talk to your lawyer and make sure there aren’t any statutes like that to worry about. (3)               Does the corporation have “net operating loss carryforwards” or other tax benefits that will expire if I shut down?”  Even if there’s no concern about liability, there may be good tax reasons for keeping your corporation alive, at least for a while.  If your corporation is “carrying forward” net operating losses from prior years, you will lose these when you dissolve your corporation.  Your accountant or tax advisor will tell you whether these “carryfoward” losses can be used to offset income from your other activities in future years.  If they can, then consider whether the cost of keeping the corporation on “life support” justifies the tax savings. (4)               Will there be an ‘income surprise’ if I shut down this year?  When a corporation dissolves, its income is taxed twice – once when the corporation shuts down, and a second time when its assets is distributed to the shareholders (that’s you).  If your corporation owns assets that have appreciated in value, you will be clobbered with income tax on the full amount of the gain.  If your corporation has taken aggressive depreciation deductions during its existence, some of those deductions may be “recaptured” when your corporation is dissolved. (5)               Will I be starting another new business next year?  If none of the above apply, ask yourself if there’s a chance you will start another business next year.  If so, it’s a lot easier (and cheaper) to change the name of your existing corporation and “keep on keeping on” than forming a new one. Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.   cliff ennico

{TKR} That Kat Radio – Episode 3 – Multi-Channel Selling – Who? What? Where? Why? When?

My Podcast is also available on iTunes here.

THIS WEEK’S SHOW WAS ABOUT . . .

  1. What is Multi-Channel Selling, Why should eCommerce folks participate and HOW? do we do it with Crystal Wells and Harry Hirschman from Vendio.

That Kat Facebook Grouphttp://www.facebook.com/groups/ThatKat – click on the “Join” button and I’ll add you to the group ASAP!

Do you have a question about eBay, Amazon, Website Selling, FBA or any of other eCommerce Topic? Send your question via email kat@katsimpson.com for inclusion in an upcoming podcast or post on the Facebook Group or Page and immediate input from several sellers.

REVIEWs From Listeners – please add one on talkshoe or itunes

You can do that? – Reviewer: CynthiaStine 10/08/11 02:32 AM EDT
Full Comment: I’m learning so much listening to these podcasts. I’ve been an FBA seller for a year and there’s still so much to learn. I took notes during Skip McGrath’s call and kept thinking “I didn’t know you could do that!” Thanks for bringing such quality speakers to the show. I’ve also enjoyed the others. I listen at night when I’m listing and boxing my inventory!

Next weeks show….. Amazon Profits and eBay Tools with Karen Locker and Jake Becker

Terapeak Now Available on Android

Ebay sellers with Android phones rejoice! Terapeak announced on Monday (November 26, 2012) that they have released a Terapeak App that is compatible with Android devices. Although iPhone users have had this luxury for quite awhile, sellers who prefer the “Droid” over Apple’s iPhone products have (until now) been left out in the cold. Thankfully, that is no longer the case and puts iPhone users and Android users on a level playing field.

 

There is one thing to keep in mind before you download the new Terapeak App to your Android device, however. You do still need to have a paid subscription to Terapeak before you can access the information on the App. Even though there is $29.95 monthly payment (or $22.50 if you make a yearly payment of $269.95), I think that most sellers will find the cost worth it. Not only can you research your eBay items with Terapeak while you are listing on eBay, but with the new Terapeak App for Android, you can check the prices of items while you are out and on the go.

 

What this really means is that if you are at a yard sale or shopping in a thrift store, you can now find how much an item is worth on eBay before you buy it. No more wondering if something is a good deal or not. Just get your mobile device out and let the Terapeak App do the rest. It not only tells you the average price of similar items listed on eBay, but it can show you up to 90-days of history on the items as well. The best advantage to this, of course, is that you can now check the price of an item you are interested in buying before you even pay for it. This means no more crossing your fingers and hoping you get a good deal. You immediately know what your potential eBay item is worth and you also know how many other people have the exact same item listed. With this type of information, you can then decide whether you should buy the item or pass it on by.

 

Although I am really excited about this, to play fair I should also tell you that the new App has gotten 3.5 stars out of 4.0 on its review. It sounds like most people are happy with it, but new programs usually have bugs and apparently the Android Terapeak App does have one or two. If you are new to Terapeak, I would suggest trying their 7-day Free Trial and see what you think. I don’t believe you will be disappointed, but if you are then Terapeak says you can simply cancel and walk away.