eBay began introducing Detailed Seller Ratings (DSR) in the first half of 2007. As they first began to appear on seller’s feedback pages, the result was a lot of sellers purchasing magnifying glasses so they could tell whether any of their stars were missing mocroscopic sections of the points on their stars.

In October 2007 eBay provided a glimpse of their intentions for DSRmicroscopic and we can now be fairly certain this forecast will become reality in the first quarter of 2008, with your individual DSR impacting where your listings show up in search results. DSR will also, in all likelihood, become one of the criteria for attaining PowerSeller status.

These changes will have an impact - positive for some, negative for others - on all sellers. The impact for some will be large, while for others it will be minimal. The good news is that there are things you can do right now that will help insure the impact on your business is positive.

Before looking at specifics however, it is vital to understand one thing. As sellers we all like to feel we provide the best service possible for our customers and should have DSRs of 5 across the board. Unfortunately, we do not live in a perfect world, and over the long term, that isn’t going to happen.

The truth is, we have some customers who are never going to give a rating of ‘5′ no matter how well we do. Factor in the possibility that an hour before a buyer leaves us feedback they may have had a blowup with their spouse or a fight with one of their children, the garbage truck may have just run over the family pet, or any number of other things that affect their mood at the time that we have no control over, and I think that over time ratings of 4.8 and 4.9 are about the best we can expect over the long term.

There are, however, things you can do to encourage each customer to hit the magic ‘5′ when rating you in each of the four DSR categories.

Item As Described - Go into enough detail in your description so there will be no surprises for the buyer when they receive their purchase. Thoroughly describe any, and all, defects or imperfection the item may have and provide close-up photos of them. Don’t scrimp on photos in your listings. Use as many as needed to insure the buyer knows what they are buying. Your goal should be that when a buyer receives their purchase they think, “this is nicer than it sounded in the description.” These are all things you should already be doing, but if you’re not, start now.

Communication - How you interact via email with a customer plays a large role in how they perceive you as a seller. Answer all questions quickly, professionally, and with enough information to make the feel comfortable dealing with you. Customers can be exasperating at times. But NEVER, under any circumstances, become combative in your communication with them. Maintain a professional demeanor at ALL times.

Send out invoices and/or winning bidder notices immediately after an auction ends. If you’re not going to be home on Tuesday evening, don’t list items to end on Tuesday evening. Have a short, friendly, pre-written emails that you send customers when their payment is received and another when their purchase is mailed.

Say ‘Thank You’ and let each customer know you appreciate their business. If you send a copy of an invoice inside each package (you should be doing this), at the very least write “Thank You, (customer’s name) across the bottom of it. Consider including a short, dated, note inside thanking them and asking that they let you know when their purchase arrives safely.

Shipping Time - Ideally you should ship each day, Monday through Friday. For some that isn’t possible though. If you can’t ship daily, implement a set shipping schedule and tell buyers what that schedule is right in your auction description.

If you take checks and don’t ship items until the check has cleared, seriously consider shipping upon receipt of the check. I realize there is some risk involved doing this, but in reality for most sellers it’s extremely minimal. I’ve been selling on eBay for more than eight years and have received one bad check in all that time.

The time it takes for a purchase to reach the customer can be frustrating at times because we don’t have total control. Once we put a package in the hands of the Post Office, other shipping carrier, we are pretty much at their mercy. This is one reason why the shipping notice mentioned above is so important.

Shipping & Handling Charge - Without any doubt, this is the one that is going to cause sellers the most grief. It’s also the one that can easily move you to the top of the DSR pile.

If your currently include charges for anything other than actual shipping costs in your shipping fees get rid of them now. If you don’t, beginning early in 2008, eBay and your customers are going to throw you under the bus. I know the ‘handling charge’ issue has talked to death over the years and I’ve heard all the excuses people use to justify them. I’m sorry, but those dogs just don’t hunt.

• “Sears, Lands End, and all the big mail order company charge handling fees” - Yes they do, but I’m sorry, you are not Sears or Lands End. Further more, none of them have a feedback system in place where customers can easily complain.
• “I have perfect feedback. None of my customers company” - Wrong, if they didn’t complain your DSR in this category would be ‘5′.
• “I need handling fees to pay for packing material, gas to get to the post office, and to pay for my time spent packing” - These are all normal expenses of doing business and you should be able to pay them out of your gross profits from the items you sell. If you can’t make a profit without charging each customer for your normal business expenses, then you are either selling the wrong product or are in the wrong business.

With a few exceptions, continuing to charge handling fees is going to hurt your business and may, for all practical purposes, kill it completely. Consider this - Do you think their unhappiness with your handling charges just might carry over into how they rate you in the other three categories? Will that affect how your listings appear in eBays search results in three months?

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The changes to eBay’s fee structure in the first quarter of 2007 were primarily targeted toward eBay stores. If you didn’t have an eBay store, the changes had very little affect on you. That won’t be the case with the upcoming changes. Everyone will be affected by them.

While different fee changes are being tossed around, the most likely change will be to either lower, or completely do away with, listing fees and increase final value fees. Several people have already speculated on how this will affect eBay, Scott Wingo goes into the most detail in his post The eBay ecosystem is abuzz about the fee change - What will it mean?

What I haven’t yet seen anyone talk much about is how such changes will affect sellers. One thing we can be sure of though, for most sellers, their overall costs are going to increase.

The most likely new fee structure is ‘near-zero’ listing fees with increased final value fees (FVF) similar to the changes put in place for eBay stores at the beginning of 2007. We won’t know what the exact figures will be until their are announced, probably sometime early in 2008. There are, however, things we can do now so we are better prepared than most when the increases come.

1. Don’t get sucked in by the whiners. - While we don’t yet know details of the new fee structure, one thing is sure. As soon as they are announced, eBay cyberspace will become clogged with distraught sellers moaning and whining. Do not allow yourself become part of that mob. Rather, spend your time implementing changes that will allow you to continue to grow your business.

2. If insertion fees drop to zero, consider increasing your opening bids by $1 or $2 on each item you list. - The popularity of $9.95 or $9.99 as a starting bid is solely due to the $10 breakpoint of eBays current insertion fee structure. If an item attracts several bids where you start it at isn’t going to matter. But, we all know that some items end with just one bid. Starting these items one or two dollars higher won’t dissuade most people from bidding, and the extra one or two dollars you get will cover the FVF increase.

3. Eliminate low-priced items from your inventory. - Sellers whose inventory consists primarily of $4 and $5 items will likely be one of the two groups hit the hardest by the new fee structure. Even though lower insertion fees along with increased FVF may actually increase their net profit per item sold, the new structure may quite possibly result in a huge increase in overall listings of low value items. This will increase competition for these items and likely result in dramatically reduced sell through rates. Money tied up in this kind of inventory isn’t working for you.

4. Eliminate products with built-in price ceilings. - Sellers who source their inventory from drop shippers and wholesale lists will be the other hardest hit group. All these items have built in price ceilings created by the large number of other sellers offering the same items and by retail prices for the same thing found in brick and mortar stores. Net profits on these items are usually low to begin with and there won’t be any reliable way to increase the profit-per-item to cover increased FVFs. Add in the fact that if insertion fees drop to zero, or close to zero, and there will be a huge influx of more being offered on eBay, once again decreasing sell-through-rates.

5. Concentrate on selling inventory that provides the opportunity of 300%, 500%, or higher net profits. - Many sellers deal in inventory that only provides net profits in the 40% to 60% range. No matter what an item eventually sells for, an increase of one or 2 percent in FVFs, will take a big bite out of their profits. If your net profits are 300% or higher, the additional FVFs will have a much smaller impact on your business.

6. Sell better quality inventory. - The sellers who will be most adversely affected by the new fee structure are those who deal in low-end inventory. Increasing the quality of whatever genre you sell in will increase your sell-through-rate along with your profit margins. The result will be that this increase, along with any future eBay or USPS shipping creases, will have a much smaller impact on your profits and your business.

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