One of the huge benefits of being a consultant, is that you can enter a business with a completely fresh look at it. Not influenced by any of the day-to-day operations, any historic issues or misconceptions created in the business by itself and can work from the cold numbers.
A few weeks back I was intrigued by the big Channel Advisor PR wheels moving and spotted one of their featured sellers ‘LeSports Ltd on YouTube.
The video is below features James, really nice chap, he explains what most e-commerce businesses have issues with, management of inventory across many channels and order processing; And that he is using CA to promote his products across new sites and that it saves him time. Great.
With this increase of automation, I wonder if they’ve failed to notice the extra cost at which it has taken to do this. Please do not get me wrong, automation is fantastic if done well, there are many tools that can aid a business in its day-to-day operations that will save hours & hours a day. But… this is where it could go wrong and the numbers need to be kept an eye on. So lets look at the numbers:
All figures are based upon data from Terapeak for the date range 01 Sept – 30 Sept 2010, the direct link to this search is here. Noting, a Terapeak account is required to view this.
|Bids per Listing||0.68|
|Sellers per Day||1|
So for this month of September we have a gross sales value of £28,632. Now lets split this between GTC (Good Till Cancelled/30 Days) listings and auction based listings (10 days or less).
|Bids per Listing||0.38|
|Sellers per Day||1|
So we can see here that for 1509 listings, £4847 was sold over 348 items. Lets crunch some numbers to see what this really means.
£4847 is 16.93% of their eBay sales (or 4/25ths), each sale has an average value of £4847/348 = £13.93, now here is the curious number, 23.06% of their listings sale. Now this is not distorted by multiple quantity listings because Terapeak says this ‘Total Listings = 1509, Items Offered = 1509’, so they’re all single item listings. This is an important factor as GTC listings normally have multiple quantities and skew this number heavily, to the point its almost worthless.
Now, this is where the numbers can lose their accuracy, so please allow some error of fees here as I am going to assume no discounts for seller fees and we are using averages.
There were 1509 listings at an average start price of £13.37, Terapeak also tell us clearly that there were no listing features used, so we can assume a straight auction fee. Now knowing this, lets crunch some more numbers:
1509 listings x 0.25 insertion fees* = £377.25
348 sales x (£1.22 Final Value Fee + £0.67 PayPal fee) = £657.72
Total = £1034.97
* I checked manually in eBay and also verified with http://ecal.altervista.org/en/fee_calculator/ebay.co.uk/index.php.
** This assumes no discounts and standard PayPal account and that all buyers paid via PayPal (probably true for 90% or more of sales) and that Channel Advisor fees of around 1-1.5% are not not included.
So for £4847 worth of sales, it cost around £1035 to actually sell the 348 items to customers, or 21.35%. This is of course excluding the item cost, packaging, staff time for the 222 questions (assuming 65% asked a question) they asked and the time taken to create the inventory record in the first place.
So… Using Using Auctions, is it Worth it?
Frankly, yes it is for them.
Why? 21% is far from the worst overhead I have seen, yes its pretty high, but there are a large number of sellers out there that are hitting 30-50%. I know for a fact at one time it was costing me 32% (the fee structure was different then). But its the ‘fact of knowing’ which is key here, if you know what your sale cost is, then you can work on it. Not knowing it is literally business suicide. I strongly suspect Jame’s know’s these numbers and is why he’s actually doing a great job.
If this dropped to say 15%-18% through optimising the time windows of sales and utilising the other four days of the week (the listings only end on a Sunday ,Monday & Tuesday) and testing outside of their normal ending windows of 7pm to 10pm, it would be tidy win for Jame’s.
Some Quick Numbers:
We’ve only focused on their auction style listings as these are the most expensive, here are some quick numbers on James’s ‘Fixed Price’ listings:
Total sales = £23.423 over 1223 listings of which 727 sold, for 1302 items, this is a positive percentage @ 106%, which means more items sold than that was listed as separate listings (I suspect due to multi level listings). With an ASP (Average Selling Price) of £17.99 the fees would come in 1302 * (0.20p insertion fee @ Basic level + 1.78 FVF + 0.81 PayPal) = £3632.58. Which is a very good 15.5% excluding any PayPal, Channel Advisor or eBay discounts.
Its a pity (or a positive) there is no ability to mine data on Amazon or the web to gain a true picture of LeSports. For anyone that is determined, using Terapeak to gain the last 365 days worth of data to get one set of data and a report for a tenner from companies house can easily do the maths…