Wholesale News - TopTenWholesale.com | China ,Trade Shows, Manufacturing» 2006 » April

Considering the Risks of Paypal

Claudia Bruemmer — Thu, 20 Apr 2006 00:04:42 +0000

If you are buying or selling anything on the Internet you are undoubtedly aware of the many advantages Paypal and companies like it offer. A reasonably priced and simple alternative to merchant accounts, Paypal has become nearly irreplaceable to online charities and businesses alike. In fact, payment processors like Paypal are often the only choice for new businesses since merchant accounts require extensive security information and prohibitively high initial fees.While Paypal is far from the only online credit card transfer company it is certainly the most widely recognized. Bidpal and Stormpay, are both companies providing almost identical services to Paypal. Of course, since they are not as familiar to the rightfully suspicious consumer as Paypal they do not carry the same clout and respectability. Online merchants often report an increase in sales simply by starting up with Paypal. Starting in 2001, Paypal quickly became so dominant that eBay abandoned their old Billpoint payment method and made Paypal their primary payment system paying more than a billion dollars for the privilege.Thousands of transactions take place on Paypal everyday without a hitch and many businesses simply could not exist without it. Still there are many things to be aware of regarding the service.To start with Paypal is not a bank and is not subject to the same level of protective regulation that would come with a merchant account. Paypal is largely self-regulated and can make decisions regarding an account at their own discretion. Many people claim to have disastrous situations result from mistakes made regarding their money. Situations that sometimes take months to resolve with uncooperative customer service from the company.While any large successful business is sure to have a fair number of disgruntled customers the sheer volume of complaints against Paypal must warrant attention. It is reported that at one point Paypal had over 100,000 unresolved customer complaints. There are many websites detailing horror stories posted by buyers and sellers alike. It is certain that many of these people’s complaints are unfounded but many of their stories are highly detailed and very convincing. (Editors Note: You can avoid payment problems like these by ordering your wholesale merchandise for the top wholesale suppliers.Over the years Paypal has been drug into the courts system many times. In 2002 a federal judge refusing to dismiss a class action suit called Paypal arbitration policy unfair and said they mistreated complaining customers. Paypal demanded customers agree to a legally binding arbitration in their home county rather than sue. So someone selling T-shirts in Florida would have to travel to Santa Clara, Ca in order to settle a dispute. The customer was also required to pay for part of the arbitration process. The cost of arbitration often exceeded the amount of money being debated in the first place. Judge Jeremy Fogle wrote, “By allowing for prohibitive arbitration fees and precluding joinder of claims, PayPal appears to be attempting to insulate itself contractually from any meaningful challenge to its alleged practices.”In 2004 Paypal had to pay the state of New York $150,000 dollars and revise its user agreement to clearly reflect the limitations and conditions of its refund policies. In blunt terms, New York accused Paypal of lying to its customers about charge-backs and reversals on certain credit cards. Paypal claimed that their customers had “the rights and privileges expected of a credit card transaction” when in fact this was not the case. American Express and Discovery accounts had severe limitations on their normal refunds policy.These are just examples of the legal problems that have haunted the payment provider giant. There have also been a number of class action suits filed against the company. Some time spent on the Internet researching these suits is an enlightening and alarming experience but one any person whose business relies on Paypal should undertake.Paypal also has a problem with phishing scams and spoof sites. Paypal customers and vendors will sometimes receive emails requesting personal information in order to fix some error or computer glitch Paypal has encountered. These emails actually come from hackers, counterfeiting the look of a Paypal email and even faking the address. If the unsuspecting target clicks on the provided link they are sent to a site that looks very much like an authentic Paypal site. Like all phishing trips the site is just an attempt to steal credit card and other personal information. The best way to avoid this kind of problem is to never click on a link in an email. Open a new browser and type the URL in yourself.In some ways Paypal cannot really be held responsible for information stolen from their customers but they have been accused of security lapses that have allowed their systems to be hacked by identity thieves. Regardless of who’s to blame thousands of Paypal accounts have been revealed to crooks. Customer and information security experts have said that the company has lied in order to cover up the break-ins and so have hindered attempts to get to the bottom of just whose information has been stolen. Some steps have been taken recently to improve the payment provider’s security.Despite all of these difficulties, the overwhelming majority of people who depend on Paypal for their business have never had a problem and use the service with confidence. Handling around a million transactions a day Paypal is a corner stone of Internet business and a possibly bad habit no one is going to break.Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.

Picking Up On Dropshipping

Claudia Bruemmer — Thu, 20 Apr 2006 00:04:39 +0000

If your online store has become an online warehouse and you’re wondering where to put your piling up inventory or if you would like to try to increase your profits by expanding your line of products but are reluctant to commit money to something you’re unsure of then dropshipping could be for you.Drop shipments are a method of doing business that could reduce your inventory, eliminate shipping worries and add flexibility to your business. First you open a drop shipping account with a manufacturer or distributor. When a customer places an order you alert the products distributor by phone or email and they ship the product out. The distributor will charge you for the shipping costs and the wholesale price of the merchandise. They won’t ship until you tell them to so you don’t have to pay for the product before you get your money. Assuming you’ve past along the shipping costs your business makes money for very little effort and practically no out of pocket expense. (Editor’s Note: Click here for a listing of the premier wholesale dropshippers.)Inventory takes up space and space costs money. Many small businesses rent storage units and dropshipping will make that expense disappear. Even if your business is run entirely out of your home your spouse probably gets tired of tripping over boxes in the garage. Besides damp basements and closets are not the best places to keep your valuable product.Speaking of keeping products, another advantage drop shipping offers is a complete lack of overstock. You won’t have to think about what to do with obsolete or out of fashion products because you won’t have any.After relieving the expense and headaches of shipping and holding inventory possibly the biggest bonus to drop shipping is how easy it makes it to expand or alter the products you offer. By not having to keep merchandise in stock you can literally offer dozens or even hundreds of different products. Often small businesses miss out of new sales opportunities because they are afraid that they can’t afford to make a mistake. Drop shipping largely frees you from this fear. If a new line of jewelry doesn’t sell you’ve lost nothing but a little time and while people like to say time is money usually they would rather lose time.Given its many advantages many small businesses rush headlong into drop shipping and are baffled when don’t make an immediate fortune. Before deciding that dropshipping is the key to success you should consider a few things.Not every product is a good candidate for drop shipping. For example, if you are selling small low cost individual products the shipping fees can be so high as to drive off customers. Nobody wants to pay freight that costs as much as the product shipped. The last thing you want to do is hurt your business’ reputation and bottom line by charging too much for shipping. A good rule of thumb when thinking about drop shipping is the item should cost at least $20 and weigh less than 70 lbs.When shopping around for a drop shipper there are a number of things to consider and questions to ask. First off, you want to avoid dropshippers who are in fact resellers. Dishonest companies will sometimes present themselves as a distributor but in reality all they do is pass your drop shipment order along to another drop shipper and either charge you a fee or simply pad the price you pay. Most reputable drop shippers will not charge you any set up fees except for extra services. You should never have to pay a regular participation fee. If your shipper demands one send them packing and look around for another shipper. Make sure you understand what you’re paying for.Speaking of extra services, ask your potential drop shipper if they can print and use labels identifying the products as coming from your business. Labels from the shipper can cause confusion for your customers and make it more difficult for them to resolve problems.Make sure you understand what manner of shipping your supplier will use. Most drop shippers will use UPS or Fedex but some use the cheapest method possible. Bad shippers lead to damaged products and plenty of customer service trouble for you. Make sure you ask your drop shipper to explain their return policy, if possible in writing.Backorders can be a real headache when using a drop shipper. It is inevitable that your supplier will be out of stock of the items your customer wants. You will have very little control over this issue and should be prepared to deal with unhappy people. If it is possible to have multiple suppliers for the same product you can avoid some backorder problems.In order to save time many business will purchase directories of dropshippers but these rather expensive documents are nearly always inaccurate and sometimes simply dishonest. Be particularly careful of directories that charge a monthly subscription fee instead of a one-time purchase price. Unless you know someone who has found a good one it is best to try to find a shipper on your own and resort to a directory only as a last resort.It is easy to get caught up in sort of drop ship mania that leads to too many shippers and too many products to keep track of but if handled with level head and careful planning, dropshipping can make a huge difference to your online business.Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.

Facts About Merchant Accounts

Claudia Bruemmer — Thu, 20 Apr 2006 00:04:23 +0000

Merchant accounts are special bank accounts set up to receive customer payments usually by credit card. It is often difficult for new online businesses to open a merchant account with a traditional bank. Banks, fearing fraud and other difficulties, are historically reluctant to trust small Internet merchants. In the face of complicated applications, expensive security deposits, and out right refusal many on line stores turn to payment processors like Paypal. Payment processors can be a vital in the beginning for a small business but when a business has grown a little and established some reputation it might be time to reconsider a merchant account. (Editor’s Note: Growing online retail businesses would be well advised to take a look at the many wholesalers offering great deals at Top Ten Wholesale.)Merchants who have enjoyed success with Paypal may wonder why they should tamper with success and take on the headache of processing their own credit card transactions. Despite initial difficulties merchant accounts can offer businesses many advantages.The biggest reason to switch is money. Merchant accounts nearly always have lower per transaction fees than payment processors. Normally a merchant account costs less than 3% of each transaction plus a fee of about 20 cents. You will sometimes encounter merchant accounts offering rates as low as 1.5% but you should be very cautious of such offers. They are usually dishonest attempts to stick you with absurd fees. Speaking of money, merchant accounts will also get yours to you faster than payment processors, normally in about three days.Another reason to consider getting a merchant account is security. A good merchant account comes from a bank. Many customers of Paypal can testify to the difficulties they’ve encountered with the unregulated payment processor. Banks have strict guidelines about how long they can keep your money and under what circumstances. These rules protect the small merchant from arbitrary account freezes and fees. Banks almost always offer more services and account flexibility than payment processors. For example, many merchant accounts will allow your business to accept checks online.If you’re considering opening a merchant account the place to start is your bank. A bank that you have an existing relationship with is more likely open a merchant account without an exorbitant security deposit or application fee. Of course, you should shop around. The fees and requirements for accounts vary from institution to institution. Some providers will ask for an application fee while others will not. When shopping for a merchant account a common trap to watch out for is a minimum transaction fee. Some merchant account providers will charge you a fee if you do not reach a set number of transactions every month. This fee can be quite high and you can probably find a provider that doesn’t have a monthly minimum. You will probably also have to pay a monthly statement fee of about $10 a month.Merchant accounts nearly always enable a merchant to accept Visa and Master Card. If you want to be able to take American Express you will have to set this up independently and pay a slightly higher transaction fee often 3.5%. Discover Cards are similar in that they also must be set up separately but the transaction fees are usually less than American Express.You will have to set up your own shopping cart on your website. This may be a daunting idea to the technically impaired but the software comes with instructions and customer support. The shopping cart software cost about $100. The upside is the opportunity to personalize and add excitement to your electronic storefront.When you consider the savings, security, and flexibility of a merchant account it easy to see why many on line businesses decide the change is worth the effort and initial expense. With an investment of money and the time it takes to learn the software you can improve you business’s profitability and energize your website.Fees You Will Have to Pay

Deeper Into Drop Shipping

Claudia Bruemmer — Thu, 20 Apr 2006 00:04:20 +0000

For quite awhile now small online and catalogue mail order businesses have been relying on drop shipping to fill their customer orders. For those still unfamiliar with the process it works like this; let’s say an online store sells digital cameras and uses a drop shipper to fill these orders. When a shopper purchase a camera the merchant passes the order along to his or her drop shipper. The shipper fills the order and ships the camera to the customer. The key element here is that the merchant sold a camera they never actually possessed or spent any money on until it was already sold.The advantages of never having to keep inventory are obvious. Never paying for storage or having money tied up in obsolete merchandise is a wonderful thing. There are subtler benefits as well. Consider a business that has considered selling an expensive product like fine jewelry but rejected the idea because of the cost of insurance. Knowing it would be foolish to keep an uninsured inventory of jewelry the business owner is forced to abandon a potentially profitable enterprise. Using a drop shipper that expense is carried by the supplier.Having someone else handle the headaches of inventory and shipping frees the merchant up to concentrate their energies on other facets of their business. New avenues of advertising, direct sales, and new products line can all be explored by a business free of the economic and time drains of inventory and shipping.Of course the supplier enjoys a number of benefits as well. Much of the expense of marketing their products is shared among the many small merchants that use their service. The small merchant drives customers to the suppliers they would never have found on their own.Nothing in this world is perfect however and drop shipping does have several down sides. Other people will not perform such vital elements of your business for free. Although the costs may seem very comparable between using a drop shipper and having the inventory your self but drop shipping is more expensive. In the long run a business’ margin will be narrower using a drop shipper.Returns and other faulty merchandise customer issues can be an absolute nightmare with drop shippers. These are big companies and trying to resolve a customer’s damaged order problem will involve listening to a lot of hold music. Normally drop shippers will neither refund the customer’s shipping charges or the merchant’s on a return they do except. Sometimes they are simply impossible to resolve and the small merchant will probably have to eat the cost.The inventory listings a merchant receives from their drop shipper often not up to date, despite usually being done daily, and their systems rarely detect sales trends. The results being that there are sometimes problems with seasonal items and products enjoying sudden popularity. It may look as if your drop shipper has plenty of graduation caps and gowns when in fact they do not and will not have more in time to make any difference.There are things a merchant can do to make sure that they chose the best shipper available. The first thing to do is shop online. Drop shippers have unusually informative websites that clearly explain the company’s policies and costs. Read these carefully, policy page are intentionally made dull and lengthy but some amazing things can be hidden in them. Avoid any company that does not have clear policies or just offers little real information about itself.There are dishonest drop shippers out there that will merely pass your order on to another legitimate shipper and the additional cost on to you and your customer. These people should be avoided like the plague.All reputable drop shippers will have telephone customer service and be willing to answer any question you might have. Ask how often they ship they wrong product. They will know the answer to this question and should tell you. Beware of any outrageous claim of 100% accuracy. Even if you have read their return policy on their website have them explain it to you on the phone in detail. Besides clearing up any questions you’ll get a good idea of the level of customer service you can expect from the shipper.Place an order to be shipped to you or someone nearby in order to get a look at the packaging, see what your customer will see. You want to make sure that your product is not covered with tags from another retailer and that the box is free of inserted advertising for another retailer.The box should include a packing slip with your company’s name on it. Some drop shippers will even put your name on the shipping labels. In most cases your customer will never suspect their purchase did not come directly from you. A good drop shipper is an unobtrusive one.Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.

About Escrow Services

Claudia Bruemmer — Thu, 20 Apr 2006 00:04:04 +0000

For several years now people buying or selling larger ticket items on line have been turning to escrow services to protect both sides of a transaction. In brief the buyer deposits payment with the escrow service that then lets the seller know the money has been received. The seller then ships the item and the buyer lets the escrow service know the item has been received and the service releases the money to the seller. The escrow service charges a fee of around 3% of total sale including shipping charges. The auction site eBay recommends the use of escrow accounts for any purchase of $500 or more. As the word escrow implies these services are very similar to the escrow accounts used in real estate purchases and are often provided by the same companies. (Editor’s Note: PowerSellers interested in escrow services might also be interested in great buys on wholesale customer returns at Top Ten Wholesale.)Generally speaking escrow services provide an excellent way to guarantee security for both participants in a transaction. The seller knows that their money is real and has been paid and the buyer can be confident that they will get the merchandise and have a chance to inspect it before their money is beyond their reach.That being said there are many concerns for both parties. Fraudulent escrow services abound online with plans to steal from either end of an online transaction. The dishonest escrow services are much like phishing scams. The usual manner for these scams to work is a thief creates a fake escrow service website, some of which look very convincing, and lures the victim to that site by insisting the fake escrow service is the only way they will trust the transaction. If the thief is the buyer the seller will be sent an e-mail saying that the money has been deposited and to ship the merchandise. Of course the victim never hears from either the escrow company or the buyer again and is left contemplating their gullibility.In the last year consumer groups have reported hundreds of fraudulent escrow companies. In 2003 the Federal Trade Commission shut down Premier Escrow for its illegal practices and filed suits against many more. Alarmingly some sites were not shut done but merely received warning letters. As threatening as those letters might have been it is improbable that the thieves went running for the hills because of them. Even when shut down it is very easy for scammers to merely open another site and keep up their nefarious business.It has been estimated that fake escrow services outnumber legitimate ones several times over. So if a customer suspects an escrow service might be a fake there is a very good chance that they are correct. There are a number of ways potential victims of a scam can protect themselves. First, be very suspicious of a buyer or seller that demands the use of a particular escrow service other than the most established names such as Escrow.com or AuctionPix. Look at the escrow service site before agreeing to anything. Check the site’s link to be sure they actually go somewhere, fraudulent services often place fake links to give their site a more convincing look. However, just because the links check out don’t rush forward with the transaction. If an escrow service claims to have state licensing or to be bonded a few phone calls to the appropriate state agencies will reveal the truth of the matter. While checking out the service’s website look for customer service telephone numbers. In this age of dwindling customer service and automated switchboards it is easy to fall into the habit of thinking of actual phone numbers where you talk to a human being as being a thing of the misty past but a legitimate escrow service should be reachable by phone. Even if you find a telephone number don’t be satisfied. Call the number to be sure it actually is answered and is what it claims to be. Finally, many fraudulent escrow services originate overseas. If a escrow service claims to be located in the United States read all the text of the service’s website looking for spelling and grammatical errors that might give you a clue that the site is in fact made by someone with a poor command of the English language.While the idea that there are thousands of criminal escrow services out there just waiting to pounce on the unwary might give pause to the on line business person the legitimate services provide an invaluable tool to protect their interests. Just make sure the service is for real. There are services out there such as the Auction Guild a trust worthy watchdog group that keeps an eye on the escrow industry and will research any escrow service for ten dollars. If you are doing business in the U.K. check out Companies House, a clearinghouse of legitimate services.http://www.auctionguild.com – An auction industry watchdog group with advice, warnings, and research services. Take a look at the fascinating Dialogue with a scammer.Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.

Shopping Cart Search Engines

Claudia Bruemmer — Wed, 19 Apr 2006 23:04:45 +0000

Just about any product you can imagine is available somewhere on the Internet. Millions of online retailers are trying to reach million and millions of potential customers everyday. So many in fact, that the world of online shopping is something of a trackless wilderness. It can sometimes take days of searching to find that perfect product at the right price. Often times those without a fair amount of web experience or the impatient simply give up and head for the mall.As is often the case these days technology and smart ecommerce companies are coming to the rescue of the bewildered consumer. The web is starting to be populated with sites whose sole purpose is to organize the huge number of shopping sites in manner that allows customers to search quickly amongst them. Generally they allow the search to be sorted by a variety of criteria such as price, size, or even color.Examples of the shopping cart search engines include Organized Shopping and Shop Sort. Both engines provide a fairly simple method to find products in just about any retail category a consumer might need. Almost every shopping cart search engine is initially somewhat confusing but a shopper who spends a little time familiarizing themselves with them will be well rewarded. The time it takes to learn the way the search engines work is far less that the time it would take to find all the information available by roaming around the web.For example, let

A Different Approach to Shipping

Claudia Bruemmer — Wed, 19 Apr 2006 23:04:36 +0000

The expense and reliability of shipping is one of the great headaches of owning a small Internet business. Especially in these days of rising gasoline prices merchants are always looking for ways to reduce the expense of getting merchandise to customers. It has historically been the case that either the United States Postal Service or United Parcel Service has met most small businesses’ shipping needs. These two both provide good service and reasonable rates for shipping limited quantities of lightweight products but aren’t nearly as satisfactory for larger quantities and won’t except items that weigh more than seventy pounds.Until recently trucking companies haven’t been a very good choice for small retailers since they have taken little interest in shipping orders less than a whole pallet in size. Advances in technology combined with the growing market for auction site and mail order shipping to create new shipping alternatives.For example, a company called Uship has brought an auction site approach to shipping. Instead of contacting a shipper and taking what shipping rate they offer a business goes to their website and list at no charge the details of what they want to ship and where. There are eight categories to choose from including general goods, furniture and a personal favorite livestock. The merchant can even list a target price similar to the way many travel sites work. Selecting a target price can be a bit of a trick, Uship suggests that the shipper determine the rate that would be normally charged for the delivery and deducting 30 to 80% depending on how long the merchant is willing to wait before a trucking company will accept the offer. Obviously the deeper the discount sought the longer the shipper will have to wait. The merchant will then be contacted by shipping companies with an offer. Once a deal has been struck the two businesses, merchant and shipping company, get into direct contact to arrange the final details of pick up, delivery and payment.Normally these trucking companies are looking to fill up space on a truck headed out that otherwise would be making its trip without a full load. Since they will be making the run regardless they are willing to make deals on the additional cargo. The shippers also pick up all the fees associated with the listings saving the merchant even more money.To ensure security and customer satisfaction Uship has several features that protect the shipper, the trucking company, and the customer awaiting their goods. All trucking companies identities are checked to make sure they are what they say they are. A shipper protection program offers a loss protection of up $200 minus a $25 fee to cover merchandise that is picked up but never delivered. The site also has feedback rating system that insures the trucking company that a shipper will pay and insures the merchant that the trucking company has a history or reliability and care.Uship is not the only company involved in this type of small order discount shipping. The venerable Small Business Transportation Company is preparing a system similar to Uship’s that will augment their existing discount shipping service. Rumor had promised this service a few months ago but it is coming. SBT has been providing quality shipping for many years and merchants familiar with the company should be excited about the new services.Freightquote.com, an Ebay preferred provider, is a web site that offers a comparison-shopping format for shipping. A potential shippers fills out a form with the details of the shipment they wish to make and the site provides the prices of a large number of competing shippers. The merchant selects the one that best serves their purposes and a collection of simple tools take care of lading bills, shipping labels, and dispatch. There is an auction system available to volume customers and shipment tracking.Although fuel prices are driving up the already high costs of shipping increased competition between shipping companies and improvements in Internet technologies are providing merchants willing to shop around with creative alternatives to UPS. If a small business can get their deliveries out faster, cheaper, and with greater reliability both ends of the transaction benefit from better margins, lower prices, and overall satisfaction.Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.

Ebay Looking at Internet Phone Service

Claudia Bruemmer — Wed, 19 Apr 2006 23:04:34 +0000

Ebay is engaged in talks with the Luxembourg based Skype with an eye towards buying the Internet phone company according to the Wall Street Journal. The Journal reported that the auction site is offering between $2 and $3 billion from their seemingly bottomless supply of cash.Skype produces software that allows users to make free Internet calls all over the world using microphones or headsets. They also offer a premium level of service for a small fee that allows non-Skype calls to reach Skype users and provide a voice mail as well as other services.Skype co-founder and C.E.O. Niklas Zennstrom declined to comment to the Journal. “There are different rumors every day,” Zennstrom said. ”We don’t comment on rumors. When we make deals, we announce them.” It is known, however that Skype has been involved with other companies regarding a possible sale but they have come to nothing so far. Incidentally, Zennstrom and his partner Janus Friis where the brains behind Kazaa, a music file sharing company that ran afoul of music piracy laws.There was talk earlier in the year of media giant Newscorp, Rupert Murdoch’s company, offering $3 billion for the phone service company. Rumor also held that Google was looking to get their hands on the company as well. Given a track record of rejecting amounts similar to the one made by Ebay would imply that Skype is holding out for more money and Ebay may have to raise their bid if they want the phone service.The rejection of previous offers shouldn’t give the impression that Skype is unwilling to sell. The company hired the mighty Morgan Stanley with the intent to find buyers for the company.While the talks are tentative and could easily collapse Ebay is known to be on the hunt for any added service that would improve their ability to move goods online. Ebay has also shown interest in diversifying into other revenue streams and buying Skype would certainly open the doors for new revenue streams.One possibility is a pay per call service. So while payphones may be disappearing from the street corners they could be coming to the Internet. Ebay owned Paypal recently added a micro-payment service that would mesh neatly with online calling.The Wall Street Journal cited sources close to the matter as saying that if the deal goes through it would represent a serious shift in the auction sites business strategy. However Ebay has refused to comment on the matter officially.Ebay has recently made a number of acquisitions and improvements meant to diversify and expand their services including rental property listings, classified ads, and comparison-shopping services.Assuming the sale goes through it is unclear how the changes will affect the millions of Ebay buyers and sellers but a purely speculative possibility is auctions being accessible by voice that would allow easier bidding from cell phones. There is certainly a movement in technology to streamline the connection between home computers and the wireless telephone. Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.

Yahoo Auction Eliminates Fees

Claudia Bruemmer — Wed, 19 Apr 2006 23:04:33 +0000

As most auction site resellers already know eBay has recently raised its fees again. The auction giant has increased its fees by 60% with no corresponding improvement in services beyond a promise to improve its much maligned telephone customer support. The monthly basic store fee went from $9.95 to $15.95. The 10-day standard listing fee doubled from $.20 to $.40. While refusing to comment on what the rate increase meant for the company’s revenue eBay has said that the hike will be good for everybody. They didn’t say how exactly. I suppose resellers will stop losing sleep over how eBay executives will pay for their vacations.These changes in pricing will take a huge bite out of the profits of its customers particularly the PowerSellers. Some retailers have said that the increase has threatened their business’ very existence. Despite eBay’s recent acquisition of Shopping.com, which will allow its users an even larger amount of exposure, many of its customers have begun looking at switching auction sites. These customers often feel that they have been asked to pay for eBay’s explosive growth. Instead of being rewarded for making the company a huge success the big sellers have been punished with the higher fees. In a recent survey of online auctioneers more than half of them said they would gladly change auction sites if presented with a good alternative.Yahoo Auctions, possibly sensing the anger of many eBay customers, eliminated many of their fees entirely. No longer will Yahoo Auction users have to pay listing or transactions fees. The company used to charge 2% on most sells and 1.5% on more expensive items but no more.However, the fee reduction will not affect most overseas customers, notably in Japan and Canada. Yahoo got into the Japanese auction market well before eBay and is the dominant auction site in the country giving them very little motivation to include Japan in its new pricing structure.The fee elimination, that began June 6, 2005, will make a huge difference on the bottom line of its customers. For example, a dealer who sells ten items per day at ten dollars each will save $670 a year on transaction fees alone.Rob Solomon, Yahoo Shopping’s vice-president, claims that the move has been in the works for some time and has nothing to do with eBay’s fee increase or purchase of Shopping.com. They say the change is part of a larger strategy to increase its already impressive web presence by increasing its total number of web pages. They also hope to increase the money they make from the paid search listings and banner advertising offered by Yahoo’s marketing division.There may be some truth to the claim. Before 2001 Yahoo charged no fees for listing items and saw their auction site shrink from 1.5 million users to about 350,000. At the time they claimed that the introduction of fees would improve their service and eliminate many problems. How times change.Some of its established sellers have expressed doubts regarding Yahoo’s elimination of fees saying that the auction site will become awash with bogus and junk listings since there won’t be anything to prevent it. Yahoo promises that they have methods in place to detect fraud. These promises seem rather vague and we will just have to wait and see if Yahoo makes good on them. Businesses listing on Yahoo Auctions will also probably see an increase in non-paying bidders, always a sure source of difficulties.While it is unlikely that the changes being made by Yahoo will have any serious long term affect on eBay it does show that the era of eBay’s absolute dominance may be coming to an end.As the world of online auctions expands there is more and more room for healthy competition. The established auction sites will have to offer more services and better pricing if they don’t want to see their market share contract.The pressures that will change the online auction industry must come from the sellers. The first step towards forcing improvements is recognizing that unless the titans of online auction believe that their customers might abandon them they will never change the ways they do business.Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.

Small Business Scams

Claudia Bruemmer — Wed, 19 Apr 2006 23:04:30 +0000

If you have an email address chances are you

PayPal Freezes Katrina Donations

Claudia Bruemmer — Wed, 19 Apr 2006 23:04:28 +0000

Online payment provider Paypal has once again become embroiled in a controversy likely to further tarnish the company

Paypal Expands Micropayments

Claudia Bruemmer — Wed, 19 Apr 2006 23:04:23 +0000

On Wednesday, August 31st, Paypal announced that it is extending its micro-payment system to include inexpensive digital content as well as the music downloads it has been doing for some time. This is a big step forward in the struggle to bring convenience and appeal to the world of low cost online purchases.Now consumers with Paypal accounts can use it to buy video games, online greeting cards, cell phone ring tones, and subscriber only news articles. Paypal was encouraged in the new move by the success of its music download payment program most commonly associated with iTunes.Paypal customers normally pay from 2% to 3% of each transaction plus a $.30 fee. The micro-payments will cost 5% plus a $.05 on each transaction. Paypal defines a micro-payment as any amount less then $2. The reduced fees allow merchants offering low cost goods to save about 50% of the traditional Paypal pricing structure. Merchants can choose whether to adopt the new pricing structure or use the old one depending on which is more favorable for their business.The public has historically been unwilling to go through the rigmarole of payment processors when making small purchases but this seems to be changing since the introduction of the iTunes music download service. It has been said that since 2004 the number of online purchases on things costing less than $5 has doubled from 10% of the e-commerce total to 20%.Peter Ashley, Paypal’s director of micro-payments, said, “Consumer response to a-la-carte pricing for music downloads has clearly shown that customers want to be able to pay as they go. With our new pricing tier for digital goods merchants can affordably provide customers with what they are demanding, the opportunity to purchase the content they want without signing up for subscriptions or pre-payment.”The possible impact of this change on small business is difficult to overstate. Paypal has almost 79 million existing accounts representing a gigantic new market for inexpensive downloads. A merchant can now offer items that would never have worked before. Hand designed electronic greeting cards, small software programs and video games, new fonts, and even short stories and news articles that could never be sold profitably before are now within the reach of the online business. Garage bands that could never dream of setting up a credit card processor can now endeavor to find a market for their original music with consumers willing to risk a dollar or two on an unknown act.Of course big business is sure to look to micro-payments as way to pay for movie and video game rentals as well as subscriber services that will require tiny monthly fees.One possible downside of all this for consumers is now being forced to pay for things they’ve been getting for free. A good example of this possibility is fonts. Up to now designers have often given new fonts away as advertising for their services. If the fonts can be sold for 99 cents in a convenient manner designers are sure to try.Paypal faces a new problem of dealing with huge numbers of tiny purchases that are just as likely to create customer service problems as larger purchases. While consumers might be willing to let a $1 sale gone wrong slide you can bet merchants wont. Paypal has made strides in handling its customer relation problems but they can count on a volume of calls they’ve never dealt with before.Paypal is not alone in offering a micro-payment service. The Waltham , Mass company Peppercoin recently launched a small payment processor of its own. The company just announced that it had raised $8 million to fund its attempt to compete with Paypal. However, given its relative obscurity it is difficult to imagine Peppercoin posing a real threat to Paypal.The vending machine age has come to the Internet. Consumers will be able to pop in their Paypal account number and purchase a whole new world of inexpensive products they just couldn’t get before. Small business’ creativity will be challenged to find products that fit into the new niche and cash in on the micro-payment.Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.

Google to Offer Payment Provider

Claudia Bruemmer — Wed, 19 Apr 2006 23:04:12 +0000

It looks as if Internet colossus Google is getting into the payment provider business. The Wall Street Journal reported that the new payment systems would be launched this year in an attempt to compete with eBay’s Paypal. Google also hopes to become less dependent on advertising revenue, which at present makes up nearly all of the company’s earnings. The Journal also mentioned sources close to the company as confirming the report. Google itself has remained quiet on the matter with only a vague promise on its website to improved online payment options for some services.(Editor’s Note: Top Ten Wholesale specializes on delivering content like wholesale business services. )The Wall Street Journal quoted sources saying it would be similar to Paypal. Eric Schmidt, Google’s Chief Executive, denies the upcoming payment system is a PayPal competitor, proposing instead that Google’s version is aimed at conquering “new problems in e-commerce.” He denied specifically that it would be “a person-to-person stored-value payments system.” It is even unclear what the service will be called though some have suggested Google Wallet. What is certain is that in May the company filed papers in California for The Google Payment Corporation.If it’s not a “person-to-person stored value system,” which just means that the money transfers from PayPal account to PayPal account with PayPal making money off of the passage from one to the other, what is it exactly? Many have speculated that it is a micropayment system, which would allow for very small payments to access web content, for instance multimedia files. Often the producer of this rich content can’t adequately broadcast it because the costs associated with mass distribution of big downloads are significant, and outside of subscription models, there’s no effective way to sell it online. A micropayment system could solve several glaring problems for content sites. The New York Times could charge you a dime to read an article, Scott McCloud could charge you twenty cents to read his comics. Of course, McCloud is already doing that using technology developed by BitPass.Google certainly has every reason to take on Paypal. First off Paypal makes lots of money. In the first quarter of this year Paypal made just over $233 million dollars and represented nearly a quarter of eBay’s take during that time. (Auction leader eBay paid $1.3 billion for Paypal in 2002.) Secondly, recently Paypal has shown weaknesses that make it an appealing target for competition. Certainly others have tried, Yahoo tried and failed with their PayDirect program a few years ago. However, none have had with even a fraction of Google’s money or presence on the web.A curious aspect of this is that eBay is one of Google’s biggest advertisers. It seems unlikely that eBay will have any other choice than to continue spending millions of dollars with a company coming after a cornet stone of their business.Prospective Google customers hoping for the information they need to make decisions about their businesses can only wait and hope. It is possible that with the barrage of public and media attention that Google will release more details regarding the finer points of their new effort.Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.

Meals Ready for Ebay

Claudia Bruemmer — Wed, 19 Apr 2006 23:04:12 +0000

There is a saying that goes

Yahoo, Ebay and the Chinese Market

Claudia Bruemmer — Wed, 19 Apr 2006 23:04:09 +0000

China is frequently predicted to become the largest online market in the world within a few years. The growth of China ‘s computer users is however hampered by low personal incomes that lead to low personal spending. Despite an average income in the cities of about $1,000 a year China has over 100 million Internet users. Only the United States has more.Online commerce in China is estimated at about $1.5 billion a year and is getting bigger all the time. It has been estimated that China ‘s online commerce will nearly double over the next few years.While ecommerce and Communism may seem an odd mix you’d never know it from the flurry of investments in China by American Internet companies. In the most recent example of the Asian spending frenzy search engine giant Yahoo is paying $1 billion for China ‘s biggest online company, Alibaba.com. There are certainly experts who believe that $1 billion is far too high a price tag for a company that made $68 million last year. Wise or not, this will give the Yahoo a far bigger presence in the world’s second biggest Internet market and they obviously believe that Alibaba will grow remarkably.This merger is just one example of the fervor with which American companies are trying to get into the Chinese web market. China ‘s biggest search engine Baidu.com very recently made its initial stock offering and its shares rose 350% in the first day of trading. Google owns just under 3% of Baidu and has expanded its advertising presence there by making deals with companies to resell their ads.Yahoo’s existing Chinese subsidiary will merge with the new acquisition. Last year Yahoo began paving the way for the new venture by acquiring 3721.com, a Chinese language search engine for $120 million. Alibaba operates an auction site calledTaobao.com that already competes with the auction site operated by Ebay and specializes in hooking foreign merchants up with Chinese wholesalers. Companies pay from $5,000 to $10,000 per year for membership in its commercial online auctions. The Chinese auction site doesn’t charge fees for individual listings the way Ebay does. The new arrangement with Ebay is unlikely to change that policy.In 2003 Ebay paid $180 for the Chinese auction site Eachnet and has been growing in the Asian market ever since. Last month Ebay added a vital element to their success in China with the launch of Paypal in the country. Ebay’s payment provider has merged with China Pay an existing cross-bank payment system. This addition is expected to greatly improve the payment systems available in China , which historically have been unreliable and slow.However, this new deal between Alibaba and Yahoo seriously threatens Ebay’s hope of dominance in the Far East . Yahoo’s auction site already has the lead in Japan as well as a significant share of other Asian markets and now hopes to take the Chinese market as well. The new partnership will offer a full range of online businesses including email, searches, as well as the auction site.They have a long way to go however. Ebay controls about 65% of the Chinese auction market while Taobao commands about 29%. Ebay claims to fear nothing. Ebay spokesman Hani Durzy has said they will not alter their plans in response to Yahoo’s move and it will be “business as usual”. Ebay certainly must have big plans for China since they intend to invest $100 million this year to improve their web presence there.What will all this mean for American Ebay and Yahoo Auctions merchants, probably not very much. The most likely benefit that American sellers might enjoy is improved access to Chinese suppliers. It is possible that we may see more imported inexpensive merchandise on the sites particularly in wholesale lots and ‘business to business’ categories. The appearance of even more products manufactured in the oppressive conditions of China may well be bad news for many American manufactures the small retailer could benefit from the changes.Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.