Several readers have contacted me over the last few weeks with this comment, "I'm not making as much money on eBay UK as I used to. What am I doing wrong?" After looking at their stores, the only problem I can see is that their pricing needs to be adjusted based on current exchange rates.
For example, one seller set up her store when the exchange rate was 1.9. Now, the exchange rate is 1.5, but she hasn't changed her pricing. Let's look at the math.
She is selling an item that costs her $7.50. She is selling it for £10.95, with £5.95 shipping.
At an exchange rate of 1.9, her profit looks like this:
Item cost = $7.50
Listing fee = .86
Selling price = $20.80
Final value fee =$2.20
Shipping fee collected from customer = $11.30
Actual shipping fee= $11.36
Profit = $10.18
At an exchange rate of 1.5, her profit looks like this:
Item cost = $7.50
Listing fee = .58
Selling price = $16.42
Final value fee =$1.70
Shipping fee collected from customer = $8.93
Actual shipping fee= $11.36
Profit = $4.21
As you can see, the selling price has decreased by $4.38, and the amount the customer is paying for shipping has decreased by $2.37. So, this seller is collecting $6.75 less from the customer, yet her cost for the item and the actual shipping cost has not changed. Her profits have dropped by 60%.
The only way to overcome this reduction in profit is to raise prices (including shipping fees), which offsets the lower exchange rate. Many sellers are suffering losses on eBay UK right now, because they have not adjusted their pricing based on the much lower exchange rate. If you have alot of listings, going in and changing your pricing will be a daunting task, but seeing your profits drop by 60% isn't any fun either. Unfortunately, fluctuating exchange rates are just part of international selling. The Dollar/Pound exchange rate is at its lowest since 1981.
For more tips on selling on eBay UK, check out my guide to Maximizing Profits on eBay UK.
4 comments:
Hi Suzanne
Do you expect the dollar/pound exchange rate to ever increase again? If so when or what conditions would make the rate better? What is causing it to drop so drastically? When it was exchanging at the $1.90 was that the 'norm' or just a good fluke? What is the 'normal' or a good exchange rate? I know the economy is bad, I am not altogether too familiar with how currencys work? Is there a site you could direct me to where I can learn about currency more, so I do not have to consume all of your time with such questions?
Thanks so much.
I never even thought of this. What a major pain this will be to change all of my prices. I wonder if it is even worth selling on eBay UK until the economy improves. I was thinking about closing my store for a while anyway.
Katie, the world economy and exchange rates are tied to the US economy. This is something all of us will have to wait out. People are losing thousands and millions of dollars on their investments right now - everyone is waiting for an answer.
I suggest you Google topics like world markets, exchange rates, and US economy to learn more about the current financial climate. There isn't much we can do except wait and see what happens.
Brandie, I've heard this alot from other UK sellers. They don't think it is worth the effort to make $1 (or less) per sale.
Post a Comment