eBay Make Offer - A Profit Killer or a Profit Maker

eBay ‘Make Offer’ – A Profit Killer or a Profit Maker?

Hey there ,

In this blog post we have something special.  We have our first guest post being published on the UnderstandingE blog and it’s a good one.

This post has been written by Richard Meldner whom most of you will have met before either in the UnderstandingE forums or as a guest on some of our weekly webinars.

Richard Meldner is one of the principals of MDI Performance, Inc. and has been a full time seller on eBay in the eBay Motors Parts categories since 2004.

His eBay store can be found at http://stores.ebay.com/mdiperformance/

With over ten years selling experience on the marketplaces Richard is an expert in his own regard.

So with the introduction complete, let’s hand over to Richard.

eBay Make OffereBay Make Offer

Believe it or not, eBay’s Make Offer feature is almost 10 years old now.  It was introduced in early 2005 on the main eBay.com marketplace and since then it has perplexed many sellers.

If you are not familiar with Make Offer, the basic function of this feature is to provide a platform for sellers and buyers to negotiate a price on a fixed price listing.

The buyer makes an offer lower than the Buy-It-Now price, the seller responds by accepting the offer, reply with with a counter offer or decline the offer outright.

This back and forth can go on for 3 total buyer offers before eBay will not allow the buyer to make additional offers.

So there is a limit to the madness. Each offer, either buyer or seller offer, is valid for 48 hours before it automatically expires.

Once an offer is accepted, the buyer makes the payment within the specified time in your eBay account preferences. Immediate payment is currently not available for this feature.

Unfortunately, many sellers have been turned off by this feature because so many buyers make unreasonable offers and sellers are tired of wasting their time to deal with them.

Yet there are millions of listings with Make Offer and there are many sellers doing well with this feature. In this post we will suggest when to use it and when to stay away so that you can develop a strategy for using the Make Offer function that works for your business.

How ‘Make Offer’ can be good for your business

Lets dive in and show some great examples on when using Make Offer can help increase your sales:

#1 – Limited Edition

Art, limited edition and many collectible items are a perfect use of Make Offer.

As a matter of fact they are so good for this product group that the feature was just recently added by Amazon to their art and collectibles categories.

Make Offer gives you the ability to set a “market price” for your item over a much longer listing duration then an auction allows. This in turn will give you the opportunity to try to sell the item as close to your asking price as possible.

Do consider that your asking price should be reasonable and similar to other sellers Buy-It-Now prices. Otherwise, buyers are more likely to ignore your listings unless you have that one special item they really want.

#2 – Meeting Manufacturer Demands

You are selling brand name merchandise and your Buy-It-Now prices must meet minimum prices mandated by the manufacturer under an authorized dealer contract.

This type of price policy is often called Minimum Advertised Pricing (MAP) policy and is very popular with major consumer brands in the United States and Canada.

Typically under a MAP policy, you must advertise the product at or above the MAP policy pricing but are free to sell the product at any price.

This is a perfect use of the Make Offer function on eBay as buyers will find many sellers offering the same products at the same price, but typically only a few sellers advertise they will accept offers.

Important: Do check with your manufacturer or distributor on the exact terms of the MAP pricing policy before using this feature on your listings and also confirm you may sell at any price below the MAP price. Some authorized dealer contracts may not allow accepting offers below the contractual set advertised price.

#3 – Large / Heavy Products

Larger and heavier products for which out of competitive reasons you offer free domestic shipping are also very good candidates for Make Offer.

If shipping costs are a major factor in the pricing of your product and many of your competitors are offering free shipping on the same or similar items, you should consider using Make Offer on these products if you are offering to sell international (cross border trading) and are using calculated eBay shipping rates.

What you are really doing in this situation is provide your international customers a way to “remove” your build in domestic shipping costs.

You can add to your listing some wording that states you only consider offers from international buyers, but there is no mechanism in eBay to block domestic buyers from making offers.

#4 – Luxury Products

Higher priced or luxury items are perfect for Make Offer as well. You maintain a “street value” similar to other sellers on eBay, but are more flexible to offer a deal to move merchandise.

#5 – Discontinued Products

Popular discontinued products are also an ideal candidate for Make Offer.

We all have seen a manufacturer inexplicably discontinue a product despite it still being popular. Since now you are working with limited quantities, this is a good time to increase the fixed price to generate a new “market price” and increase your sales and profit on your remaining inventory.

You could call this a twist on the art, limited edition or collectible strategy above.

How ‘Make Offer’ can be bad for your business 379760083_f5dd2e5638_o

Now here are some scenarios where Make Offer is really a sales and profit killer:

#1 – Refurbished Products

When selling refurbished products you are typically in the business of turning inventory quickly as you have capital invested in the inventory in your warehouse.

Typically refurbished products are sold to sellers in lot sizes only and are at the end of their “New In Box” life cycle. So it becomes important to maintain your cash flow by quickly selling the items before they become obsolete.

The Make Offer feature is not going to accelerate your sales on your inventory since the typical refurbished products buyer is a bargain buyer.

That person is going to try to negotiate you to death if they see you are using Make Offer on your listings.

You are unlikely going to gain any sales from such buyers as they will always think you are priced too high and your efforts will result in little to no sales and all you do is waste your time.

#2 – Generic Products

Selling non-branded (generic) products and you are competing in a market with many other sellers selling similar non-branded products.

In this case, you need to find a good competitive price point for your products and just stick with it.

A typical buyer not looking for a specific brand will just look for a seller that has a product that matches his or her needs that he or she can Buy-It-Now without haggling.

Using Make Offer in this type of sales scenario is a huge profit and sales killer as it turns off potential buyers.

#3 – Low Price/Low Margin

Even if you have products that may fit into one of the categories where it makes sense to use Make Offer, you need to set a minimum price point when you will entertain offers that makes sense for your business or specific products.

Generally, if your product is not at least in the low 3 digit pricing, $150, £100, or €125, you shouldn’t bother with Make Offer.

Buyers are not going to be excited to save 2% or 3% and you are likely only going to waste a lot of time answering offers with no sales.

#4 – Used Products

Used products are a really bad choice for Make Offer.

Your used product is competing with other similar used products on eBay and most likely in auction listings.

Unless your used product could be categorised as a collectible, your item is not going to set some new magical market price.

So list it as an auction item and hopefully you attract a small bidding war to run up the price.

Know your strategy

From these examples you can see that the Make Offer function can have a place in your eBay selling strategy.

Smart eBay sellers will use Make Offer in select situations to boost their sales and profit, but will not use it across the board on all listings. You may also find a mix strategy may work for you.

For example, if you are selling refurbished products and your sales are slowing down, you may want to add Make Offer when you have only 2 or 3 items left.

This preserves the selling price you have been using, but allows you to try to discount the remaining items to free up your cash and inventory.

Top Tips4843576916_75c594ba06_b

Before deploying Make Offer, here are some factors and tips to consider in your strategy:

#1 –  Title changes

Making changes to your eBay listing title are not possible after you received your first offer.

While eBay has increased the ability to change a title after a sale to a listing, it has not extended this to Make Offer listings.

There is currently no indication that eBay will change this in the future. All other revisions are possible, including price, item specifics, and description.

#2 – Can’t be removed

Once you create a listing with Make Offer or convert an existing listing to Make Offer, you no longer can remove that option.

It is a one way street. So if you decide you want to remove the Make Offer feature, you will have to stop the listing and then relist it.

This may impact your Best Match position for the listing.

#3 – Automation

Over time using Make Offer on your listings, you may decide to automate the responses to weed out the unreasonable offers.

Most listing tools offer a way to automate responses and this can save you time instead of responding to someone offering a $1 on your $1000 item.

#4 – Communication

When you receive an offer, use it to “talk” to your potential buyer.

Best practice is to always counter offer and include something in the notes that states this is the best price you can do.

If your counter offer appears reasonable to your potential buyer, they often will take it when you indicate that this is your best deal.

Conclusion

Amazon on December 9, 2014 introduced “Make an Offer” feature to their marketplace in art and collectibles categories.

It is reasonable to think they will expand it to other categories over time and the same strategies for eBay would apply on Amazon.

In conclusion, the Make Offer features is generally a good idea for higher priced, low volume items.

Amazon on December 9, 2014 introduced “Make an Offer” feature to their marketplace in art and collectibles categories.

It is reasonable to think they will expand it to other categories over time and the same strategies for eBay would apply on Amazon.

The lower the price point and the higher the volume, the less interesting Make Offer becomes and can even turn against you by alienating potential buyers.

It has been around for 10 years on eBay.  Amazon is implementing it, so there is a reason for its existence, but it requires a targeted approach.

Don’t leave money on the table if you have listings that can benefit from Make Offer.

Richard

 

Image sources: Stefan Erschwedner [Flickr], Cornflakegirl_ [Flickr]

2 replies
  1. Matthew Ogborne
    Matthew Ogborne says:

    Howdy,

    I just wanted to add a quick note to say thanks to Richard for writing this. I know how much time & effort he put in to complete this article and it’s packed with no-nonsense suggestions.

    Thank you Richard!

    Matt

    Reply

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