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February 2, 3008

Like most eBay sellers, I try not to put all my eggs in the eBay basket. Especially after the announcement this past week of a major price hike and other changes that are not very favorable to sellers, diversification is going to be more important than ever. In December I began selling on uBid. I’m also looking at joining other smaller sites like blujay.com that provide a great alternative to eBay, albeit that those smaller sites do not have anywhere near the traffic volume and exposure that eBay gets.

uBid.com is a large eBay competitor with lots of traffic and a model that is quite different from the one that eBay provides. The biggest difference is that there are NO listing fees whatsoever. And while buyers can place bids just like on eBay, they do not know who they’re actually buying from. uBid is set up so that the buyer actually buys an item directly from uBid and they have no idea who’s actually shipping the product or even which part of the country it comes from. That’s both good and bad. It’s good because that means uBid will provide all direct customer interaction. However, at the same time that’s bad as well, because their phone reps will have no experience with the item that was sold and will not be able to answer some more specific questions. They will filter some questions, and send some of them on to the seller.

Another difference with eBay is that only actual businesses can sell through uBid. Joe Schmoe who's unloading his basement is not going to be able to list on uBid. I had to go through a rigorous application process that included allowing them run a real-life credit check on me. Guess they don't want shady characters pulling scams. (Yes, I passed with flying colors).

The buyer pays uBid directly so you have absolutely no deadbeats. uBid carries the risk the non-payment. Yeah! Listings on uBid get a good amount of exposure in the shopping engines and so far I’ve been moderately happy (7 out of 10, see score card at end) with the sell-through rate. The best thing so far on uBid is that they charge no listing fees whatsoever. There’s only a commission on the final sale. If an item does not sell, you simply list it again at no charge.

While I'm cautiously optimistic about the viability of uBid for a small seller like myself (<250K in sales/year), I have to say that their web-based user interface is absolutely atrocious. More about that later.

How about the commissions they charge? Their "final value fee" structure is seemingly way out there! They charge a commission of 12.5% on the first $25, another 10% on the amount between $25 and $250, 7.5% on the amount between $500 and $1000 and 5% on the amount over $1,000. (I can't remember the last time I sold a $1,000+ item online, though, so I'm not too concerned about that). On top of those fees, there's also a flat 2.5% + 0.30 credit card fee on the final amount a buyer pays.

However, on the flipside is the fact they do not charge a dime for listing. You get free listing, free pictures, and free scheduling at any time of the day you like, for any length of time, from 1 hour up to 30 days. You can schedule listings on their website, cancel them (as long as there are no bids, of course) and see sales performance by item for various time periods.

You may balk at paying a 12.5% sales commission, but what you need to realize is that while eBay “only” charges 8.75% on items below $25, eBay charges you for every single listing and enhancement. And if you list a lot of items on eBay with a relatively low conversion rate (which is defined as the number of items you sell as a percentage of the number of items you list) those listing fees sure add up fast! As an example, on eBay my effective take rate (the commission I pay as a percentage of total sales) for all of 2007 was in the neighborhood of 20%! So, clearly, the commission that uBid charges is a bargain compared to what you pay over at eBay. Of course, you have to run your own numbers (you do keep track of things like conversion rate, take rate and margins, right?), but I bet in the end uBid will come out cheaper than eBay.

The interesting thing is that on uBid I am able to charge MORE for the same items than I can on eBay. Clearly, uBid buyers are of a better (or at least higher-spending) quality. Maybe that is because uBid really vets sellers and buyers know that. Maybe it’s because some uBid buyers are disgruntled eBay buyers who realize that the low prices on eBay often come at a cost: poor customer service from many sellers.

uBid pays out to sellers twice a month by paper check and gives you a lengthy and difficult to decipher statement that's worse than my cell phone bill.

As I mentioned earlier, when a buyer makes a purchase on uBid they purchase the item from uBid, Inc. NOT from you! As far the buyer is concerned the item is sold by uBid and shipped by uBid. When you ship the item you are required to include a packing slip you download from uBid. It lists the buyer, their address, payment and has uBid's name with YOUR return address. Guess uBid now has a branch is every town in America! :) You, the seller, are not supposed to have ANY contact with the buyer directly, and you are not allowed to include ANY identifying information as to who you really are. As far as the buyer is concerned, this came from one of uBid's suppliers' warehouses.

That's the good. Now comes the bad...

The seller is responsible for everything, including insuring the shipment. I deal with that by just including the insurance charge for every item in the shipping charge.

If a buyer returns an item, (which is actually surprisingly difficult for the buyer, it seems) the seller will need to refund the buyer in full including shipping, but the seller does not get a refund of fees. Quite unfair, if you ask me.

Because you have to use uBid’s packing slip, you are not able to use dropshippers, which could be a major drawback for some sellers.

To track your activity with uBid you use their “Certified Central” portal. It looks nice on the outside, but once you start using it you’ll discover many shortcomings. Their portal has been a major headache for me, at times. The upload and listing creation interface is not very sophisticated, nothing like even eBay’s standard listing web interface, let alone Turbolister or other such tools. Canceling pending listings (listings that are scheduled and have not started yet) is a major pain in the derriere.  There’s no way to individually select them, and you have to schlog through page after page of listings.  Even a simple price change on the starting bid of a more than one pending listing takes a LOT of effort.

Listings themselves can only have 2 colors. Black and a specific shade of blue. Fonts can only be Arial, that’s it. No outside URLs are allowed and photos are not allowed to have watermarks.

Working within the portal takes lots of getting used to, and at times is very counterintuitive.

There are some good things to say about the Certified Central, though. You can build up a “library” of product templates and then schedule auctions with those as you wish so that you only have to specify starting price, being and end times and number of units in the listing. Both starting and ending times can be specified up to the minute, up to 30 days in advance. And while you can not have multiple listings for the same item at the same time (unlike on eBay where you are allowed 15 identical items at any onetime), uBid does allow you to run a Dutch auction with multiple items.  What I do is have listings that only last 23 hours and 55 minutes, to create the impression of scarcity.  (“I’d better act on this great deal now, it’s about to end soon!”), and after the listing ends I start a new one five minutes later.

In the end, I’d give uBid an 8 out of 10 overall. Of course, my experience is only based on 2 months of exposure, so check back towards the end of the year, and see what I think then…

If you have any specific questions about my uBid experience, feel free to contact me through the ContactUs link below.

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