eBay Bookkeeping Archives

eBay fees too high? It depends.

Seller Ledger on November 18, 2024

One of the most common complaints we see among small eCommerce sellers is that eBay fees are too high. As are fees at Amazon, Etsy, Poshmark and other eCommerce marketplaces. This becomes especially common whenever new fee increases are announced.

While price increases often produce an emotional response (we are only human, after all – at least until AI starts writing these blog posts,) we thought it might be helpful to provide some context on marketplace fees and how you can evaluate them rationally (and analytically.)

What do marketplace fees get you?

To start, it might help to remember some of what you get from your online marketplace seller fees. For the sake of this article, we’ll use the example of selling on eBay versus selling on your own website.

1. A full-stack eCommerce platform on which to sell

What do I mean by “full stack”? Well, I mean everything that you would need to sign up for, configure and pay for yourself to start selling online through your own web storefront. For example, if you want to set up your own eCommerce storefront, you’d need to arrange (and pay for) the following:

A domain name. It’s the equivalent of a street address on the internet.
A hosting account which can handle the internet requests to visit and purchase from your online storefront. Oh, and you will likely want it to be secure, so you’ll want an SSL (secure socket layer) certificate.
Software to run your storefront. Your options here run anywhere from coding it yourself to using existing platforms like Woo Commerce or Shopify, which run from free to sizable monthly subscriptions.
A payment service, like Stripe or PayPal, to let you accept payments from your customers.

Online marketplaces provide all of the above for you. In additional to thinking about the cost savings with each item above, it might also help to think about the time savings of all the things you don’t have to spend figuring out, setting up, and, especially, fixing when they break. There is a very high probability that the large marketplaces have more reliable systems than what you might cobble together.

2. Marketing

This is the big one, and it’s not even close. The #1 thing you get from listing items for sale on a marketplace is traffic. Finding customers is one of the hardest things to do in business, let alone in an eCommerce business. Online marketplaces have done the heavy lifting to build large brands with huge numbers of customers who visit them every day. You benefit from that, though you do need to compete for attention among all other sellers on a marketplace.

To better understand why we focus on “marketing” so much, just imagine what you would try to do if you launched your own website. Let’s say you have a brand new eCommerce website, it’s live, it’s beautiful, it works perfectly and has amazing, unique, incredibly valuable items for sale at extremely reasonable prices.

How do you get people to visit your store?

If you google “how to drive traffic to your ecommerce website”, you will find a TON of content offering all kinds of advice (as well as some “experts” willing to help you, for a fee.) And you can compare that to what Shopify and Wix suggest. But let’s discuss a few of the common techniques you’ll likely find.

Word of mouth

Likely the very first thing to try is to reach out to your entire network of friends, family and professional colleagues. Ask them for help, ask them for advice, and of course, ask them to tell everyone they know about your amazing new web storefront.

Search engine optimization

In the brick and mortar world, you can choose a location with good foot traffic, though the rents will likely be higher. On the internet, there really isn’t a lot of foot traffic. The closest equivalent is search traffic, so you’ll want to make sure your website is optimized for key search terms. Of course, you’ll need to do this better than your competitors in order to get a high enough ranking. And some of those competitors are the very same online marketplaces, who’ve spent years developing expertise and credibility so that they can drive traffic to their customers’ listings.

Paid advertising

In the brick and mortar world, we used to be able to advertise in the Yellow Pages, but that’s been replaced by the online world. You can advertise on search engines like Google, as well as social media sites like Facebook and Instagram. You could sponsor podcasts from influencers who talk about products like the ones you sell. There are a lot of options out there that can help you reach your target customer, but it’s critical that you test and measure your ad campaigns on each of them, to be able to know whether you are making enough money to justify the continued investment.

eMail marketing

Even though it’s been around for a long time, email continues to be a very effective tool for communicating with customers. But in order for this to work, you need to get people to give your their email address, which requires a whole other step of finding prospective customers and giving them enough of a reason to give you their email address. This leads us to the next concept.

Content marketing

One of the most common techniques you’ll see to help drive traffic to your website is a more indirect method that is sometimes called “content” marketing. This means creating a bunch of content (or paying someone else to do it,) that is related to what you’re selling, but different enough that it can attract people who are not explicitly seeking out a specific item. Writing blog posts, sending newsletters, creating videos or reels on YouTube, Instagram and Tiktok, these are all examples of content marketing.

Social media

Perhaps the fastest growing technique for acquiring customers is to build up a presence on social media channels like Instagram, TikTok, Facebook, SnapChat, etc. Social media platforms make it much easier for you to build lightweight relationships with “followers” and “connections.” But you still have the challenge of creating interesting enough content to gain those followers. That said, because this is a much newer domain and is rapidly evolving, there may be more opportunity to do something new and unique.

Other ideas

There is no shortage of marketing ideas that you can try for your website. For example, you could create an affiliate program to get influencers to promote your store. Or roll out a customer loyalty program to get your happiest customers to spread the word. When you’re an entrepreneur, everything is worth a try:)

How do I compare the costs of marketplaces vs doing it myself?

While there is no “easy” answer to this, as everyone’s business is different, we have tried to pull together some resources to help you get a better sense of where your costs should fall. So if you are thinking that eBay’s fees are too high, compare that to some of the statistics below.

The CMO Survey from 2021 states that “B2C Product companies spent 18.4% of their revenue on marketing in 2021.”

This blog post from Boldist suggests “The Small Business Association recommends 7-8% of revenue should be spent on marketing, but what we see, in reality, is that ecommerce companies will spend up to 30% of their revenue on Customer Acquisition Costs.”

And if you have time to dig through a LOT of great detail, check out Marketing Sherpa’s 2015 eCommerce Benchmark Study. Notice that most respondents talked about how their customer acquisition costs are expected to go up over time.

Final Thoughts

Every small business owner needs to decide for himself/herself how best to spend their money. But we are big fans of making informed, data driven decisions to help grow your business. Hopefully this article helps provide some context for evaluating the true cost of online marketplace fees and whether your money would be better spent elsewhere.

Want an easy way to see your fees per online sales channel? Remember to check out our recently added Channel Breakdown report.

Not yet a Seller Ledger user? We offer a 30-day free trial, co credit card required.

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eBay 1099-Ks are coming…electronically

Seller Ledger on November 11, 2024

Yesterday, we received the following email stating that eBay’s 1099-Ks are coming electronically for 2024.

Understandable confusion – but don’t worry

First, this email was received for a seller account that only sold personal items this year. This might raise concerns that personal sales may get reported as “taxable.” But that’s not the case – it just means you will want to properly account for them in your personal tax return, which we explain in this post about the relationship between personal sales and 1099-Ks.

Second, the seller account that received this email also sold less than $600 for all of 2024. This raises the question about the sales threshold for receiving 1099-Ks. eBay links to an article that discusses reportable criteria, so clearly not every seller will receive a 1099-K. As of the last IRS announcement, the threshold for 2024 is expected to be lowered to $5,000 in gross receipts. But, as we’ve seen before, this could still change.

As we’ve mentioned before in prior blog posts, 1099-Ks are “informational” documents designed to help identify eCommerce sales across platforms. So long as you are correctly tracking and reporting actual business profits, you should have nothing to worry about.

Get your business finances organized.

Need help making sure you only pay taxes on your net business profit? With automated bookkeeping through Seller Ledger, we pull in your detailed sales and expense information to make this as simple as possible. We also offer a 30-day free trial, no credit card required.

Try it free

Tracking cost of goods sold with eBay

Seller Ledger on June 29, 2023

eBay cost of goods sold tracking has been a challenge for years (as we have heard from both customers and members of the eBay management team.)

Not too long ago, Seller Ledger rolled out inventory tracking, complete with some nifty automated cost of goods sold calculations. But for eBay sellers, that functionality depends on the use of an optional listing field called “Custom label (SKU).” And it turns out, that field is not shown by default when creating listing templates. So, we thought we’d help folks learn how to find and use that field, and what magic it can potentially unlock.

When you start to create a listing, one of the first things you’ll do is create a title for your item. By default, you will see two fields: Item title and Subtitle. However, if you click on the link to the upper right, called “See title options“, you will see a few more options pop up. One of those options is “Custom label (SKU)”.

Click on the selector to turn that field on, and you should see an updated form that looks like this:

Now, you have the ability to enter information about this item in the Custom label (SKU) field. But what should you put there, and why is it important?

You can choose to put anything you’d like in there, but, if you follow this guidance in conjunction with Seller Ledger, you will see two major benefits:

Have your inventory reduced and your cost of goods sold automatically calculated when an item sells
See how much money you make on each sale

The key concept here is to have a unique identifier (SKU) for each item you sell on eBay. How you create that identifier is up to you. Some people put a combination of letters and numbers, with some parts relating to the product name, or the bin number in which they are are currently stored. Others simply choose ever-increasing numbers. What matters most is that each SKU value is unique to that eBay item.

In Seller Ledger, when you purchase items for resale, you now have the ability to create a product/item, complete with a Product SKU field.

If you enter the same value in your eBay listing under “Custom label (SKU)” that you enter in Selller Ledger under “Product SKU”, you can sit back and watch the magic happen. When one of those items sells on eBay, Seller Ledger will match the order to your inventory, reduce the number of “in stock” units in inventory, and automatically calculate the cost of goods sold for that item, and show you the gross profit for that sale, as seen below.

Feel free to dig in for a more in-depth look at how Seller Ledger helps automate inventory and cost of goods tracking.

Interested in giving this a try? Seller Ledger offers a 30-day free trial, no credit card required.

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Categorize eBay transactions the way you want… plus more

Seller Ledger on April 5, 2023

Now that we have officially launched, it is time to get back to making the product better and easier to use. To do that, we’ve focused on a number of enhancements that came directly from our customers.

Customize how eBay transactions are categorized

First up, we heard from a number of people that they would like to be able to change how eBay data gets categorized when it comes in. As a refresher, here is how Seller Ledger handles eBay transactions by default.

But, we’ve heard some great reasons to change the default settings. Some examples include:

Putting eBay fees under the “Advertising” category rather than “Commissions and fees.”
Putting Shipping costs under “Cost of Goods Sold” instead of “Office Expense.” There’s an interesting debate here, which we plan to tackle in a future blog post.

However, one of the coolest ideas was to let customers have eBay order amounts go under a subcategory of Product Sales, so that, if you are a multi-channel seller, you could have a profit and loss that starts with something like this:

Categorize eBay transactions — Custom eBay sales categories

To make this possible, just go to our new “Customize” page under the Settings tab, and edit the transaction types you’d like to change:

Remember, if you want to use any sub-categories for eBay data, you’ll want to create those sub-categories first.

See your profit or loss by month, quarter or year

This one is pretty self explanatory:

On a related note, we also added totals to top right of the Income and Expense tabs, so when you drill down or filter for a specific date range and/or category, you can see the totals. This will also match the numbers your click from the profit and loss report.

Ability to delete sub-categories

A small enhancement, but for those of you who add a sub-category but then decide you don’t need it, or made a mistake, you can easily delete them. Of course, if you have categorized any transactions using that sub-category, you will need to re-categorize them. We won’t give you the option to delete a sub-category if there are any transactions using it.

That’s it for now. We’ve got a few other improvements coming soon, so stay tuned.

Bookkeeping for Multiple eBay accounts

Seller Ledger on February 14, 2023

Seller Ledger now supports bookkeeping for sellers with multiple eBay accounts.

Based once again on feedback from our wonderful Beta customers, we have added the ability to link multiple eBay accounts to Seller Ledger. This is especially important if you are looking to match the 1099-K that eBay sends. If you have multiple eBay accounts under a single Tax ID, eBay combines the totals for all accounts under that Tax ID.

Learn more about 1099-Ks and why bookkeeping helps you avoid unwanted discrepancies.

Connect multiple eBay accounts in Seller Ledger

If you have multiple individual eBay accounts, it’s simple to link them with Seller Ledger.

Just add each account, one at a time, and watch them show up on your dashboard.

You can see each account, the net sales amount, and how many transactions have been imported. Click through to view the transactions within each account.

To make tax time much easier, we roll up your sales and expenses across all of your eBay accounts into a single Schedule C tax report.

Automated bookkeeping for eBay sellers just got a lot easier for sellers with multiple accounts.

As always, keep the feedback coming. We’ll see you at the next feature announcement.

New Bookkeeping Website for Online Sellers

Seller Ledger on January 31, 2023

We’re Seller Ledger and we’re here to automate bookkeeping for online sellers.

Why a new bookkeeping website?

Hi, this is Kevin. I was the founding CEO of Outright.com, a bookkeeping website for online sellers that eventually became GoDaddy Bookkeeping. As many of you are painfully aware, GoDaddy Bookkeeping was shut down mid-year in 2022. We were not happy with the demise of something we had worked so hard to create.

We then looked at the market to see what alternatives existed and if folks were happy with those solutions. Turns out, not so much. So, we started reaching out to sellers to see if there might be interest in a new bookkeeping website for online sellers. The response was very positive.

So, in a rapid sprint, we’ve put forth a new product called Seller Ledger to fill the gap in the market. Our initial focus has been on eBay sellers, with plans to add additional marketplaces and sales channels soon. With the help of a tremendous group of initial customers/alpha testers, we’ve built and launched a first version of the product.

See for yourself

What Seller Ledger does

Our product helps automate your eBay bookkeeping in 3 easy steps:

1. Import your sales and fee history

Connect your eBay account to Seller Ledger and we will pull in your transaction history every 3 hours.

2. Generate real-time profit and tax reports

We categorize all of your transaction details, including shipping amounts collected and fees charged, showing you an up-to-date profit and loss report as well as a pre-populated Schedule C tax summary.

3. Manually enter other transactions

To complete your financial picture, simply add business transactions we don’t know about, like the cost of items you sold, off-marketplace sales and even mileage expenses.

Give Seller Ledger a Try

We’re keeping Seller Ledger free for the time being, as we continue to add features and functionality. During this time, we encourage prospective customers to reach out to us directly.

Category: eBay Bookkeeping