Do you often find good hot items you want to sell but there are tens or hundreds of sellers offering the same one?
Dropshipping is becoming more and more popular which leads to an over saturated market, I am sure you have already noticed. You are often competing with too many sellers and too slim profits and since 90%+ of the listings for particular item look the same to the buyers, it is mostly the price and ranking in search results that matters. In a business with that slim profit margins, cutting prices is a “dead end street” and you have to be more creative to grow.
Promoted listings is another way to get your items noticed on eBay. It puts your listings in front of more active shoppers, boosting item exposure and increasing the likelihood of a sale. I don’t want to waste your time so today we will go through the most important metrics and strategies, as well as a few examples.
What is a promoted listing and how do I set up?
Promoted listings is an eBay advertising service, similar to Google Adwords, which allows you to boost your listings to the top in search results. The more you pay – the more visibility you get. On every one of these listings you will see a “SPONSORED” label and the item will often appear in searches both with the label and the original listing. Best of all is you pay only when you make a sale!
How it worked for me
As a dropshipper, I want to show you some of the experiments I did with promoted listings and the results I accomplished. One of my stores has ~50 orders per day maintaining about 700 active listings.
NOTE: It is very important for you to understand that each and every listing and eBay store is different so a copy/paste of my strategies might also work better or worse. However – feel free to give them a try – experimenting is the key!
These are the three strategies I tested and the results I came up with:
- Promoted listings applied to all items in store at a lower percentage
First thing I thought of – what will happen if I apply a 2% promotion fee on all my listings and increase their price by the same percentage so I keep my net profit.
It turns out that 2% is not enough to make a difference for all these listings. Some of them were selling good before and kept selling good with a small increase, others dropped because of the increased price, but most of them did not even move. Here is a quote from the eBay news team, I found later, which explains this good:
“Promoted listings are about selling more of your hot inventory, converting items that sell moderately well—via organic search—into higher-performing items, kick-starting sales for new listings, and standing out in crowded categories. You do not want to use the service to push items that are not selling well organically—i.e. the slow-moving merchandise.”
It means that if the conversion rate of an item is very low promoting it is not a good idea. You will gain more traffic but because visitors do not convert into buyers you will essentially waste it without gaining new sales.
With this in mind, I tried another strategy.
- Cheap items with the max of 20% fee
I used promotions to boost some of my new listings as well as a few hot items. The difference is I applied the maximum of 20% fee and increased the price by 20% so I keep my profit close to the one I put initially. Doing that with expensive items would cost you tens or hundreds of dollars for fees per sale so I applied it only on cheap items – $5-$15.
Let’s say you are selling an item for $15, which you buy for $10 and the rough net profit is about $2. Applying 20% fees means every time you sell you will be charged $3, therefore in order to keep your profit of 2$ you will have to increase the price so it will be around $19.
Even if that price is higher that your competitors, you can get more sales because the visibility and ranking of the listing is much higher.
This strategy worked way better for me. I doubled my sales on a few items in 2 weeks and kept the same profit.
Using a similar approach, I decided to test selling expensive items.
- Expensive, niche and unique items with 5-15% fees
As I said, simply increasing the price of the expensive items will result in fees so high that nobody will buy your product. In order to do it you have to find a unique product that nobody is selling in a particular niche(or 2-3). Only then you can set a price of your own as there is no direct competition for the product and you are the only(or one of a very few) seller. Buyers don’t know how much should this item cost so you can have a 50-100-200% profit margin, or more. Include the promotion fee in your pricing and you are ready to go.
I did this with a few items and some sold for nearly double the price, which not only paid my promotion fee but left me a good profit.
To sum up – using promoted listings is tricky and often takes a few tries before new sales come in but if your ad rates are set correctly you will never lose money, so why not give it a try?