My Online Trading Experience  


Happy New Year 2015

This time I want to share my experience in selling my handmade products on Trademe, which is similar to eBay. Prior to list my product on Trademe, I have checked the New Zealand Inland Revenue to ensure that my trading activity will be categorised as a hobby, not a commercial one. I also keep recording and documenting all transactions. Well, I hold a bachelor degree in Accountancy and a diploma in business studies so I prefer to implement my knowledge into this hobby project.

I have chosen Trademe because it is a leading trading website in New Zealand and it is one of the most competitive market for similar products. A friend of mine told me that it was very difficult for her to sell her handmade products on Trademe so I thought if I could sell my products on Trademe then I would be able to sell them any where in New Zealand lol.

The most important thing to do as a new player is to raise product awareness. I have to be careful in making market penetration plan and how to build up my customer base. As a producer and seller, I believe my handmade products are good and different to competitors’ goods. However, customers have their own consideration and buying behaviour towards new products from an unknown seller. Hence, a careful plan is needed to introduce my new products to my target customers on Trademe. The problem is I do not know the demographic of my target customers on Trademe. Consequently, I have to take a risk. In other words, I have to prepare for a loss performance although conversely I have to minimise the loss.

Prior to list my products, I must decide how much sunk cost I want to spend for advertising on Trademe and estimate the success fee. This is a must to do before I determine my product pricing. I also look at the pricing range for similar products from competitors and analyse their pricing strategy. I look at the additional value of their products and the reasons why their products are sold at that price and why people buy them. Once I can make an assumption then, I can determine my pricing strategy for that niche market.

On 15 May 2014, I put a listing for my products and decided to spend NZD 20.00 to advertise them. As for pricing strategy, I offered my soaps at an introductory price. By the end of May 2014, I sold three soaps to a new customer and earned a feedback. At that time, I thought I should focus on earning feedback to encourage other customers to purchase my products. Thus, I selected an auction method to quickly earn feedback. However, I had to be fair to my customer who already purchased the same products. Consequently, I looked for the smallest and uneven soap bars. I was lucky I had a few of lip balms too. Thus, I decided to auction them at $1.00 reserve price in the following month. There were two new customers who won the auctions and I received two feedbacks.

Peppermint Soap

Green tea & lemongrass soap

Eucalyptus

When I run out my advertising sunk cost, I decided that I did not to want spend more dollars. At that time I had a lot of experimental soaps. I told myself to offer them at variable cost. I thought it was a fair deal. I could use the revenue from selling experimental soaps to cover the Trademe advertising cost and success fees. I thought some customers could be encouraged to purchase the experimental soaps at variable cost. I took a risk to sell my experimental soaps because if the customers did not like the soaps then I would receive bad feedback.

Experimental lavender soap

Experimental jasmine soap

Experimental passionfruit soap

Experimental vanilla soap

On 28 June 2014, I listed my experimental soap bars on Trademe. Within two days I sold two experimental soaps to a new customer and received a good feedback. These experimental soaps are well received by customers as I sold 73% of them from June until December 2014 and I earned sixteen feedbacks. Unfortunately, I only sold two soap bars at their normal price during that period. Well it is quite understandable, as people tend to purchase popular products especially when they are offered at variable cost.

Experimental cake soap

Experimental goat milk soap

Experimental round soap

Experimental cocoa soap

On August 2014, I had five jars of handmade body lotions that were close to expire. I decided to auction them at $1.50 reserve price. I sold two jars of handmade body lotions to a repeating customer and a new one. Afterwards, there were a significant number of views for the remaining auctions and they were sold to a new customer. Subsequently, the number of views kept being significant. The sales performance of experimental soaps stayed strong. It meant that the product awareness plan had been successfully implemented.

Body cream

On November 2014, Trademe introduced a multi-quantity buy now for my product. I thought it was a good intention of Trademe to simplify the sales transaction procedure. I voluntarily joined the programme. By the end of November, I sold four experimental soaps only. I wondered what happened to my sales performance considering Christmas was coming at that time. I checked the number of views and they were strong. There was a Trademe member who wanted to purchase my soaps but she could not use the buy now option. The transaction did not happen so I thought that she lost her interest.

I was bothered with the poor sales performance on November so I decided to list my products at special price on the following month. I considered it was time for Christmas sale. No sales transaction took place! Something went wrong. Auction method was handy to boost up my sales performance but which soaps should be auctioned? I looked at my stock and apparently my most expensive soap bars had not been sold. Should I auction them? But their variable costs are way too expensive. I was in a dilemma! On one hand I want to increase my sales figure, on another hand I want to minimise the loss. Well it is a hobby project and I have been preparing myself for the loss. Thus, I made a decision to daily auction my expensive soaps for $1.00 each from 11 December to 31 December 2014. I sold 40% of the auctions to six new customers and five feedbacks have been received so far.

Jasmine soap

Rose soap

One of those customers told me that she could not use buy now option to purchase my experimental soaps. I thought something wrong with Trademe system so I withdrew one listing as it had one bar left in stock. A few days later, Trademe staff dropped an email to inform me that he deleted my profile because I referred Trademe members to my personal email on my blog. I was pissed off so I created a new profile on my Trademe account and wrote that if Trademe staff deletes my profile again, I will close my accounts with Trademe and will list my products with other trading website. I feel good afterwards lol.

I linked the information given to me about my customer not able to use buy now option to the similar information I received on November. I analysed the related sales performance and concluded that the multi-quantity buy now option was the reason for my poor performance. To be qualified to use the buy now option, a Trademe member who wants to purchase an item should be an authenticated member and has the minimum amount on his/her Trademe account. As a seller, I do not give a damn if my customer is an authenticated member or not. I do not give a damn if my customer has $0.00 on his/her Trademe account either. I only care if my customer wants to purchase my products that he/she can put a bid on my listing or can use buy now option. I chose a bank transfer as the payment method so I do not care if my customer has a credit card or not. I emailed Trademe and told its staffs that I would not use the multi-quantity buy now option any more as it did not work for me. What does it mean to you? It means you need to understand how the trading website system works. They may have a good intention but if their system/application/option does not work for you then you should abandon them to minimise the loss.

I have analysed my trading performance from 15 May to 31 December 2014. The net profit from Trademe is NZD 126.22. Yes, it is a profit considering the cost of goods sold is sunk cost. However, I want to apply the benefits vs cost perspective to gain a better understanding of my expenditure. Sunk cost can not be recovered but I want to forecast my 2015 profit/loss. The sunk cost for goods sold from 15 May to 31 December 2014 is NZD 301.25. It means the loss is NZD 175.03. I breakdown the figures and identify that the expensive soaps sold via auction at $1.00 reserve price is the reason for the loss. What benefits I earned from that loss? The answer is five good feedbacks. It means I do not need to spend more dollars to advertise them.

I think I want to change my selling tactic this year. I will avoid the auction method and focus on selling my products at their normal price. It will be a challenge but we’ll see how it goes.


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