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If you have
your sights set on becoming a high-volume seller and you want to
avoid the potential problems that can arise between you and your
future customers, it's critical to sit down and formulate your
own sales policy for your auction business. From payment to
shipment policies, there are a number of important decisions to
make. Never fear, though, we've outlined the most important
questions for you.
Methodology
You know you want to get paid for the items you auction; now
it's time to figure how you want to get paid. There are
several standard payment options your potential customers will
expect. The payment methods include personal check, cashier's
check, money order, and credit card. Do not offer payment by
cash--you will dissuade bidders from participating in your
auction. Each payment type has its pluses and minuses.
Weighing
Your Options
Personal checks are by far the simplest method for buyers,
saving them the trouble and expense of going to the bank or post
office to pay for a cashier's check or money order,
respectively. On the other hand, these guaranteed payment
methods do protect you from bad checks. They also let you ship
upon receipt of payment--no waiting for the buyer's check to
clear at your bank--and ship C.O.D. (collect on delivery), in
which the mail carrier picks up the payment at the point of
delivery. Also of note, cashier's checks and money orders
provide the buyer with some recourse in the event of a bad
transaction. Specifically, cashier's checks sometimes have a
stop payment option, while money orders provide the enforcement
power of the post office. If you, as the seller, do not complete
the transaction, you can be investigated for mail fraud.
Finally, accepting payment by credit
card is an excellent option for both you and your buyers. It
allows buyers to pay immediately and also protects you against
fraud at the point of sale. In essence, your credit card
provider will decline the buyer's credit card if his or her
account is invalid or overdue.
The
Delay
If you accept personal checks as one of your payment options,
you should articulate in your sales policy (ideally, a short
paragraph that's included in your auction descriptions and
end-of-auction notices) if you will not ship merchandise until
your bank clears the buyer's check. Be aware that this could
discourage some bidders who would rather not wait for items they
have won. With this in mind, you might state in your policy that
you only require a check to clear before shipment on items above
a set dollar amount (the thinking being that you will ship upon
receipt of a check if the item is of low value). If you sell
low-cost items exclusively, this strategy probably isn't right
for you.
Middlemen
Some buyers will also want to use escrow services to complete
transactions. Escrow services, such as i-Escrow,
TradeSafe,
and ICC,
protect both the buyer and seller by acting as an intermediary
in the transaction. Typically, the payment is sent to the escrow
service, which then forwards it onto the seller after a
predetermined number of days. Note that escrow services often
charge the buyer, not the seller. Be sure that buyers are aware
of this if they request an escrow service.
Plastic
Money
Another new financial service on the horizon--soon to appear on
both eBay and Amazon.com Auctions, thanks to BidSafe
and Accept.com,
respectively--is credit card verification. This is another
financial service aimed at both buyers and sellers. Put simply,
these systems allow sellers who do not have a business license
and merchant account to accept credit cards. Credit card
verification will also attract bidders who prefer paying by
credit card as well as protect you against dishonest buyers. The
catch: these services are relatively expensive, and the amount
charged is a percentage of the item's final value. The question
to ask is whether or not you sell enough valuable merchandise to
justify the expense.
Who's
Responsible?
The other major policy you'll want to state up front in your
sales policy is who is responsible for paying shipping. It's
either you or the buyer who ponies up for postage. Typically,
sellers pass this expense onto the buyer and add it to the cost
of the item. Sellers looking to endear themselves to repeat
customers or attract new bidders will pay shipping. This is
especially true if they are selling smaller, inexpensive goods
that do not require intensive packing. If you decide to go this
route, be sure to include it in your written policy at the
bottom of your item descriptions. It will distinguish you from
the crowd.
Snail
Mail
Between the United
States Postal Service and United
Parcel Service, there are a bewildering number of ways you
can ship your merchandise. Before you start selling in bulk,
it's wise to look at the different carriers and their services
and decide which one suits your auction biz the best. Each one
is trying to outgun the other with new value-added services. For
instance, UPS now lets you produce and print mailing
labels on the Web.
In general, both the USPS and UPS
offer many of the same shipping options. Decide which ones are
best for your core customers, considering the different rates
and your inventory's shipping requirements. For instance, if you
are bookseller, buyers will expect the slower but less expensive
standard mail rate. Also, while Priority Mail from the USPS
seems to be the method of choice, don't feel obligated to use
it. First-class or standard mail, which arecheaper, may be
sufficient for you and your customers. Some sellers offer
several choices or let the buyer decide. (If this is your
policy, it is wise to require that the buyer pay mail insurance.
This way you are protected if the item is damaged. Also,
recognize that sellers get free shipping materials with Priority
Mail.)
Handle
With Care
Speaking of handling, many sellers will charge shipping and
handling fees together, especially if they are shipping
expensive, fragile goods, which require additional packing
material. They will attach a flat rate to all their goods, which
is an aggregate of the price of their shipping materials and
shipping fees for an item of its size and weight. Be aware that
some people will not bid on items that have shipping and
handling fees. Typically, these buyers feel that sellers are
trying to artificially inflate the cost of the item to make up
for listing fees or money lost on the resale of the item. If you
include a shipping and handling fee, describe what services are
provided, such as the exact packaging and shipping method.
Insurance
Mail insurance is another issue you'll have to deal with as a
seller. Even though it's an added fee for the buyer, many
sellers demand it to avoid problems with bidders. In essence,
insurance protects sellers from having to refund goods that are
damaged or lost en route to the buyer. It also allows sellers to
avoid policies such as "all sales final" and "no
refunds." Along the same lines, insurance prevents false
claims and returns, such as a buyer claiming an item was damaged
in transit when in fact it was broken after it was received.
Again, some sellers suggest insurance and let buyers choose to
use it or not, depending on the merchandise they sell. If you
are a dealer in fine china, it's a good idea to incorporate
mandatory insurance into your policy.
Guarantees
and Refunds
Some sellers offer guarantees on their items to encourage
bidding and demonstrate they are customer friendly; however,
this is not a prevalent practice. On the one hand, it will
definitely elicit more bids and endear you to honest bidders. On
the other hand, it could attract the wrong element--buyers
looking to take advantage of gracious sellers. As for refunds,
some buyers will attempt the old bait and switch: sending back a
fake of the item in the hopes of keeping the real one and
scoring their money back as well. Fortunately, with a little
diligence, this is easy to avoid.
Back to Auction tips &
tactics
by Vendio Services
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