Understanding Sell Through Rates Can Help You Make More Money on eBay
By: Skip McGrath, eBay User McGrrrrr

If you want to make money consistently on eBay, understanding the concept of sell through rates (STRs) and their importance in crucial to your business success.

Simply put, your STR is the percentage of listings that end successfully over a specified time.  First let’s define successfully.  By that I mean an auction that ends with a sale at a price where you make a profit.  Next we have to consider the time factor.  Some sellers measure their STR over a one-week period while others prefer to look at a month.  The longer the period the more accurate your data will be as anyone can have a bad week. For instance, if you measured sales during a week with a major holiday when people are away from their computers, you may have a low STR and think your product just wasn’t selling well.

Now that we know what STR is, why is it important?  First of all it is a measure of the sales potential of a product on eBay. If I am considering selling a new product, I will look at the STR of the product by other sellers before I decide to purchase a quantity to sell on eBay. Use eBay's Completed Item Search or third-party research tools to do this). 

If the STR of that product by other sellers is low, that is a red flag and I will do a lot more research before deciding if I want to sell that product.  This is really one of the secrets of making money on eBay.  Your research may tell you to totally avoid the product –thereby saving you some money, or it may show that other sellers are not selling the product correctly and thereby creating an opportunity.

The other reason to watch STRs has to do with fee control.  If you listed ten identical items on eBay you would pay ten separate listing fees. Now if your sell through rate was only 50% (5 items sold) that means that you paid listing fees on the other 5 items that didn’t sell.  Therefore your listing fee on the ones that did sell is effectively doubled.  If only 3 items sold, your listing fees just went up 70%.

If you think about this you will see that a low STR can really affect your profit margin.  This has more impact on low priced items where the sliding scale of eBay listing fees represents a higher portion of an items starting price for lower cost goods. (Click here to see eBay listing fees if you don’t understand this).

If you are selling expensive goods, say over $200, then your STR can be lower than if you are selling something for $20 because the fees (both listing and final value) are a lower percentage of the price.  So the key to making money on eBay is to first understand the sell through rate for all of your products, fully understand your fees and do the calculations to make sure you are making a profit.

In general if I am researching a product to sell on eBay, I look for products that have a sell through rate of over 50%.  That is not a hard and fast rule, but if you start there you will really reduce your risk.