eBay Returns And Refunds: A Traders Mentality

Posted by

Recently I have spent a substantial amount of time absorbing any and every podcast I can find relating to running a business selling on eBay and I have been quite surprised just how upset people are getting when a return or some other issue arises.

Sure, it’s annoying, you now must give the money back from a sale that you have made. Perhaps already having contemplated what that money might do for your life (particularly if this was a large sale).

You now need to spend time dealing with a problem, time that certainly would be better spent elsewhere.

Maybe people just need to vent their respective frustrations to the world to feel better, a collective frustration.

There certainly are some learnings that can be had from some of the stories but in the simplest of terms, these problems and issues need to be thought of as the cost of doing business.

After all, people are going to change their minds, people will buy items and then not pay, some people will even try to run scams.

Perhaps my own previous experience frequently trading the stock market may offer a different mindset to combat the angst I often see on Instagram and frequently discussed during podcasts.

People who make consistent returns in the stock market from frequently trading stocks (I.E a day trader) accept that not all stock trades they make are going to be successful.

Most people who attempt to trade the stock market will lose money. Some get lucky on the first trade(s) and think it easy, only to give all the profit back on further trades or even by overtrading with fees and commissions gobbling up profit.

Without a proper trading strategy and excellent money management plan, an amateur is doomed to fail in this endeavour. Day trading although often portrayed as easy, is hard work requiring substantial amounts of planning and research.

It is extremely hard to make money and to be consistent. Just think if it were really that easy everybody would be doing it.

A while ago I took an online day traders course as a good friend had signed up for and I borrowed his login details to have a look and complete to see if I could glean some useful information.

The most useful things I absorbed from this course related to emotions and risk management.

Emotions need to be controlled and managed through the trading strategy. Amateurs tend to hold stocks once the trade had turned bad and they began losing money in the hope it might turn around later. Sometimes this might work but often this delay only served to magnify the losses incurred.

The thought of losing money is so powerful that they simply hang on.

Indeed, I have experienced this myself giving back to the market almost $100,000 of paper profits (in real money, not on a demo account). I got emotional with my view of this particular stock and it cost me dearly. I didn’t lose money as such, but it cost me all of the potential profit. I did not manage my risk well. The flipside of this is that I learned several valuable lessons which will serve me well in the future.

Anyway, the trading strategy outlines signals and methods to enter a trade, signals to exit. All that was required was to follow the strategy to the letter. If the trade went against you and hit your stop loss you got out preventing further loss. No emotions just like a robot.

The idea is to win more than you lose letting winners run and cut losers quickly. Amateurs tend to do the exact opposite of this.

If you win 66% of the time and you make $300 per trade but you limit your losses to only $100 every trade, then for every 3 trades assuming you win 2 and lose 1 you come out $500 ahead.

That’s the basic principle to become consistent. It really is like the old saying 2 steps forward and 1 step backward (though in trading it can also be far more backward steps whilst learning). Find trades that will make you money and cut your losses short. The other part of risk management related to trade size allocation as a % of overall capital (usually 1-2%) if you are curious.

I use these same principles when operating my eBay business.

  • Issues raised cost me in time.
  • Returns cost me in both time and money (example an INAD – Item not as described).

These events when they occur are in effect the equivalent of losing trades.

There is no point in getting upset when these events occur, there are many others successful sales which will offset the occasional losing one. I have accepted this as the cost of doing business using eBay.

In some circumstances, even after resolving your problem you can still make a profit, something you cannot do with trading! For example, I sold some physical software on an eBay auction a while ago for $2. I was expecting into $40-$50 range for the final sale. I was extremely disappointed at the time, a bad mistake on my part. The buyer, however, did not pay (a common problem for many), I opened and closed an unpaid item case, relisted the item as a buy now and sold it for $40 the following day.

Just like a trader’s strategy, there are steps to take to ensure that you can increase your chances of simultaneously keeping eBay sales and prevent them from turning into problems later and minimising returns.

  • Create honest, detailed and accurate listings.
  • Clearly describe any faults or defects, take pictures of the faults.
  • Offer great customer service when these things eventually happen to limit chances of negative feedback.

Once this mentality is accepted you will be surprised just how calm and relaxed you will become in the face of problems. It is this calmness that allows decisions to be made quickly and effectively resulting in being able to get on with things that really matter.

Leave a Reply