On September 9th, 2004 Dick Cheney made a statement about the number of individuals who derived some of their income from ebay:
That's a source that didn't even exist 10 years ago," he said. "Four hundred thousand people make some money trading on eBay." It's unclear how many of those are making enough to support themselves.
http://www.usatoday.com/news/washington/2004-09-09-cheney-war_x.htm
Now, Karl Rove, the master of data for the republicans, has almost doubled the numbers used by Cheney:
There are two or three societal trends that are driving us in an increasingly deep center-right posture,” he said. “One of them is the power of the computer chip. Do you know how many people’s principal source of income is eBay? Seven hundred thousand.” He went on, “So the power of the computer has made it possible for people to gain greater control over their lives. It’s given people a greater chance to run their own business, become a sole proprietor or an entrepreneur. As a result, it has made us more market-oriented, and that equals making you more center-right in your politics.
So according to the republican leadership in less than two years the number of people whose job it is to sell on ebay has almost doubled, and has gone from “unclear how many of those are making enough to support themselves.” to “ people’s principal source of income is eBay” Let’s take a look at the numbers available from ebay and see how close they are to reality. First I took the ebay Gross Merchandise volume for each quarter since 2004. Then I used the Net Transaction Revenues (Marketplace) to get an estimated GMV percentage for the US only Next I multiplied the Gross Merchandise volume times the percentage of transactional revenue derived from the US to get an estimated US Gross Merchandise volume Finally I divided the estimated US Gross Merchandise volume by both Cheney and Rove’s seller numbers. These numbers are widly optimistic as they assume there are no sellers other than those mentioned by Rove and Cheney are part of the GMV.
Here are the 2004 Numbers:
- Annual Gross Merchandise Volume $34,168,000,000.00
- Net Transaction Revenue US $1,399,848,000.00
- Net Transaction Revenue Intnl $1,155,805,000.00
- Total Transaction Revenue $2,555,653,000.00
- US Transaction Revenue % 54.77%
- Estimated US GMV $18,715,375,860.49
- Cheney Ebay Sellers Estimate 400000 Avg Annual GMV Per Seller $46,788.44
Here are the 2005 Numbers:
- Annual Gross Merchandise Volume $44,317,000,000.00
- Net Transaction Revenue US $1,737,039,000.00
- Net Transaction Revenue Intnl $1,665,262,000.00
- Total Transaction Revenue $3,402,301,000.00
- US Transaction Revenue % 51.05%
- Estimated US GMV $22,625,969,120.02
- Cheney Ebay Sellers Estimate 400000 Avg Annual GMV Per Seller $56,564.92
Here are the 2006 Numbers:
- Annual Gross Merchandise Volume $52,473,000,000.00
- Net Transaction Revenue US $1,798,196,000.00
- Net Transaction Revenue Intnl $2,103,547,380.00
- Total Transaction Revenue $3,901,743,380.00
- US Transaction Revenue % 46.09%
- Estimated US GMV $24,183,225,168.44
- Cheney Ebay Sellers Estimate 400000 Rove Ebay Sellers Estimate 700000
- Avg Annual GMV Per Seller - Cheney $60,458.06 Avg Annual GMV Per Seller - Rove $34,547.46
Here are the 2007 Numbers for the first quarter
- Quarterly Gross Merchandise Volume $14,281,000,000.00
- Net Transaction Revenue US $449,549,000.00
- Transaction Revenue Intnl $630,003,400.00
- Total Transaction Revenue $1,211,545,000.00
- US Transaction Revenue Percentage 48.00%
- Estimated US GMV $6,854,880,000.00
- Cheney Ebay Sellers Estimate 400,000 Rove Ebay Sellers Estimate 700,000
- Avg Quarterly GMV Per Seller - Cheney $17,137.20 Avg Quarterly GMV Per Seller - Rove $9,792.69
First, if you are a fantastic ebay seller with great merchandise you will pay ebay 10% of your gross revenue, take 10% away from the gross revenue number. Second, retail establishments with great margins mark their goods up 100%, ebay margins are generally much lower, but we will use 100% markup for a 50% merchandise cost, takeaway another 50% away from the gross revenue number. So we assume that with no other costs (Postage, computer equipment, auction management services) each seller will get to keep 40% of their GMV. Here are the net income averages for both Cheney and Rove’s seller estimates:
Cheney 400,000 Sellers
- 2004 – Monthly $1,559.61 Annual - $18,715.38
- 2005 – Monthly $1,885.50 Annual - $22,625.97
- 2006 - Monthly $2,015.27 Annual - $24,183.22
- 2007 - Monthly $2,284.96 Annual - $27,419.52
Rove 700,000 Sellers
- 2006 - $1,151.58 Annual - $13,818.98
- 2007 - $1,305.69 Annual - $15,669.30
Having sold on ebay for 4 years at my last job, I can tell you that the realities of selling on ebay are much less rosy than these numbers, which already look bad for Rove and Cheney. Some things not accounted for in these numbers are:
- In reality the GMV percentage is not evenly distributed among sellers.
- Much of the GMV on ebay is from sellers who do not support themselves with ebay
- The largest GMV sellers on ebay are corporations like Sun, IBM, and eforcecity whose volume is included in these numbers.
- There are costs of doing business other than ebay fees and merchandise.
- In many categories the sell through rates do not allow for ebay fees of just 10%
- Credit card payments average ~3%
- Cheney’s number of sellers estimate from 2004 was used for all 4 years
If I had to guess I think maybe 200,000 people, half of Cheney's numbers might be close to an accurate number of independant sellers. I am positive very few of these people are getting rich.