After using PayPal to accept payment for all my sales for years without incident, I feel utterly let down by their service today. I’ve discovered that mine is not an isolated incident, but arose from a decision on their part to exclude virtual products from their Seller Protection policy. So if you sell patterns, eBooks, or any other information product, please read on and spread the word about how you may end up out of pocket when PayPal decide to return your customers’ money to them – after they have already downloaded your products!

Here’s the scenario:

1. Customer orders lots of patterns and pays with her husband’s PayPal account. (Note: she is a repeat customer and has ordered 4 times before this, always paying with her husband’s account.)
2. Customer downloads her patterns and everyone is happy.
3. PayPal get suspicious of a potential fraud because she’s paid with an account that is not her own.
4. PayPal dispute the transaction and put a hold on the funds so I can’t access them while they investigate. PayPal contacts me and customer.
5. I send PayPal proof that customer has downloaded patterns.
6. Customer, for whatever reason, does not respond to PayPal’s email.
7. PayPal decides this is proof that customer is a fraud, and returns my money to her.
8. Customer has patterns AND money. I have nothing except for a bad taste in my mouth.
9. I phone PayPal, sure that this silly mistake will be sorted out if I can speak to a real person, right? PayPal rep informs me that virtual items (e.g. patterns) are not covered under their Seller Protection, and that all I can do at this stage is contact my customer and ask her nicely if she’d like to pay again for the goods she’s already received.

So apparently, all you need to do if you’d like some free stuff is to order it online, pay with a friend or relative’s account, and then get your co-conspirator to ignore any emails from PayPal enquiring if they really did place that order. PayPal will reverse your payment, but by that time you’ll have your merchandise already – and you’ll get your money back too! Sweet! Oh, except for the poor seller, who is left with nothing.

Nice going, PayPal.

I am so upset about this, but the part I really don’t understand is that PayPal decided that not getting a response from my customer’s husband was proof that my customer had taken the money from him without permission, and made them decide to return the money to him.

There are many legitimate reasons why my customer’s husband could have not responded, for example:

• He was out of town or sick and didn’t check his email
• He only uses that email account for PayPal payments and doesn’t check it at all
• The email from PayPal was filtered as Spam and he never saw it
• He did see it, but assumed it was a phishing scam and didn’t respond

Any of these are perfectly legitimate (and likely) reasons for his non-response, and do nothing to prove that his wife stole the money from him and thus it should be returned to him. Surely the only way PayPal could really have obtained proof of this so-called theft is if the husband responded to PayPal saying “yes, this money was taken from me without my permission” – and PayPal confirmed to me that this did not happen!

I am appalled that PayPal would take such a stance. This entire scenario was based solely on a “review of recent transactions” that PayPal took it upon themselves to conduct. There was never any complaint for PayPal to respond to! They just decided to “protect” the buyer (my customer’s husband) even though he had not complained about the transaction, and didn’t even respond to PayPal to confirm that any fraud had occurred.

So the buyer got his money back, even though he didn’t ask for it, and a trustworthy small business owner lost out on a sizeable transaction, even though no theft/crime/fraud/error has occured. The only error is on PayPal’s part, for taking this scenario to such an absurd conclusion.

Considering that I conduct all my business online, through PayPal, that means that PayPal basically get to keep 3% of my gross income! You would think that would make them eager to look after reliable customers like myself who keep them in business.

But, apparently, PayPal do not deem sellers of virtual products worthy of protection. And in this age of so many digital products – patterns, eBooks, etc – this is a decision that affects many of us! I think we should all be aware of it, even though we’re pretty much stuck with using PayPal because there sadly isn’t much competition for their service. Let’s hope that changes, or that PayPal will take notice and change their policies to allow some kind of protection for those of us that make our living selling virtual products.

Luckily in my case, after hours of worry on my part, I heard back from my lovely (and honest) customer, who has paid me (again) for the patterns. Let’s hope that PayPal don’t decide she’s still “a fraud” and give the money back to her husband again!

For those of us with small businesses (crafty or not), advertising and marketing is always a difficult area. Very few of us can afford an advertising budget, so we have to try to make wise decisions that lead to maximum promotion with minimum expenditure.

Having said that, it could be that we’re missing out on effective advertising methods, so I thought I’d try an experiment with Facebook advertising on behalf of the entire crafting community, to see if it might be something we should be doing.

This is what an advertisement on Facebook looks like – I’ve circled the ad in purple

For this experiment, I spent $150 on Facebook advertising. Before you think I’m wealthy or foolish enough to waste $150 (that’s the revenue from close to 40 pattern sales!), I should mention that I received all the credit I used as promotional vouchers by signing up for Canada Post’s Venture One small business scheme and the VISA Business Network, so I haven’t actually lost anything as a result of this test.

Setting up the Ad

Facebook know their users, so you can tailor your ad to be shown to only a specific demographic. If you want to, you can specify your target age, gender, location, language, interests, etc, and only the FB users who match your profile will see your ad. In my case, I limited to residents of US, Canada, UK, Australia and New Zealand who listed Crochet, Crocheting, or Amigurumi in their interests. This is a very powerful screening tool!

You can also choose to pay by CPC (you pay each time your ad is clicked on) or CPM (you pay per 1000 views of your ad), your maximum CPC or CPM bid, and the daily maximum you’d like to spend.

Your ad consists of a title (up to 25 characters), an image (110 x 80 pixels), and body text (up to 135 characters). Facebook have some very specific rules about the content of their ads: no abbreviations allowed (e.g. ‘&’ instead of ‘and’ is not permitted!); full sentences and punctuation are required; no excessive capitalization – it’s worth checking to make sure you follow all their rules, because…

What Comes Next

Once you’ve set up the ad, you have to wait for it to be manually approved. This takes a minimum of several hours (in my experience), and if you change anything in the ad later, you have to wait for it to be approved again before it will run. So make sure you get it right first time!

Once the ad has been approved, you can monitor stats from your Ads page, and see how many times it’s been viewed, clicked on, and the average cost you’ve paid (Facebook, like other ad systems, only make you pay the minimum you need to ‘outbid’ other advertisers, so you don’t always pay your maximum bid price). You can also pause or delete your ad if you need to.

My Experience

Facebook certainly has plenty of users. I was expecting to spend a few dollars a day, but I blew right through my initial $50 within 1 day! This is the ad I used:

I used the CPC model and my $50 bought me 67,252 impressions (times that the ad was shown on anybody’s screen) and 241 clicks through to my site. Not one of these clicks generated a direct sale 🙁

So, with my remaining $100, I switched a few things up. Carina pointed out that my ad did not contain the word amigurumi (well, duh, how did that happen?!), so here’s my revised ad text:

I tried running the ad with the two different pictures shown above, but after a couple of thousand views I could see that the PocketAmi Christmas image was getting better results, so I pulled the AmiDogs ad and kept running the Christmas ad.

I also switched to the CPM bid model, so instead of paying per click, I was paying per view of the advert. This didn’t seem like a good plan – after all, I wanted people to click through, so that was more valuable to me than the number of views – but it turned out that my views cost me a lot less with this model, and I also got more clickthroughs! Why? Here are my theories:

• The text was more appealing in the revised ad
• People had seen the ad more often by now and were more tempted to click it
• By chance: the people who happened to see the ad on Day 2 were more receptive to it

My $100 lasted for 2 days, although the morning of the first day the ad was ‘pending’ waiting for approval of my changes. The results were 290,241 impressions and 1206 clickthroughs – that’s twice as many views and 2.5x more clicks per dollar than with my first attempt!

I’m going to give you full disclosure of my revenue, in the interests of helping you make an informed decision: my Google Analytics report shows sales of only $70 resulting from these clicks, although it’s not 100% accurate (I’ve noticed it doesn’t pick up all my sales), so that could be a low estimate. So, on the surface, I didn’t even break even with my advertising budget, but this doesn’t account for the intangibles:

• People who signed up for an account or my mailing list and may become customers at a future date
• People who bookmarked or saved my site for later
• People who didn’t complete checkout at the time, and returned to my site later to complete the purchase (so the sale wouldn’t show up as coming from Facebook)

Conclusions

Facebook ads are definitely interesting. I love that you can specifically target the people who are your potential customers. But the advertising costs are just too expensive for smaller businesses to justify, unless they can somehow convert almost all their clicks into sales, or sell a very expensive product where one sale would cover the advertising budget for the day/week.

Obviously, this is just going from my personal experiences, and you may have different results if you try using Facebook ads. Personally, I won’t be advertising with FB again unless I can find another promotional voucher for free credit – it’s just too expensive for my budget. Having said that, I’m still hopeful that the almost 1500 clicks I received during the course of this experiment will lead to some more new customers at a later date, as well as the few direct sales I received on the day.

I hope you’ve found this report helpful in deciding where to spend your precious funds to try to grow your business! Have you tried FB ads too? I’d love to hear about it – please leave a comment and share your experience.

If you buy or sell handmade goods, you may have already heard of Artfire.com, a new online marketplace. Artfire is similar to Etsy in many ways, but also has some interesting differences, especially in their fee structure. I’ve been investigating for a while, so I thought it might be useful if I summarised some of the things I’ve discovered, in case you’re also wondering if you should try selling your wares on Artfire…
This post is a review based on my own opinions – I’m not affiliated with Artfire in any way other than as a user!

Google Running a few test searches on Google to try to find some of my crochet patterns, I found that my Artfire page comes up much higher in the rankings than my Etsy page. This gives you an immediate advantage over your Etsy-selling competition if buyers are googling for a certain type of item.

No Account Checkout Unlike Etsy, your customers don’t have to have an Artfire account in order to buy, so if you link from your blog to your Artfire, that’s a good way to get sales from non-Etsians who may be unwilling to create an Etsy account.

No Fees! You can sign up for free and list up to 10 items at any one time with absolutely no strings, no listing fees, and no commission fee when you sell an item (vs 20c listing fee and 3.5% commission on Etsy). This would be a great way to get your feet wet with Artfire – you have nothing to lose.

Did I mention it’s free to sell?! So important I think it deserves a second mention: NO listing fees! NO selling fees! That’s an amazing deal.

Monthly Fee Upgrade The free account limits you to selling 10 items at any one time. To sell as many items as you want, there is a flat fee of $20 per month. But for the first 5000 sellers the fee is only $7 per month – and that’s guaranteed never to increase.

Those 5000 places are going pretty fast – I’ve been thinking about it for the past few weeks, and in that time the number of $7 memberships left has gone down from 2600 to 1400… I decided I wanted to get in at the $7 level while I still have the chance. If I don’t like it, I can go back to the free 10-item membership, and I haven’t lost anything. But I’m prepared to pay for a few months at least and give it a chance to succeed.

As I’m currently paying over $30 in Etsy fees each month, knowing that I could sell a thousand patterns and would still only be paying $7/month in Artfire fees makes this deal very tempting! Just listing my 44 items would cost me $8.80 at Etsy, so I’ll already be saving money by the time I’ve finished setting up all my listings.

My Artfire storefront

Artfire is still small and new, but it’s growing fast, and I really think it has the potential to be big. I’ve only had 1 sale so far, but it all went very smoothly. If you are thinking of expanding your sales venues, I suggest you consider Artfire among your options. At least sign up for a free account – you can upgrade to the $7 monthly account later if you don’t feel like committing today (but remember that those memberships are going fast, so don’t leave it too long!)

Please list me (planetjune) as the referrer if you do decide to sign up. Here’s my direct link: Register on ArtFire.com.

I’ll report back in the coming months with how sales in my Artfire shop compare with sales in my Etsy shop and, of course, my main PlanetJune shop. I’m thinking of writing some more posts about things I’ve found out about while running my business, so please let me know if you’d like to hear more on my perspective of running a craft business…