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Name: DerbyDad03
The PayPal Blues thread got me thinking about some things that I've bought on eBay recently.
I don't quite get how anybody can make money selling items for next to nothing and then shipping them for free.
One such item I've bought a couple of times is a mount for a GPS. US$4.95, free shipping.
Another example was a pair of cell phone chargers - one for home and one for the car. US$5.88, free shipping.
These items must cost something to produce/procure. How can they be sold for such a low price and shipped free? The volume can't be that high that they actually make enough money to make the effort worth the profit.
Many of these items may have been obtained through the grey market or even illegally.
Some vendors don't have possession of any merchandise. They just take orders and have the item drop shipped from the true vendor. I don't know about free shipping. Most times the item is next to free and the shipping is too much.
IMO, ebay is a good source for items that can't be found at regular outlets. This would include very limited demand items, used items, etc.
For new computer hardware I prefer to deal with legitimate vendors. Many on ebay are running businesses under the radar and are not paying any state or federal taxes.
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I too have been turned off by items where the price was too good to be true only to find that the shipping costs made it more expensive than other sources.
I once watched an eBay auction for an item I had found at an on-line store. The bids got higher and higher until the price plus shipping was higher than any of the bidders would have paid if they had just searched for the item elsewhere. The price of the item was still within reason, but the shipping costs were twice what they were elsewhere. I just smiled as I placed my order at the other store.
However, the $4.95 mounts and $5.88 charger set were rediculously cheap even before free shipping. I'd have gladly paid a certain amount for shipping, but free is even better!
Even if the items were obtained in a less than scrupulous manner, there is still cost and effort involved and I don't see how they make enough to make it worth the trouble - or the risk.
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"The volume can't be that high that they actually make enough money to make the effort worth the profit."
I'll just bet ya it can.
There's more than one way to make a buck. If I sell one item and make $100 profit or sell 1,000 items at 10¢ profit, I still earn 100 bucks.
Doesn't make any difference if the markup is made to the item itself, to shipping and handling, or a combination of the two.
As OtheHill said, grey market or worse is one answer and the drop shipping method is another. With drop shipping the seller has no real overhead and his only real concern is to sell for more than he pays.
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DerbyDad03
I thought a primer on what grey market items are would be appropriate.
Grey market items are things that were exported and then brought back into this country. Or items that were never intended for sale in the USA.
These items may appear to be the same or similar to items found elsewhere. The difference is there may not be any warranty on the product. The products you mention are inexpensive and waranty might not apply.
Buying a printer that is grey market will probably result in no warranty on that printer. Some items don't even need to leave the USA to be disqualified for warranty. Buyer beware.
When a truck load of hardware is hijacked how do you think it is ultimately sold? In that case the manufacturer may have serial numbers and when you try to register the product it is flagged.
One other thing to mention is counterfeit merchanise. Buy some name brand ink tanks that seem too cheap. Could be old stock, stolen or counterfeit.
As you can see, I am very skeptical of ebay in general.
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Yeah, I agree with you and fully understand the concept - after all it's just math.
However, let's say it is drop-shipped and the seller has no overhead - which can't be true since he has to share his profit with eBay and PayPal. All we've done there is add someone else in the line that had to add cost to the item. The entity that holds the item certainly has overhead, the entity that made the item has overhead, etc. etc.
I know it works - I know it wasn't a gift. :) I'm just still amazed that anything can be sold and shipped for $4.95 and everyone in the line - the raw material provider(s), the manufacturer, the seller, eBay, PayPal, whoever packed the item and printed the label, and the company that actually brought the item to my house - made money on the deal. Even the entity that made the bubble-wrap envelope and the shipping label took a bite.
There just doesn't seem to be enough room in a $4.95 item for all those people to have made money.
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Did you ever hear of Overstock? Also knockoff items from the third world can be bought for pennies.
My issue with ebay is the number of folks that come here for help that bought computer hardware from ebay.
How can any small timer on ebay undercut an online vendor like newegg.com. They are huge. Their buying power has to be tremendous.
The answer is they can't. If it appears that way there is some reason.
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I buy lots of things on e-bay, I really don't care where it comes from, I only care if it does the job. What other people do is their business and if they can make a buck, all the more power to them. Some people are really hung up on GREY materials, etc, why worry about it? If it works, just be happy you got a good deal, that's my opinion.
I've bought lots of PC hardware on e-bay and only had a few that I had problems with, but that is to be expected because not everyone is as honest as the next person, don't forget....they are all trying to make a buck.
I bought a battery charger and 2 rechargeable batteries on e-bay for one of my cams and it works great. It was 1/4 of the price of the same thing anywhere on-line, it was a great deal.
Some HELP in posting on Computing.net plus free progs and instructions Cheers
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How much profit is made is not the point in question here at all. That a profit be made is what it is about. The assessment that the cost is too low to make a profit at all is a case in point....this happens all the time from within grocery store chains and corner stores and the lot. Some canned goods are sold all the time at cost or even below costs. It is a simple way to entice customers to come in and purchase goods. Very seldom does a person buy only one single item unless it is a high ticket item.
There is also the fact that perishable goods are sometimes placed on sale below costs simply as a way to recoup a major loss when the expiration date comes about and the product must be destroyed.
All of which is just immaterial to begin with. The seller has to decide at what cost he is willing to part with something. If one thinks it is a good deal then buy it and be happy that you got a good deal on it....if not then buy it and pay the seller the amount that you wish to so as to make sure he makes a profit.
Capitalism at its finest
Change Is Good
http://www.citizenlink.org/Stopligh...
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The difference between my example and your "loss leaders" example is that an eBay purchase for a specific item is not (in my mind) an enticement to buy anything else from that seller.
I went looking for a GPS mount and found one that was really inexpensive. Yes, I went back and bought a couple more as gifts, but to be honest, all I did was perform the same search as I did the first time and found the same unit at the same price. I honestly could not tell you whether it was offered by the same seller - unless I go home and check the receipt. But I don't really care 'cuz I wasn't shopping at the seller's store, I was shopping for a mount.
The same holds true for the cell phone charger set. I entered the model number of the phone, browsed the available options and bought the set offered for $5.88 with free shipping. Once again, I couldn't tell you the seller's name unless I checked my records. I doubt I will ever specifically go to that seller's eBay store. I'm pretty sure that I'll just search for what I need and select the best deal at the time.
Maybe, in the larger scheme of things, those sellers are getting customers to shop directly with them becasue of the loss leaders, but that's not the case with me.
Don't mistake this for "non-loyalty". If a vendor gives me exceptional service, like certain local stores that I frequent, I'll pay a little extra to keep them around. However, in the non-contact world of eBay I'll shop by total cost (unit price plus shipping) every time.
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The cell phone chargers are available from multiple vendors, but not for $5.88 (total) for the pair.
I have found similiar GPS mounts online, but none that were $4.95 including shipping.
Why do you ask?
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For comparison shopping purposes. The GPS mount is a good item to purchase based on price, assuming the thing gets the job done.
The phone charger may not be such a wise buy. If the charger doesn't shutdown when the battery is full then you can ruin the battery or worse. LI-ion batteries can explode.
Not sure about cell phone chargers but there have been problems with cheap laptop power packs damaging the laptop.
There is a brick & mortar store near me called Harbor Freight Tools. Most of their prices are really cheap. I have bought many items there. Virtually all are Chinese imports. Some are pretty good and some are junk. I am able to examine the merchandise before buying. But to compare an electric drill, for example, to a brand name American tool is comparing apples to oranges. If you only need the drill a couple of times a year then it may be a good deal. For everyday use the brand name is the better buy.
Speaking of drills and chargers, I bought cordless drills at that store. The charger is not a fast charge, which I knew. What I didn't know is the charger has no brain. You leave it connected too long and it will damage the battery.
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I too am a patron of Harbor Freight...for over 10 years when they had no stores...only trailers to sell out of.
I have bought many a power tool from them and never had any problems with them performing...even at long hard service. I go their first to look at pricing then check the neighborhood lumber stores and Sears. Some of their pricing is high and some are lower than elsewhere...
Just plain comparison shopping.Change Is Good
http://www.citizenlink.org/Stopligh...
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hi
just browsing here & saw this thread via Derbydad , some surmising going on but the truth is stamped on the item
"I don't quite get how anybody can make money selling items for next to nothing and then shipping them for free.
re: GPS. US$4.95, free shipping.ok how it works in the UK as example
The item costs a pound £1
shipping (ebay postage) £1.50, profit for the seller who sells at £5 =£2.50 easy math, sell multiples ..=.££££
note some ebayers over price on shipping deliberately,watch the sellers who sell 1000's of items all low cost on ebay.co.uk phone chargers cphone cases etc
ok how:
per unit : cost of imported item 30p ! , container shipping here 30p, UK stocking and transport 40p.now what youve bought, have a look at the 'made in' bit....
hello China!, or equivalent, lol would you be horrendously suprised at cost? to mass produce there is 10% cost of 'made in UK ' . probably same for USA? bought a new dell ? wheres it made?
;) yup they had to move east to make bigger profits as demanded by the stock markets etc (oops well up till now)Weve been at the edge of the grey market (where 'legal', called parallel imports, just the difference being legit products imported without permision from licensing owner) for years so no suprises here ,
ive been buying from US ebay.com for a while i love the exchange rate in our favour and wouldnt call US ebayers dodgy just earning a living.welcome to free world trade, hence one of the reasons for current GDP imbalance.
got change of a renminbi?
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It may also be an attempt to get a higher seller rating.
For example, if you want to buy a PCI Lan card, there are literally hundreds of sellers who have that item for sale. Even if you look at only the cheapest, there are still 20+ sellers who sell PCI Lan cards for the same price.
In the above example, most buyers would go with the seller with 3000 transactions over the one who only has 5.
To get to 3000, the seller could spend a long time selling their primary items (in this case, LAN cards) at a realistic price. OR, the seller could quickly sell a bunch of "cheap" items at or below cost.
-Ryan Adams
Free Computer Tips and more:http://RyanTAdams.comPaid Tech Support: Black Diamond
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It doesn't seem like enough profit for the effort. However I do like the free shipping. It is extremely frustrating to overpay for shipping. Your good deal quicly becomes a not so good deall.
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I've been selling my old junk on eBay for a few months now, and there's a couple reasons why shipping costs are higher than the selling price:
-eBay charges several fees AND takes a percentage of your final SELLING price, EXCLUDING shipping costs. It's wise to make most of your money in shipping costs to reduce eBay's "taxes".
-Setting a low selling price with a high shipping cost puts you first on the list when you sort by "selling price" - which alot of people do and tend to ignore the shipping price. You can get the "real" picture by selecting "price + shipping."
-Sellers take a risk shipping items cheaply and without a tracking number. PayPal REQUIRES a tracking number for items between 0-$250US (may have changed) or else the seller has ZERO protection. That means the buyer can tell PayPal that they "didn't receive it" or "it's broken" even though it's been received in perfect condition and PayPal will charge back a refund to the seller - no questions asked. Cautious sellers will buy shipping that includes tracking.
-Sellers offering "free shipping" entice buyers, but the final price often evens out to those who put the real cost of shipping in - except they'll pay more in eBay fees by having their "free" shipping costs shifted into the selling price. Sometimes, the "free" shipping service is actually coming from their work's company account without anyone knowing - how honest would they be if a problem came up?
I'm all for cheap prices as a buyer too, but if I were selling thousands of items and that was my day job, I'd want to put all of my costs and some profits into the shipping price because it's more profitable.
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re: sort by "selling price", which alot of people do and tend to ignore the shipping price.
I catagorize those people as idiots. As I related earlier,
"I once watched an eBay auction for an item I had found at an on-line store. The bids got higher and higher until the price plus shipping was higher than any of the bidders would have paid if they had just searched for the item elsewhere. The price of the item was still within reason, but the shipping costs were twice what they were elsewhere. I just smiled as I placed my order at the other store."
re: Sellers offering "free shipping" entice buyers, but the final price often evens out to those who put the real cost of shipping in
Not in the case of the $4.95 GPS mount or the $5.88 chargers I've bought. Total price was way below those that charged for shipping.
re: if I were selling thousands of items and that was my day job, I'd want to put all of my costs and some profits into the shipping price because it's more profitable
Which is exactly why I started this thread - apparently there are ways to make a profit without charging shipping, even on items under 5 bucks!
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DerbyDad03
Maybe the shipping was only free because the seller was using company shipping where they work full time as was pointed out in #18.
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That's possible, although multiple, similiar items are there all the time from various sellers. Could they all be ripping off their full-time jobs and using their shipping department? I guess so...
Hey, maybe all the sellers are actually the same person ripping off only one company. Who knows.
Here's an example...
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I would guess the seller is getting the parts drop shipped to you directly from the wholesaler. That way they don't handle them at all.
Haven't you seen any of those late night infomercials about knick knacks that are ordered through the seller but they expressly tell you that you don't handle inventory? Thay aren't trying to sell you the knick knacks, they want to sign you up as a seller.
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I understand all of this, but it doesn't change anything. Drop shipped or not, someone has to pay for manufacturing, assembly, storage and shipping.
Regardless of who actually shipped it, there is still cost involved in everything from base materials to the insertion of the springs to the plastic bag it was sealed in to the padded envelope it was packed in to the address label on the package to the ink used to print the label. All along the way, profit was made by every party involved - including eBay and PayPal.
All I am saying - and it's the same thing I've been saying all along - is that with an item that costs the end-user <$5.00 total, there just doesn't seem like there is enough room for everyone that had anything to do with getting that item to the end-user to have made enough money for it to be worth the effort.
Obviously, there is room for profit all along the line or the manuacturer wouldn't manufacture it, the seller wouldn't sell it and the shipper wouldn't ship it. I guess I'd like to see the numbers.
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All that is from the assumption that everyone involved is making a profit. Consider this: A manufacture of cell phone chargers based in China makes a special charger for Motorola phones. It costs them $5 to make each charger. They start out selling directly to Motorola at $6 a charger and make 1,000,000 chargers. Then Motorola stops buying from the manufacture, the manufacture discovers their units are damaged, the phone the chargers are made for is discontinued early, or something else drastic happens. Now the manufacture has 100,000 chargers left that no one wants/are no good/can't be sold to the original buyer. Since they are just taking up storage space (and are therefore a ongoing expense to the manufacture) they can do one of two things, throw them away, or sell them under cost. Obviously the second is the better option as they at least get something. So, they sell 10,000 of these chargers to a guy at $1 a charger. This guy then sets up an eBay store, lists each charger for $1 + $4 shipping. When someone buys the charger, the seller gets about $4 after ebay/paypal fees. Throw in shipping costs (which are discounted either due to a bulk mailing discount, or an inside connection) and the guy gets $2.50 from each sale. That is a profit of $1.50 for every charger he sells.
That might not seem like much, but consider the following three things:
1) He has already done better than the manufacture (who lost $4 on each sale).
2) $1.50 times 10,000 is $10,500. Think about what that would (or used to) get you in a developing nation).
3) Even though he is selling a product that might not be in high demand, useful, or even perform as well as it should, what is $5 to a rich American. The person who gets the item will be estatic about the price and leave positive feedback before the item breaks 2 weeks later. After 10,000 easy sales, the seller has 10,000 positive feedback reviews. He can then list a $600 laptop computer, and set him self apart form all the other laptop sellers due to his high rating.The above scenario is completely made up, but I think you can get the idea that there is more to selling on eBay than earning a profit for everyone in the supply chain.
-Ryan Adams
Free Computer Tips and more:http://RyanTAdams.comPaid Tech Support: Black Diamond
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I have bought and sold several items on ebay. First I only buy through pay pal. Second I only seel through pay pal. I never sell anything that isn't bid for. No buy it now. The worst problem I have had buying is I once bought a PC game. When I recieved it everything looked good. The cost was $9.49 + $3.00 shipping. The same game (as it was a new game) was $29.99 at walmart. Put it in the pc and guess what! Everything is in Russian! I understand and read enough Russian to know it was Russian that's all. However the seller sent along instructions on how to set it up in english. I still play this game about twice a week. I noticed shortly there after that the seller got so many bad reviews all for the same game and the same problem. Over 600 of them. Pitty if they had just read the paper sent with the game, that was in english, problem would have been solved.
As a seller I have done some drop shipping. When I don't I use a shipping calculater and that price is what is posted on the site. If I can ship it for less the buyer gets charged the lesser price which is the case about 98% of the time. I don't make a killing but I do make a little bit of money after payin fees to ebay and paypal. I have not yet found items I can sell for $5 and make a clear profit unless I sell tens of thousands and I don't have that kind of time. I am not running a business though it is more of a hobby.
Practice makes perfect but only if you practice perfectly!
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