Reasons why they sell so Cheap on eBay

There are around 10 reasons I can think of as to why a seller will charge 1 cent for an ebay item with free worldwide postage on ebay. I will describe these over the next few days.

The first is these sellers sell lots of other higher value items. Ebay gets paid for every item thats sold (a percentage of the sale price). Lets say one of these power sellers has ebay fees of $1000 per month.

But ebay gives incentives to the seller to try and give good service to their customers, they gave up to 40% reduction in fees if sellers get good DSR* scores.

* Everytime a buyer leaves feedback for a seller, they also give the seller a rating for (1) Communication (2) Shipping Time (3) Item as described and (4) Shipping Costs. These ratings are called DSR - Detailed Seller Ratings.

Ebay looks at these DSR scores to see if a seller qualifies for the 40% discount, so if I seller pays $1,000 in fees per month, they have the opportunity to get refunded $400.

So the seller may decide to sell 3 items per day for $0.01 + free postage. The total monthly cost/loss to the seller could be around $1.50 x 30 days x 3 per day = $135.

But in return these customer will then leave excellent feedback as they are very happy to buy something so cheap, and the seller is happy as they get the 40% discount from ebay.

In reply to the people on linkreferral who claimed my idea is taking advantage of lower paid workers in Asia. This isn't true, the ebay seller isnt manufacturing the goods and pays full price for them. He/she takes a loss on these, but then he/she gets this back with the ebay discount.

And in reply to the comment about the goods in Asia being of lower quality, are you aware if you buy items like this on ebay from USA sellers, 99% of their stock is sourced from Asia.

So I'm just explaining a method of buying the stock cheaper than the USA powersellers, obviously if they buy from a factory in Asia, they dont pay $0.01 per item.

Theres lots of other interesting reasons for these low $0.01 prices, I'll explain some more tomorrow.


Muhammad said...

Very interesting insights. Smart idea to resell these cheap buys and make money on ebay. You are correct about many items on ebay probably being made in Asia. We import a lot of our items from Pakistan and Dubai and particularly in Dubai, China makes a lot of the items, they have really flooded the market. Nice blog. As a seller on ebay I never really thought through why people would sell items so cheap but you make an interesting case. I enjoyed reading your blog.
Muhammad Nafees owner of 786stores Odds & Ends Islamic Clothing on ebay

Winchuck River Store & Electric Powered Kayak said...

As an eBay seller, this was interesting read. You might post your blog also on the eBay blogs

matt1976 said...

This is a flashy yet informative description of e-bay.

Anonymous said...

Nice information thanks for the information very useful for me.

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