An age old question (since the time of eBay at least) and one of the most common queries that’s sent in to me by my blog readers – how are some items for sale on eBay at such a low price? You know what types of listings I’m talking about – £0.99 with free shipping or sometimes even bulkier items for sale at £2.99, which is just barely enough to cover the Royal Mail postage fee, never mind any packaging or the item itself – so HOW do they do it?
Well this is exactly what Julie asked me in a recent email I received from her:
I’m a huge fan of your blog – you’re really doing an amazing job with it so thank you very much! As a newbie eBay seller I learn so much from every post and whenever I’ve asked a question in the comments section you’re always so quick to answer, so thank you again!
I wanted to ask you one further question if possible?
I started selling on eBay last year, just as a hobby as I have a full-time job and two young kids to look after. Recently I’ve started to look into ways to grow my business to the next level and hopefully even get it to the stage where it can replace my current job in the future.
But there’s something that really worries me whenever I look into doing this properly and that’s the fact that there seems to be so many sellers offering items at such cheap prices! I just don’t understand how they do it and how they can possibly make any money like that.
I mean, are these genuine sellers/products or is it some sort of eBay scam?
Hi Julie and thank you for your email – it’s great to hear that you find my blog valuable and that it’s helping you with your business! 🙂
In answer to your question – yes these are genuine sellers, to put it simply.
The first thing you need to understand is that sellers aren’t necessarily making any profit at those prices. In fact I would go as far as to say that the majority of the time they’re not.
There are several different scenarios in which an item would be sold at what appears to be an impossibly cheap price and I’m going to run through a few of them for you now, so that you can see exactly what I mean:
- Chinese sellers – you often get big wholesalers or even manufacturers in China selling directly to retail customers in the UK via eBay. In such cases they obviously benefit from rock bottom item costs and shipping is also very cheap (albeit very slow as well!).
- Feedback builders – a classic tactic for people just starting out is to sell some items at a very low price – after all they need to entice buyers somehow.
- Sales history boosters – another classic tactic and exactly what I teach in my guide on how to reach the no.1 spot on eBay’s search ranking – basically you start with a very low price (often BELOW what it costs you) in order to get a large number of sales in as quickly as possible.
- Loss leaders – while on the subject of selling items below their cost price, loss leaders aren’t only for new listings – they’re often used to get new customers (i.e. to build your mailing list) and to promote other, profitable, products for sale.
- Clearing out overstock – many businesses will sell end of line/out-dated stock at a loss, simply to get rid of it and clear some much needed warehouse space.
- Selling one-off clearance stock – some stock can be bought well below the usual market price, from liquidation sales or from companies that have gone bust. Of course products can’t consistently be sourced like this but it does account for a decent minority of the “unmatchable” prices on eBay.
- Multi-buy items – there are often products that seem completely unprofitable at single quantities, but when you check the sales history you’ll see that the vast majority of purchases involve customers buying 2,3 or even more of that item in one go (LED lightbulbs are a good example). Suddenly a £1.99 orders turns into a £6 one, and that’s where the profit is made.
- Shipping costs abusers – yes, there are a number of sellers who somehow abuse the shipping rates and pay less than what they should – paying large letter fees for small parcels for example. I don’t know exactly how they do this (I’m assuming it’s by fraudulently using the “mate’s rates” that some shipping companies offer employees) but they usually don’t last long anyway.
- Hobby sellers – this may sound hard to believe for those of us trying to run a business on eBay, but there are a lot of sellers who simply aren’t bothered about the profit they make. They do it as a hobby and are happy to subsidise losses here and there.
- Large sellers with huge buying power – this is a fairly obvious case, as if a seller can buy stock in huge quantities, they’re obviously going to get the best prices and lowest shipping cost per item.
- Failed sellers – I saved this one to last, as I personally think it probably contributes the most to this phenomenon. There are a lot of sellers on eBay who have no choice but to sell their stock very cheaply, simply because they couldn’t get the price they were looking for.
Let’s look at a quick example. A new seller comes along and decides that mobile phone cases are the perfect product to sell on eBay (after all, they’re cheap, small, easy to ship and very popular – so what could go wrong?). They order 1,000 cases from China but very soon realise that the market is oversaturated and they’re not going to achieve their expected selling price of £4.99.
People are inherently impatient and I’ve often seen sellers give up after just a week or so! They don’t give it time, they don’t take proper product pictures, or implement proper listing strategies – they just throw some products on eBay and when they haven’t made a huge profit after a week think “what the hell, this obviously doesn’t work” and then list their remaining stock at £0.99 just to get rid of it all and to recoup at least some of their initial investment.
You’ll see countless such listings in the job lots section on eBay:
So please always do proper Terapeak research BEFORE you buy any item to re-sell, so that you can get an actual idea of the market and normal selling price.
I hope this answers your question Julie.
Have a great weekend everyone!
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Great information – very practical – thanks
So I’ve been selling Cabbage Patch Kid dolls for several years.
Unlike most sellers, I clean and repair the dolls and ensure they are as near perfect as possible considering most are from 1980s
Recently a new seller has flooded the market with lots of dolls starting bidding at low prices. Consequently the dolls are selling at around £10 each when mine are between £30 – £100 depending on their condition, rarity etc.
I thought this might just be a phase, but it continues
So now many sellers have lowered their prices including myself, yet still unable to sell. What can I do? I have a lot of stock and paid more than I can afford to lose….
I’m afraid you can’t do much… it’s plain game of supply and demand. If someone sells the same product cheaper, people will buy it cheaper.
You could maybe wait out until they’re sold out.
Or maybe they’re selling FAKES? Don’t know if such a thing exists in your niche…
Very informative, keep up the good work. I still don’t think I get it to be 100% honest.
Last week I needed some battery terminal covers. They have been selling this line since Jan 2018 at £2.79. They do not fit through large letter size so will have been sent small parcel (Via Royal Mail) and was sent tracked 48. Standard retail for this is £4.74. They have sold nearly 700 of these in just over 12 months on this listing. They are at over £5 before you even take into account the cost of the item itself. This isn’t an item you would purchase more than one of and looking through what they have sold it would appear they’re all bought in singles. It isn’t the first time i’ve had an item like this.
Thanks for your comment.
Was it really sent RM tracked 48? IN real life? Or that’s what the listing said?
I’ll add another. Buyer driving down market price through relentless price directing. It’s rather easy. I’ve done it to serveral niche markerts.
Example. Let’s say that I want to drive down the price of vintage buttons (VBs) of Bears. Let’s say Bear VBs come on the market once every 2 weeks for around $50 a VB. When the next one shows up with a Make Best Offer button I offer $46; 90% of sellers will jump at that. Next I set an email alert for Bear VBs, should they show up. When the next one shows does, I offer $40; this will trigger a $45 seller counter offer (the seller will claim we’re meeting in the middle, plus they by checking Sold Items’ History that the last one sold for $46, so close enough). I agree and buy $45. Then the next seller posts their Bear VB with a $45 BIN with a MBO option. I offer $35 and we settle on $42. That’s when the next seller does an auction with a $39 public reserve. But now buyers are wondering if the market is shrinking and interest is dropping because prices are dropping; this leads to very few bids; maybe 2 bids and the Bear VB sells for $40; to me. Then the whole cycle begins a new. And after 8 months I’ve driven the price of Bear Vintage Buttons down to a couple bucks; maybe even a dollar
I assure you I’ve done that to numerous collectables markets. Why? Because I’m then able buy a couple 100 Bear Vintage Buttons for a dollar a pop. I then sit on them for a year or 2. And step away from the Bear VB market. Which quickly levels out without my meddling. Offen, the original base price doubles by the time I come back. So now I can sell my 200 or so Bear VBs (that I bought for a dollar each) for $90 to $100 a pop. A very tiddy return.
But for a while there is the that 6 month period or so where an item that once sold for $50 every 2 weeks is now selling for $1 every 4 days… to me… because I have all the alerts set and buy within minutes of the items posting.
Now, do I always get the market down to a dollar? Well, no. But I have an entire wall of rare vintage clocks worth $500 a pop, that I only paid $5 a piece for, that I am quite proud of.
Yes, I can see how that could work in rare items, collectables etc.
It won’t work in normal markets though where hundreds and thousands of purchases for the item are made every day.
It’s it a scam if I saw a 1000$ laptop listed at 96$?
I saw a pair of off white sneakers for a bid of $50.00 with tags of Nike and StockX that bid to me is extremely cheap you think that there is something strange like maybe they are fakes or you think the dealers are real and is worth to bid on them and take a risk Maybe they are real. The pic look almost ok a bit blurry but not bad is very confusing to be honest all I now the very low bid price makes me think twice into biding more for this item
Any thoughts & suggestions abut this?
It could be fake it could be real.
You don’t look at item price while it’s still in auction – the bidding happens at last few minutes before the auction ends.
It could be that the item sold for $150 at the end.
So there’s a $2k retail value brand new Fendi purse that just came out that is on auction with 6 days left till it ends on eBay. The seller has good ratings and seems to sell other brand new products on ebay in this way. The current price is $156. What are the chances this is a scam?
with 6 days left, the price may well reach or even go over the $2k mark 🙂
New seller on Ebay starting from today as I did my listing today
What a valuable conversation here
It make me lots of thing to understand on Ebay
Thanks Andrew and all other
You’re welcome! 🙂
I’m a couple years late to the party, but hoping for clarity. The SC200 Swing Caddie retails at Dick’s, Golf Galaxy, et al for $349.99. Even with 20% off coupon, it’s $280. These are fairly new, and discounts can’t be found. How is an eBay seller able to sell this unopened for $219, with free shipping? This doesn’t seem to fit in any of the categorical reasons Andrew listed for why a seller might be able to do this. All sellers have high ratings. Is it too good to be true, or am I missing something? Thanks so much.
Hard to say – maybe they deal directly with the brand and have exclusive rights for selling the item on eBay?
It could be a liquidated stock too or refurbished items?
Steve’s comment: “If selling fees are £3 max , and I’m selling something a £2.99 , surely that’s a loss, is that correct.”
No that’s not correct. eBay commissions from your sale of £2.99 will be approx 10% so roughly 30p. If your item sold for £35.00 they would be £3.50 odd. This £3 maximum means that eBay would only take £3.00 even if your item sold for £45.00 or £50.00 etc…
I’ve started re-selling on eBay recently, clearing out my shed and loft and have made over £2,000. You don’t need to be buying in bulk and re-selling to make money on eBay. Stick it on a normal listing (no insertion fees for first 100 a day) and if it doesn’t sell in a week then re-list as a buy it now.
Sunday evening is statistically the best time to end an auction.
As for postage prices, it goes by size and weight. eBay recommends posting certain items as a small parcel (£2.95) so many home sellers use what eBay recommends. If you visit the post office enough (daily in my case) you’ll know what sort of things can fit through the “large letter” slot (which also goes by weight) so you can adjust the postage on your ebay listing accordingly. One thing I hate as a buyer is postage cost abusers. There’s no need for it.
Hope that’s helped.
Thanks for your comment.
Steve’s comment on £3 fees included P&P. This post is about HOW Items are sold so cheaply on eBay and this was regarding prices/items that seems to be selling at a loss.
if you sell something for £2.99 and your costs are £3, you obviously can’t make any profit. Large sellers who have discounted shipping rates can often do this simply because they for example pay £1.5 per parcel delivered instead of normal rate of £2.5
If selling fees are £3 max , and I’m selling something a £2.99 , surely that’s a loss, is that correct.
That is correct, yes.
I was recently talking about this very subject as I have recently starting selling on eBay myself… looking at ordering certain small sale items from China (£1.65 each inc shipping… which should normally retail at least £5.99 )… and then seeing them on eBay for £0.99 free postage… ?!
This explains a lot…
Yeah, eBay has become bargains paradise…price is everything!
If you haven’t done it already, check out my Amazon video to see how things are totally different over there.
I started selling on ebay since this first of june and I did all this following your blog. I have uploaded only 10 items all are workwear gloves and one hi vis vest. Till now my total sales has reached £5,000. Considering this is my first month I am very happy with my sales.
I am selling small size hi viz vest at£0.99 each with free sheeping. Selling on this price is big loss for me but i get only few orders for small sizes. Price for other sizes are £2.99 each. Ebay display the lowest price on search list so this trick is working for me. My best selling item is leather work glove. I can sell this glove 25% less than what I am selling right now but I dont know why I am still cheapest in ebay for this kind of glove. Quality should be good as i have already got more than 100 feedback in less than a month
Congrats Raj! 🙂
That’s an awesome first month and great trading results so far!
Yes, that cheapest price variation option is a very common tactic most sellers use now and it works very good.
I’ll add another which I believe to be fairly common:
Bad business pricing – some sellers do not know when they are no longer making a profit, because they either can’t work out, or haven’t worked out the true cost of their product and sales. This is also apparent (more so on Amazon) in a competitive market with the use of specially when product repricers and happy to sell no matter what.
Yes, you’re right Paul.
I have spoken with many people who sell on eBay and when we put numbers together it actually turns out that they’re losing money all the time, because they don’t know how to even properly calculate eBay/PayPal fees, import taxes, shipping costs, packaging etc.
ordered a action cam from ebay (from a chinese supplier
) before christmas …..was listed at 17.50 Dollar…..sounded way too cheap so i used pay pal ….. it never came…i filed a money back request and got it back in 2 days….
That’s a good example.
this was likely a money back scam …ie they hope that 3 out of 10 will forget to ask for money back in the allotted time and any complaints are quickly refunded…