Doesn't this seller know he is losing money?

[musicyouneed]

I was doing some CD research and I came across a Canadian seller that is losing money on each CD he sells.  Priced at $3.43 with free shipping.    The shipping alone in Canada is $3.28.  I calculated the fees and he/she is losing $.53 cents on each CD, that is not even including tape, envelope, paper, and time.  This seller has a terrible business sense/model.

[lotzofuniquegoodies]

I've stumbled across large sellers in mostly likely GTA selling new electronics, assorted sizes shipping free across Canada by mail. Not sure how that would be possible unless they are buying product pennies on the dollar or know the CEO of Canadapost very well.

-Lotz

[ypdc_dennis]

---

@musicyouneed wrote:

I was doing some CD research and I came across a Canadian seller that is losing money on each CD he sells.  Priced at $3.43 with free shipping.    The shipping alone in Canada is $3.28.  I calculated the fees and he/she is losing $.53 cents on each CD, that is not even including tape, envelope, paper, and time.  This seller has a terrible business sense/model.

---

Shipping in Canada (assuming 200g) is $3.00 via meter or $3.12 with stamps (I will leave sales tax out of the equation). Discounted stamps can be bought inexpensively on ebay or elsewhere (best discount I got as small stamp buyer on eBay was over 60% off face value). So still possible for them to breakeven or even have a tiny profit.

Or it could be a lightweight CD going out at 100g: ($1.85 meter or $1.90 stamps)

-..-

[marnotom!]

The seller may be resorting to extreme measures to liquidate inventory. C$3.43 strikes me as being a pretty carefully calculated selling price.

[bpl521_sell]

Or they are slipping their shipments through their work mailing account <g>

[strange*highways]

Shipping through the work account.

Quite possible.

I bought a pair of headphones and a DVD player about six months apart from the same eBay seller and they both came via Fedex in packaging branded with the McDonalds Canada Logo and with McDonalds Canada head office as the return address.

I have to wonder what would have happened if something got returned to the seller at the work address and opened by someone other than the seller.

[lotzofuniquegoodies]

If you were to by chance order something from a Canadian eBay employee, because you were curious, it could arrive from eBay Canada by Expedited with free shipping.

-Lotz

[forester_studios]

I too often see items for sale that have seemingly little if any profit. Even if they paid next to nothing to acquire the item when you factor in listing time it seems like a futile business model.

I'm sure many sellers, myself included, occasionally lose money on a sale. Still I only take less than I'd like when clearing slow moving "dead" stock. I would not reularly waste time on listings that only make pennies at best.

Now with GTC becoming the only option in fixed price i'm reevaluating more than ever what will be worthwhile listing. I plan to head towards higher value items or bundles of lower value ones.

[ichopshop]

Well, I just bought that CD, so I'll let you know how they're doing it in 2-16 business days.

My guess is they have access to bulk mail pricing or some sort of foreign mail drop ship .

Ian

[musicyouneed]

Really, that would be interesting to see how they do it, so do report back.   

[cumos55]

There are many who do not understand the basics of selling on eBay.

Like the new Canadian seller who was listing in US dollars on eBay.com.

He was only going to sell to Canadians...  and he blocked all international shipping.

What this seller did not understand that on eBy.com 

domestic is USA

International includes Canada.

[cumos55]

Then how do some sellers sell books on some major book selling sites...

priced at a price of a penny each?

To them it is a game in relation to the cost of postage ! ! !

The actual high  cost of postage paid by a buyer  and how much the seller  actually paid.....

[ichopshop]

Received the package today.  2 permanent stamps, an 8c stamp and a 2c stamp.  Package weighed 104g according to my postal scale and gram scale.  New padded envelope, arrived in good condition.

So package was technically missing postage but I guess Canada Post let it slide.  Shipper could have shaved 4g from packaging.

Looks like you can buy rolls of permanent stamps on eBay for as little as 68c per stamp.

How does that effect your calculations?  

Ian

PS, anyone want an Oscar Lopez CD?

[ichopshop]

[slaneyenterprises]

It used to cost 2 stamps to mail a CD. I can't imagine that has changed

[imbuzzy]

---

@ichopshop wrote:

Received the package today.  2 permanent stamps, an 8c stamp and a 2c stamp.  Package weighed 104g according to my postal scale and gram scale.  New padded envelope, arrived in good condition.

So package was technically missing postage but I guess Canada Post let it slide.  Shipper could have shaved 4g from packaging.

Looks like you can buy rolls of permanent stamps on eBay for as little as 68c per stamp.

How does that effect your calculations?  

Ian

PS, anyone want an Oscar Lopez CD?

---

My take on the scenario:

-Lettermail is $1.90 for 104g

-Paypal account is a micropayments account, thus fees are 5% + 5 cents

-eBay FVF are between 9.15% and 10% (depending if store or not) + tax

-discount postage of 75%

For a $3.43 sale, that breaks down to:

-postage $1.43

-Paypal fees $0.22

-eBay fees (10%) + tax  (assuming 13% Ontario) $0.39

Above fees totaling $2.04

That leaves the seller with $1.39 to cover all other costs, such as inventory, envelope, packing material,, paper, ink, TIME, and perhaps eBay store fees.

The 75% Face Value on postage stamps was based on 68 cents per P stamp indicated previously.  I have been able to get mint Canadian stamps at far less than that.  In fact,  I found this past January and February to be extremely beneficial and was able to buy lots at less than 40% face value! Mind you, these are large lots with a combined face value of over $1000 and I am drowning in pool of 5 cent stamps, but it does significantly cut the costs (but adds time).

The OP's original comment stating that "This seller has a terrible business sense/model." cannot be validated.

As an example:

I sell postcards and charge $1 shipping to the US and Canada and $2.50 everywhere else...

Once every conceivable cost is considered (except for my time and my inventory cost), a 50 cent postcard auction sale will net me the following:

Canadian buyer:  38 cents

US buyer: 12 cents

Everywhere else: 19 cents

My numbers are based on a 70% postage rate, which historically has been a very safe estimate for me.

For a fun exercise, I plugged a $3.43 transaction value ($2.43 + S/H for Canada and USA, 93 cents + S/H for everywhere else) into my spreadsheet program and such a postcard sale resulted with the following profits:

Canadian buyer:  $2.02

US buyer:  $1.76

Everywhere else: 55 cents

It's all about quantity, obtaining cheap inventory, and putting a low value on time.

[recped]

There a complaint on the US Boards, more of a warning actually about the 30 cent PayPal transactions fee (seller seems to think nobody knows about it and PayPal keeps it "secret".

The seller in question is offering a lot of Items (coins) as $1 + 50 cents shipping (US Letter rate). I'm not sure if they even understand how little money they are making, about 50 cents to cover the time and effort to list and ship plus the value of the item itself.

They probably don't even know that they are giving eBay 5 cents on this shipping since they apparently just found out about the PayPal 30 cent fee even though they have been selling for several years and have done at least a few hundred sales.

To answer the OP question.....it's true, many sellers have no idea if they are making or losing money never mind how much.

[travis7s]

Would they be doing something like this to keep volume up to become/maintain Power Seller or something?

[musicyouneed]

Thanks so much for doing that.  Now we know how the seller does it. 

It seems that this seller is circumventing the PO as he would have to pay $3.28 (oversize lettermail) to ship that item.  It is over 100 grams cannot go through the letter slot.  That fact that  this one got through is lucky.  Most CD's weigh about 125 grams.  I would hate to take a chance and the CD arrives at the buyers and he has to pay extra for shipping.   A big red donut for a few pennies. 

Even though I love what I do and music, if I was only making 50 cents a CD, I would give it up.  In fact I think my limit is around $5.00 a CD although I have a few under that.  My time and energy are worth more than than.   But each person has a minimum wage they will work for.   What would you rather sell, 5 items at $10 each or 100 items at 50 cents each.  

[imbuzzy]

"It is over 100 grams cannot go through the letter slot."

I have zero experience shipping music cd's, but the ones I have in my collection are only about 10mm thick.  Can't they be securely packaged and still be under the 20mm limit?

If so, then lettermail  within Canada would be the cheapest legitimate option.