Economy of eBay Selling

[dipmicro]

So you bought an item for $16.65 and sold it with nice markup of 50% (= 24.98). Hmmm, you made $8.33.

Well ...

You spent $0.03 listing it in your EB store, eBay took $3.00 Final Value Fee (12%) and PayPal took $1.02 ($0.30 + 2.9%). You made $4.27 (17.11% profit).

Or ...

You spent $0.35 listing it in fixed price listing, eBay took $2.00 Final Value Fee (8%) and PayPal took $1.02 again. You made $4.95 (19.83% profit).

So with this particular product, you need to sell $5547 of it (=222 sales) to pay the $1100 rent 😉

I am not complaining, I am looking at those numbers in My eBay and they pink-glass me. And then at the end of the month I look in the spreadsheet and reality smashes me 😉

[pierrelebel]

"with nice markup of 50%"

way too low for mail order business whether you list on eBay, other online venues or advertising through TV, radio, newspapers, magazines or trade publications. .

[cartoonsinabox]

This works only if you are selling in volume(A little bit like Walmart with markups of 15% to 50%).

Frederic

[pierrelebel]

"A little bit like Walmart..."

Walmart has a big advantage: on average, they sell their inventory before they have to pay for it!

Typically, they have 38-40 days inventory on hand and pay their suppliers 45-50 days after receipt of goods.

For example, at the end of their last reported fiscal year, they had inventory totally US$35.2B and accounts payable of US$44.3B

It would be nice if we could do the same! ;-) .

[ds2286]

Sellers should try for more than a 50% markup (profit), especially if you are selling lower price items. It's not so bad if you sell something for $300 and make $150 profit.

[dipmicro]

way too low for mail order business

Pierre, I was looking at a drop-shipping opportunity, where I would include somebody's else inventory with mine. Many mail-order businesses, even the big names, do this.

Electronic component distributors would also dropship, even some manufacturers, just they are not willing to hide their identity when doing so.

50% markup is low, my markup on items I stock and resell is usually 100%+, sometimes even 200%. All the items are surcharged by 12% when listing on eBay after the markup is applied. There is only several items that we stock in small quantities to justify immediate demand but they are reorderables, same model as vending machine guys, they buy a box of junkfood in Costco and resell it with markup in their machines.

Then there are some loss-leaders. Their pricing is done so we break even but they bring traffic.

Drop-shipping items we do not stock 50% and we do not have to go to post office to is not so bad, rigt? We don't do this yet, but I am exploring the grounds. I need to pick the partner wisely, because they could easily spoil the reputation we build-up.

[pierrelebel]

"I need to pick the partner wisely, because they could easily spoil the reputation we build-up. "

While many mail order marketers use drop-shippers, you find very few sucessful Canadians doing it on eBay.

The way eBay operates does not really lead to a successful long term operation for Canadian sellers using drop-shippers. Even with 98% in stock, can you image the adverse results on your feedback rating and DSRs caused by the missing 2%?

There are millions of items one can buy and resell at a profit. Why insert a middleman (drop-shipper) in the transaction, adding unnecessary risks in the process?

KISS

Buy right - sell right. .

[dipmicro]

you find very few sucessful Canadians doing it on eBay

My focus is not eBay. eBay is a marketing tool that brings me $9.90 customer. Same as stamps, electronic components are highly repeatable, many customers if comfortable with us, come back for more and in two months for more.

However, unlike stamps, electronic components are space intensive. We work with distributors, who have hectares of warehouse space and they give us discounts for volume, which gives us some room to "compete" with them. However, they don't mind because they rather fill one big order than many small ones. These guys are expediting thousands of orders daily and have agreements with Fedex/UPS so when one places the order by 8pm, they will get it next day noon for $8 shipping charge, which can be sometimes even waived. Brokerage included as they clear entire truck of orders going to Canada every night in one shot to speed it up.

[dipmicro]

Btw. what I described above is not a dropshipping, but rather "non-stocking" or stocking on demand 😉 It works quite ok for Canadians due to tight US/Canada infrastaructure. Dropshipping is new to me. I am thinking if it's even worth it since there is very little control over the process and the stability of the partners (unlike established distributors) and their data accuracy is often questionable.

[westernstargifts]

I purchased some stock from a supplier (not one of my usual ones) who told me at the time that they do drop shipping. I had the goods shipped to me. They arrived in a battered old box that looked like it had been around the world a few times. Not only that, but it was taped so poorly that I could put my whole arm in it without having to open it.

That turned me off drop shipping, at least with that company. I would rather have the stock myself. You then have more control over the quality of packaging and shipping time.

Judy

[cumos55]

Remember....

One makes a profit based on what one pays for inventory... and not on the final selling price.



Also ..... The more you pay for inventory...

the more eBay gets as FVF just on the cost of inventory...