Tiny (if any) margins on eBay sales

[aripho]

I was wondering if I am missing something here!

I'll use a contextual example here with item 222507563389 on ebay, which is some personalised bin stickers.

There's an item that sells for £1.65, with postage, for four stickers. Using the minimums, 2nd class postage is 65p. That leaves £1.00.
If I simplify the fees involved for listing/final value and say 10%, that's 16p - leaving 84p. it seems like PayPal are currently on 30p + 2.9%, which is essentially leaving 50p.

From that 50p, you have the cost of producing the thing (wear/tear on equipment, printing/cutting costs, envelope) and also the time of someone weeding/processing it and putting it in a letterbox (plus the cost of a stamp). Surely that's leaving literally single digit pennies.

I've also seen 99p sales that surely sell at a loss, all things told.

Any idea what the gist of this is? It's either insanely (idiotically) competitive, or there's a cheaper way of postage/fees I'm not seeing.

Even with Etsy/Shopify, it seems like they want around £30pcm just for a start-off, and you look at some of these £2 shops and they've made <700 sales in 4 or 5 years, so I assume there's barely anything of business value involved?

I would ideally like to start selling in the small arts/crafts area, but I'm struggling to see the viability of it all in that particular model. Is it just volume?

 

[fisicx]

Look at the location. If they come from China they won’t be paying postage.

 

[alan1302]

I think it must often be just down to volume on items like these - either that or they don't even realise they are not making anything.

I do think that if you do have the volume the 2nd class postage can be less though so there would be some extra profit to be made there.

 

[alan1302]

Look at the location. If they come from China they won’t be paying postage.

They are from Lancashire!

 

[aripho]

Look at the location. If they come from China they won’t be paying postage.

As has been mentioned, it isn't China.

Pretty much all of them are bona fide UK businesses.

143380163220, for example, is a pair of UK number plate stickers - 99p delivered. They also sell a set of 3 house numbers for a bin for 99p (143541113244), including postage.

Although vinyl isn't that expensive, it also isn't free - neither are envelopes. They are obviously paying for a shop, but have 45000+ active listings it seems, so will be paying a decent amount before making a sale.

Even if you consider volume, making pennies on a sale seems hardly worth it, even before you get to the point of considering taking (or paying) a wage to handle the volumes you'd need!

 

[MBE2017]

Busy fools or looking for market share. Either way not particularly profitable for most.

Instead of looking at the competition try listing correctly for yourself, to make a profit. The same item can sell anything up to double or triple the price, little point in selling at a loss.

 

[aripho]

Busy fools or looking for market share. Either way not particularly profitable for most.

Instead of looking at the competition try listing correctly for yourself, to make a profit. The same item can sell anything up to double or triple the price, little point in selling at a loss.

Perhaps.

I have been using better quality materials and I design and produce my own artwork, so I was considering whether a more 'boutique' approach may be the path worth treading.

I am a software engineer by day, but I have previously worked in typography/vector/graphic design so it's something I was thinking I could combine together for a bit of a passionate project. As a result, I would have no qualms making and producing my own site, but I expect it'd be a slow burner if I wasn't expecting to use the mainstream ones.

 

[fisicx]

It says they have sold 50 in 24 hours.

With 45000 listings assume 10 sold from each that's 450000 items sold each day.

If they make 1p profit on each after all costs that's still £450/day. No bad

 

[aripho]

It says they have sold 50 in 24 hours.

With 45000 listings assume 10 sold from each that's 450000 items sold each day.

If they make 1p profit on each after all costs that's still £450/day. No bad

if you go on sold, they don't sell 450000 items a day. only about 400 listings have ever sold, according to the sold listings search.

Even if they sold 450,000 per day, I don't think £450 would go far to covering the cost of getting people to process them (write/print/stuff envelopes, even).

Then, you'd have to account for at least 1% returns/missing (which I feel is generous) so you'd probably gross at -£350 a day with that 1p profit per item, assuming £2 per item sold.

 

[Mr D]

Paypal - micropayments, 5p plus 5%. £1.65 would cost 14p.

Are they sending letter or large letter? Are they getting discount you haven't factored in?

Sufficient volume for a business - and you don't necessarily see all they sell - and what would be a loss for you can be a profit for them.

 

[19ninety]

Does seem like a lot of work for the money.

 

[Mr D]

Does seem like a lot of work for the money.

Some people seem to prefer that.
They must be cheap or they cannot sell. Their target customer buys only the cheap items.

Those smarter business people will charge higher and make more money for less work.
With different target customer.

 

[WebDesires]

doesnt ebay offer free listing for things this cheap? I dont think ebay charge anything...

 

[JEREMY HAWKE]

Why stay in markets that don't make any money

 

[Mr D]

doesnt ebay offer free listing for things this cheap? I dont think ebay charge anything...

No.

Personal sellers sometimes get a week of free listings - usually a small number. But still pay other fees. Can cost them more than business sellers.

Business sellers with a shop subscription get so many free listings a month then reduced rate on additional. For example featured shop at 60 odd quid a month gives 1500 free listings then 5p or so thereafter. Occasionally getting a free week in certain categories. Still pay other fees - say 10 percent final value fee.

 

[alan1302]

No.

Personal sellers sometimes get a week of free listings - usually a small number. But still pay other fees. Can cost them more than business sellers..

Only time I can think business sellers get cheaper fees would be in a category like mobile phones where the eBay fee is 5% rather than 10% - otherwise it's usually better for the personal sellers.

 

[Scottishgifts4u]

Looking at their website (what do you mean nobody else did) they are a reasonably sized operation selling 200,000 units last year so it seems they can make the figures stack up.

They are on Amazon as well as eBay and of course their website and I’m pretty sure I even have one of their house signs on my house that I bought from Groupon.

I would think wheelie bin numbers are just a sideline.

 

[Chris Ashdown]

They may well just include a sales flyer in with each sale, which is where they make their money just like advertising in the daily papers, any sales would be direct to the company without ebay taking a cut, and the flyer products in some way targeted to the likely customers

Just a idea

 

[alan1302]

Looking at their website (what do you mean nobody else did)

I looked!

 

[alan1302]

They may well just include a sales flyer in with each sale, which is where they make their money just like advertising in the daily papers, any sales would be direct to the company without ebay taking a cut, and the flyer products in some way targeted to the likely customers

Just a idea

I've recently bought a cheap sticker off eBay and when it arrived they did have a sales flyer in the envelope.......although both in the recycling bin now!

 

[MBE2017]

Well according to his accounts he made £26k in 2019, so reckon he is just working hard to make a living, computer repairs and eBay. He might be selling at a loss without realising it, I have met plenty of people on eBay who have done the same, forgetting the fees from eBay, PayPal, postage etc. Plenty of his listings will make just pennies if anything.

Personally I would prefer to pack one item and make £120 profit, rather than pack several hundred to do the same, but not everyone sees business the same way.

 

[Mr D]

Well according to his accounts he made £26k in 2019, so reckon he is just working hard to make a living, computer repairs and eBay. He might be selling at a loss without realising it, I have met plenty of people on eBay who have done the same, forgetting the fees from eBay, PayPal, postage etc. Plenty of his listings will make just pennies if anything.

Personally I would prefer to pack one item and make £120 profit, rather than pack several hundred to do the same, but not everyone sees business the same way.

Some are happy with low profit low cost quick processing items.
Bin numbers - could pack 3 a minute? So making a few pence profit (or more than a few pence) per item can be made to work.

Perhaps the business has quiet times and looks to make a few shekels while would otherwise have staff and packing stations idle.
Seriously we can wonder at what and how someone is doing stuff. Ultimately its down to them not the rest of us.

 

[MOIC]

All eBay sellers have their own reasons to sell at the price points they set. It could be for a multitude of reasons, some you may not agree with or do not relate to your business model.

Concentrate on your own business.

Circumstances will always be different.

 

[DavidWH]

If they're a large set up, they could be printing these stickers alongside higher value work, on material that would otherwise go to waste.

However, there are lots of chancers and clowns, who just cannot price a job. Buying something for £1 and selling it for £2, after working on it for an hour doesn't = £1 profit.

 

[Mr D]

If they're a large set up, they could be printing these stickers alongside higher value work, on material that would otherwise go to waste.

However, there are lots of chancers and clowns, who just cannot price a job. Buying something for £1 and selling it for £2, after working on it for an hour doesn't = £1 profit.

There are instances whereby buying at £1 selling at £2 is a good idea.

Downtime for staff already employed. Taking advantage of slow periods for more profitable goods until some better stuff can be sourced and received.

Far from ideal, but a quick fix that brings in a small amount of income versus nothing but costs....
Maybe as a stopgap.

Far better to buy at £1, sell at £2 and spend 20 seconds.

 

[DavidWH]

In some instances, but there are plenty who think business works that simply, then scratch their heads when they make naff all money.

 

[Mr D]

In some instances, but there are plenty who think business works that simply, then scratch their heads when they make naff all money.

True.
And of course everyone else is to blame... never the idea they were using.

 

[kulture]

When I was busy selling on Amazon I had one particular item where I sold about 20 a day and made 0.05p profit on each. I monitored the costs and margin closely.

the reason being that it greatly increased the total number of orders and thus if I ever got a negative review on any order it did not affect the poor order rate that Amazon looks for. For example if you do 50 high margin orders and get 1 negative you loose the ability to get the buy now button and thus potentially loose thousands. Whilst if you additionaly have 300 low margin orders you have some leeway.

 

[Paul Kelly ICHYB]

Wow, they are being paid to build a list of highly targeted contacts that they can remarketed to, sell direct and make a higher margin!

 

[Paul Norman]

I know 3 people who run Ebay based businesses selling this kind of thing.

Not one of them has made a profit yet, but they all believe they will, one day.

I believe that are unlikely to unless they find a way of monetising the growing number of customers they have.

But without seeing the accounts relating to the business selling the item in question, it is hard to answer the specific opening question without suggesting that not every business out there understands whether or not they are making money. I know. Amazing. But true.

 

[Ecommerce&MailOrderGuy]

We run Ebay as one of our sales channels. They are useful for making a few quid at times but the propensity to repeat purchase is awful. Amazon customers are twice as good (still poor), Customers from PPC or printed classified advertising are the best. We mail a print catalogue to maximise repeat sales. This gives us a chance to track sales offer source codes. Don't build a business based on Ebay alone would be my suggestion,

 

[Mr D]

We run Ebay as one of our sales channels. They are useful for making a few quid at times but the propensity to repeat purchase is awful. Amazon customers are twice as good (still poor), Customers from PPC or printed classified advertising are the best. We mail a print catalogue to maximise repeat sales. This gives us a chance to track sales offer source codes. Don't build a business based on Ebay alone would be my suggestion,

May depend what you are selling.

Prior to lockdown we were doing around 3 to 5 percent repeat orders. A few customers ordered half dozen times a year or more.

Yes it's a good idea to look to convert customers from one channel to another. While of course selling them stuff.
People often appear to try the 'if you build it they will come' approach to own website without thinking of where customers are.