Sep 09 2008
eBay sellers make money on shipping
This is part 2 in an ongoing series entitled Powerseller Mistakes: Used DVDs is a Red Herring.
It started out simple enough. I like movies. So much in fact, I actually WRITE about movies so it seemed like a natural progression: Selling movies will be fun and profitable. Yeah, not so much.
In the early days of my burgeoning eBay business, I read countless books about the subject and dug around online trying to find a winning formula for success. There isn’t one. I went with used DVDs (and later used CDs) because it looked like others were pretty successful at it. Scroll through eBay and take a look. You’ll see a multitude of used DVDs sold as “1 Cent” movies which leads people to believe that it, “Looks like there’s more than enough money to go around! YeeeeeHAW!”
“How can I sell DVDs for a penny and still make a profit?” The answer is shipping. Pure and simple. It doesn’t matter if it’s movies, comic books, Nintendo games, or CDs, sellers make their money on shipping. If they make a tidy profit on the actual item, then that’s just gravy. Take a look at the below item that’s currently for sale on eBay:
sammy61y (whom I don’t know) is selling a used copy of Three to Tango on DVD. Bidding is currently at $0.01 USD with no bidders. Honestly, I’d be surprised if it went over a penny. Three to Tango isn’t exactly a hot commodity but there’s a buyer out there for everything*. Here are some other fun facts about this auction:
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Shipping: $4.99 USD – USPS First Class (US), $5.99 USD – USPS International (Canada)
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$1.25 off for each additional DVD.
Actual shipping usually runs about $2+ for USPS First Class mail with a #6 bubble mailer when shipping to the US. Canada isn’t that much more expensive! It’s only about $0.20 to $0.30 more yet the seller is making they buyer pay a dollar more. Why? Though it’s more profitable to ship to foreign countries, it’s a huge pain in the ass. At the time of this posting, PayPal hasn’t automated the label printing for customs labeling. It takes a few minutes longer for each item which adds up because you have to do them manually.
When I sold DVDs, I put the starting price at $0.01 like everyone else but with a shipping price of $3.95 (First Class) to try and be a bit competitive. Most of my DVDs sold for only a dollar which put my earnings about $0.25 a sale after eBay/PayPal fees and supplies. Sadly, A LOT of my discs sold for a $0.01! Ironically, these buyers were the most troublesome (I’ll go more into that in later posts). This put my revenue upside down thanks to buying my DVDs with all the gusto of a drunken sailor (complete with cursing).
If you were to sell your DVDs with FREE SHIPPING, buyers will flock to your listings. DVD prices go MUCH higher when buyers see that they can save on shipping and will create bidding wars for your merchandise. I never felt comfortable doing that because the shipping price was a safety net. Even if one of my DVDs sold for a dime, I’d still make over a dollar. In the end, this really compromised my listings because my competition went “balls out” with their movies by promoting the fact that they had FREE SHIPPING.
The next installment will go into how I sourced my product and what you can do to find a winning deal.
Is there a winning strategy that you have implemented? Are you a Three to Tango fan? Who doesn’t love Neve Campbell?
2 Responses to “eBay sellers make money on shipping”
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Yup, the eBay buyer has to be real careful these days. Usually I’m buying from the US for shipping to Europe and I’ve had eBay sellers try to tell me that shipping is $25 when other eBay sellers of the same item in the same state are advertising their shipping as less than half of that for my country. I understand about time and packaging figure into the costs but if the shipping costs are greatly exagerated I’ll wait until the same item comes up again with another seller.
Buyers also need to be aware (and sellers too if they haven’t caught on to this tactic employed by some) that there are some sellers who claim “free shipping” but that option is only available if the buyer actually goes and picks the item up! To me this isn’t exactly free shipping, but I guess eBay rules must have a loophole that allows it to be advertised as such.
Scoundrels. For US sellers, it’s been a bonanza regarding international interest in items thanks to a weak US dollar. It’s not very kosher to try and kill off that business and try to exploit them. Like you said, buyers are smarter than that too and they’ll just go to a seller with REASONABLE shipping prices. Sellers trying to take advantage of buyers will only end up hurting themselves.