Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Thu May 2 2013 09:31:35

Can You Make Money Selling Low-Priced Items Online?

By: Ina Steiner

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Retail is hard, and online retail presents its own challenges. Have you ever calculated exactly how much money you're making per hour in your online retail business? The Boston Globe interviewed a crafter who sells on Etsy (a craft-prenuer, the globe called her) and asked, "After factoring all your Etsy fees, PayPal fees, materials, and time, do you make a profit?"

What a great question!

The Etsy seller said it was difficult to say and explained she was still in the process of building her business. She went on to list the costs of doing business, including Etsy and PayPal fees, postage and shipping expenses, and Facebook and Google advertising.

Many small sellers face this challenge - they're often busy sourcing (or making) product, listing, packing and shipping to make enough money to pay their bills, a vicious cycle that gives them little time to calculate exactly how much money they are earning per hour.

Consignment sellers face their own opportunities and challenges - presumably you can get access to items with higher price points, but you also have to share the earnings from a sale with the consigning client.

I spoke to an eBay Trading Assistant yesterday (she sells other people's goods on consignment). She had extra costs as a REDOL seller (Registered Ebay Drop Off Location), and she said her break even point was $7,500 in sales per month. The pressure to meet her break even point thanks to the overhead was intense, and she only accepted items valued at $100 or more per listing.

In January she participated in eBay's Selling Assistant pilot program. Under the pilot program, she was working with a 30% margin after eBay and PayPal fees. "If clients are bringing in $10 items all day long, you can see the numbers on a 30% margin along with eBay and PayPal fees it is A LOT OF WORK for peanuts." (With Selling Assistant, eBay trains outsourced staff to do the pick-ups at clients' homes, who then hand off the goods to independent Trading Assistants.)

Almost half of the items she listed for the pilot did not sell. She has since closed her drop-off store but continues to sell on eBay.

Can you make money selling low-cost items online (even non-consignment sellers)? How do you determine selling prices, and have you done the math to determine your hourly earnings from selling online?




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This user has validated their user name. by: Anonymous Annie

Thu May 2 12:20:50 2013

I sell a few items like that... regardless if it's ''free'' shipping or calculated shipping, the bottom line is that it ends up not being a good value when purchased individually.

So, for the time being, I've bundled them together so that my customers must purchase in ''bulk'' quantities of 6 or more.

In the future, my husband says that he'll be able to tweak the programming of my shopping cart so that these items can be purchased individually (with a quantity of 1) but in order to do so, the customer must have at least $25 worth of merchandise in the cart.

It will be my own version how Amazon handles inexpensive ''add-on'' items, which also require a minimum amount of merchandise in the cart.

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This user has validated their user name. by: Anonymous Annie

Thu May 2 12:25:45 2013

RE: Vikram Singh's comments: ''Selling has continuously become easier as the years have gone by on eBay and yet, we know that there are a number of people for whom time is an issue...''

OMG! --- SERIOUSLY?!

''Easier?'' ~ Did he really just say that?

Absolutely clueless! Living in a fantasy world, aren't they?

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by: moggy This user has validated their user name.

Thu May 2 12:44:07 2013

Agree it's certainly getting easier on ebay. Easier to click on one of their adverts and buy off of the site.

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by: Patricia This user has validated their user name.

Thu May 2 13:19:49 2013

Annie - this is the big problem with Ebay...there is a lot of "know-it-alls" who never sold an item on Ebay who are making up all the rules and the new hoops for sellers to jump thru.  Its total madness and they are absolutely oblivious!

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This user has validated their user name. by: Basset

Thu May 2 14:46:31 2013

My store has different price points but I do make a profit & pay the taxman to prove it - this is the equivalent of a full-time job for me.

However, the hours are hard to keep track of since business related activity varies throughout the day and evening. Then there is down time waiting for glitches to work out.  

Two days of the week are usually extremely busy, two are usually moderately busy, and the rest is light to moderately busy. Flexibility is built in but I do something business related 7 days a week.

Thankfully, I enjoy what I do & count my blessings.

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This user has validated their user name. by: Sandymenu

Thu May 2 15:02:24 2013

Ina, what a great topic you've posted to help our mom/pop sellers ''wisen-up'' with inventory -vs- pricing to make a profit.

When I need to go to the store to buy some girly hair products, lately I've been happy to just buy them on ebay for $2-$4 more but have noticed many sellers aren't really being too wise choosing to sell items that are already preset (retail).

I paid $14.99 (at walk-in store) for a hair product but now I find the same products on ebay for $18.99 with FREE SHIPPING. Ok, great (not a problem) since I'm willing to buy it; however, once the free shipping item arrives, it cost sellers $3-$4.90 to ship the item.

That's not good (for them).

Sadly, that just made my facinator turn tangerine orange knowing that sellers aren't really making a red cent profit.

Ina, perhaps your topic might help them think twice of their select inventory in order to make a decent profit.

Thanks for sharing!

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by: JustTheFacts This user has validated their user name.

Thu May 2 17:36:04 2013

I do have several small ticket items but they are such a pain in the rump roast because they also attract some (not all) of the WORST and most DEMANDING buyers.  They are also the most likely to give low ratings and negatives demand free and next day shipping.

They want dollar store prices, delivered to their door FREE the next day but expect Gucci quality.  

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This user has validated their user name. by: Ming the Merciless

Thu May 2 18:37:53 2013

When I first began selling online, I had the economic freedom to invest profits into more and higher quality inventory until I reached the point where I could begin paying myself.

I now make enough to live on through not comfortably if online sales was my only source of income.

That was then, but this is now (obviously :-)

I'm reasonably certain that given the hostile and avaricious climate ebafia has created that I couldn't repeat what success I've had.

Now, greedy venues and search engines have added too many cost layers that decrease our profitability while continually and relentlessly increasing their own.

Of the many reasons ebafia is lobbying so hard against a universal online sales tax, one of the unarticulated reasons is that they know in many cases in some of the most popular and profitable categories that sales taxes will push prices higher than in brick and mortar stores.

Ebafia is no longer satisfied to have the highest fees on the internet while providing the poorest customer service imaginable.

They impose listing fees for the rabble and "noise" while their preferred customers list for free.

They get a percentage of the final selling price.

They get a percentage of the domestic shipping cost.

They want an even higher percentage of international cost. Sweet Pitney deal.

They get a percentage of the shipping labels from USPS and other carriers.

They generate revenue from illegally placing ads in our listings.

The new fee structure is causing sellers of expensive high quality but slow moving items to move these quality items to other sites. Bean counter, MBA style greed at its worst.

Courtesy of the Bush era Republican Congress, USPS is legally obligated to raise their rates once a year.

Google charges obscenely high ad word rates, and the verdict is till out whether these ad words are worth the investment.

Unproven as an effective even as a modest volume sales generator, social media demands their cut, and several sales venues cooperate with them and may ultimately force sellers to use whether they want to or not because they earn revenue from social media.

In my opinion, those considering trying to earn either a supplemental income or an income that can support a family should take a very long and coldly analytical look at online selling and be prepared to invest their own money and be unprofitable for a few years.

Currently, the direction we're headed in now will soon kill the mega greedy sites, and there's only one of these.

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by: Truk This user has validated their user name.

Thu May 2 23:26:28 2013

I can't speak to the profitability of low cost items but we sell a lot of used and new high cost business and industrial items
With the new fee structure we can continue to sell used items but the expensive new stuff it's coming off ebay
We average 20 to 25% discount from OEM's on new product with the fee's from ebay and Paypal the cost of shipping and our overhead as a brick and mortar warehouse,new high end items won't make us any money on ebay
So the used industrial goods garage sale  style stuff stays on ebay the  new stuff you can just purchase from our web-site
We want to sell new product on ebay but under the new fee structure  the margin's just aren't there

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by: AngelaTC This user has validated their user name.

Thu May 2 23:33:08 2013

I've had this discussion in other forums and found that the answers depend on how you define profit.  If I factor in my time, then I don't make a profit.  If I figure that I wouldn't be making anything if I were just watching TV, then yes, I make a profit.

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by: Arch This user has validated their user name.

Thu May 2 23:50:43 2013

Amazon makes a lot more sense to sell low price items.  They do NOT charge commission on shipping.  

You can easily start selling on amazon using your current ebay listing with the 3rd party software exportyourstore.com.  I've been using it for a year.  There have been some glitches but they are very hands on in getting anything fixed.  

After all my items got in using exportyourstore.com then I started shipping some things in to fba amazon.  with fba you can also sell low priced items and still make a tidy profit since the bulk shipping cost to amazon fba is very cheap. and you don't have all the customer service headaches of ebay- you can focus on getting new good stuff to sell, not on daily shipping out stuff and answering questions etc.  

I still sell on ebay for low priced items.  I have tried free shipping vs charged shipping and charged shipping is much better. I get a lot of combined sales and give a modest 20% shipping discount increasing my overall percentage profit with the larger sale.

Still amazon's setup is much better for low priced items.  

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by: comet This user has validated their user name.

Thu May 2 23:56:14 2013

With some of the new absurd "rules"--ie the 30% DIFFERENCE between the auction START price vs a BIN price--ebay is  now LOSING money on these transactions as presumably a seller already KNOWS what the traffic will bear on a BIN and a start price;  Adjusting them the way ebay demands is stoopid as you can't SELL something at a too-high BIN and reducing your auction start makes the chance that it does sell for a LOWER price a given.

Again driven by some weird sort of madness by people who have NEVER shopped their own venue nor have they ever SOLD anything on it.

I am now going to have to either make my items BIN Free or lower the start price---this is a stupid move ebay!!!!!

INA---is there any way you can ASK why this new and ridiculous structure was put in place?  What is it meant to gain?  For WHO?  

And--no---especially with this new % deal I cannot make money on ebay.  

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by: BackInBlack This user has validated their user name.

Fri May 3 00:27:36 2013

Yes you can make money selling low-priced items online. If you're in China, and have USPS-subsidized postage that's cheaper than intra-USA domestic shipping rates.

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by: PowerSeller2007 This user has validated their user name.

Fri May 3 01:08:29 2013

The two Donahue are genius.  Not!

One delivered parcels from Asia with tracking for few cents BUT charges US sellers to send to our next door neighbors' $1.70.

One created all hardship to small American sellers BUT hired dedicated managers to tamper NEG feedback and DSRs to make them always good.

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by: jen This user has validated their user name.

Fri May 3 03:04:07 2013

Ask the resellers at Etsy.

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by: Red Ink Diary This user has validated their user name.

Fri May 3 04:24:03 2013

when I first started on eBay, lo these many years ago it was easy. I sold ephemera, reproduction Victorian greeting cards, bookmarks etc.  Average sale price was $2 & I charged $1.25 S&H. I sold a lot, I made money. More to the point my share of the proceeds was greater than eBay's. Incidentally I spent a lot of money on eBay too.

My neighbor at the time sold very high end on eBay and was quite scornful of my $2 greeting cards but at the end of the year my net was higher than hers. Yes I worked harder than she did.

By 2006 eBay's share was equal to mine and my wholesaler & USPS took the last third.

A year later I still made a profit (on paper) but if I had been relying on eBay for living expenses I would be a great deal skinner than I am.

I do not believe I could start a business on eBay today even if I wanted to, which I do not. It has become unbelievably complex, and the stress level, oh my. There does not appear to be any room for profit for the small seller who must pay fees that enterprise level sellers do not.

While I no longer sell the same product online I do have some stock left. Just for fun I did the eBay math. Even with 2003 stock prices I couldn't break even on eBay today.




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by: This a joke, right? This user has validated their user name.
Web Site

Fri May 3 08:33:19 2013

All that really matters is the bottom line. Anytime you are trying to figure what you are making an hour you are wasting time.
I have been self-employed 44 years and have NEVER worried about what my time is worth

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by: FREDDY This user has validated their user name.

Fri May 3 09:18:58 2013

Amazon: Book sold for 2.49 + 3.99 shipping. After media mail shipping, commissions, left with .52. That did not take in the cost of the book. So NO you do not make money selling low price items on Amazon. You will take a loss. Possibly if you use FBA then maybe, but what items that do not sell or get lost?? Year end do you still make money?  Amazon does take fees for shipping.
ebay- low priced or high priced , how do you make a profit when no one sees it and it just sits and you keep relisting.... -:)

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by: FREDDY This user has validated their user name.

Fri May 3 09:22:25 2013

Years ago, I sold things on the internet as a hobby that paid for itself and also picked up some extra money.(aver 900/mo.) Something to do to keep active-even fun back in the day.
They have made it almost impossible to make a living JUST from ebay and or amazon, etc.

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by: GoodK9 This user has validated their user name.

Fri May 3 12:00:57 2013

I'm slowing moving our items off of eBay to WebStore (if they don't sell on eBay, I just copy & paste from there to our Webstore -- saves time).

Anyway, I'm also listed as a Trading Assistant.  Most of the "leads" I've gotten are asking me to basically be a drop-shipper which I won't do -- I don't sell stuff I don't have some knowledge about and electronics aren't it.  

The items I will sell are antiques & collectibles (my hubby & I have a brick & mortar antiques shop) -- we do have a few folks ask about us selling things on commission for them.  I have to explain to them that unless their items are higher value ($50 and up), it's generally not worth the time and effort to list them online.  Piddling stuff just doesn't sell.  Vintage advertising pieces, on the other hand, we have no trouble selling although it's usually in our shop and NOT online.

By the way, regarding eBay's doings in Atlanta -- hope they have a Georgia auctioneer's license.  According to the Georgia Sec. of State's office, if you're listing something on eBay for someone else, you're supposed to be a licensed auctioneer (at least in the state of Georgia).  Found that out this past week.

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