Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Wed Jan 29 2014 13:19:28

Is It Profitable to Sell Low Priced Goods on eBay and Amazon?

By: Ina Steiner

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Sellers of low-priced goods may be struggling to find a way to remain profitable on the eBay and Amazon marketplaces. The rising cost of shipping along with marketplace policies and fee structures are putting pressure on the low end of the market.

As reported in today's Newsflash, Amazon has raised the fees for selling low-priced goods in certain categories by instituting minimum referral (commission) fees. The changes began in fall and are expanding to more categories. Here's an example I used in the story that demonstrates the challenge for sellers:

"Under the current fee structure, a seller who lists an item in the Beauty category that is priced at $4 would pay a referral fee of 60 cents; under the new fee structure, he or she would pay Amazon $1 (which is in this example a 25% commission rather than a 15% commission)."

In addition, Amazon has placed many low-priced products in the "Add-on" bucket - meaning shoppers can't get free Prime shipping or Free Super Saver Shipping unless they spend $25 or more. Amazon has not disclosed the criteria for making an item an add on item, but many items $10 or less are impacted. (Let us know if and how this has impacted you.)

Sellers have tried to combat the challenges of selling low-priced goods by bundling items (either creating multi-packs of the same item or bundling a low-priced good with a complementary, higher priced good), and by up-selling and cross-selling.

On eBay, sellers often offer combined shipping discounts to encourage shoppers to buy multiple items but can be hampered by eBay's shopping cart limitations.

Many sellers meanwhile discourage friends and colleagues from selling low-priced items, questioning whether they are really making a profit when their time is accounted for, and some say low-priced items actually attract the most demanding buyers.

But can selling low-priced goods be part of a bigger strategy? On eBay, some sellers use it as a way to average out DSRs, or a way to acquire customers to add to their mailing lists and market to them through email newsletters.

Interestingly Bonanza and Etsy allow sellers to sell digital content - these can be low-priced, but have zero shipping costs and only a one-time production cost.

There's plenty of demand for low-priced goods as online shopping becomes ever more popular and extends to categories such as groceries and supplies. Some popular low-priced items include charms, postcards, bookmarks, small replacement parts and certain supplies and health & beauty items.

If you've been impacted by the rising costs of selling low-priced goods, share your story (and strategies). And are other marketplaces more viable?




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by: Steevo This user has validated their user name.

Wed Jan 29 14:03:40 2014

If you buy a cheap item online on ebay or anywhere, expect to pay the full cost of your purchase.  

Try buying a $4 part from Sears.  It'll probably cost you $10 or more for shipping, which is the minimum at which they would agree to get up out of their chair and send it to you.

No real surprise there. Businesses have costs, it's not really possible to get any business to do anything at all for $2 or even $10.  Waste of time.

Businesses need customers who want to spend money.  

Making your business based on selling very cheap stuff, your costs would be out of line.  You would lose money. It's a fact of life.  

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This user has validated their user name. by: monkey

Wed Jan 29 15:27:06 2014

Steevo, I understand your point of view. You're obviously a businessman, and probably a pretty good one at that.

However, I'm a small hobby-type seller. I have a totally different perspective.

I sell lots of items that are $20 or less. I realize that I may be working for minimum wage, but I enjoy sourcing collectible items and connecting with customers.

I'm that guy who buys something for 50 cents and sells it for 10-15 bucks. Definitely low risk.

At the end of a good month, I am plus a few hundred dollars in my PayPal account.

When I consider that I enjoy the sourcing, marketing, selling, and packaging -- in effect the entire transaction -- then yes it is profitable.

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by: FeelingFroggy This user has validated their user name.

Wed Jan 29 16:25:53 2014

Sorry folks but I disagree. We have one of our stores with over 10,000 listings at nothing over 6-8 dollars.

According to our 1099 form from paypal this year minus our expenses we definately made money.

Most people buy more than one of something. Yes you do get some people who buy only one, then we break even. But most people buy more than one.

So yes people you can make money on Ebay selling low priced items especially when you have 1000's that cost almost next to nothing.

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This user has validated their user name. by: juliawww

Wed Jan 29 16:46:03 2014

Hey Froggy! We meet again on the blogs today. :) If you sell that many items, at low cost, do you have any packing and shipping efficiency tips for us? :)

As to me, my price threshold for what's worth buying has gone up a bit. Especially for Amazon. I'm a little more willing to experiment on eBay.

But my preference is to sell fewer things, with higher profit per transaction. Duh. :) Unfortunately I also usually take on more risk when I sell the high-dollar items.

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This user has validated their user name. by: ebayisajoke
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Wed Jan 29 16:50:19 2014

Its dangerous now for sellers on eBay to sell low priced goods. eBay doesn't make a large enough profit on .99 cent - 9.99 items, so many new or small sellers get tossed out into the cold. More money thrown away by eBay.

New sellers can sell low priced goods to establish a feedback and trust. Personally I drop ship items between $100-$200 nothing more. I always make sure I can profit a minimum of about $10-25 per item. At times I will accept a $5 (after fees are paid) profit depending on the seller competition.

If you're thinking of selling on eBay for the first time low priced goods, take your business to Amazon.

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by: gutspiller This user has validated their user name.

Wed Jan 29 18:14:50 2014

The big problem is that a lot of sellers can't do their maths. They sell and think they are making a profit. But after all fees, VAT, taxes there's zero profit left.

A lot of those sellers only realise it after a year or 2. The moment where they shut down their business.

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This user has validated their user name. by: Al G

Wed Jan 29 19:54:31 2014

You have to do the math, period!

For my enterprise, I will not sell anything less than $2.99 (shipping included) - and that is just to get rid of the damn thing with an envelope and minimal postage. Oh, yes, and minimal time to find the item & stuff it into the envelope.

Otherwise, I plan on putting all of the unsalables into an auction & sell it for a few bucks over my cost plus shipping. If no sale, I'll help my local co-generation plant with raw material.

Use the 80/20 rule - you make 80% of your profits with 20% of your inventory. Get rid of the other 80% at cost & you are ahead.

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by: FeelingFroggy This user has validated their user name.

Wed Jan 29 20:24:25 2014

@juliawww

Sorry Julia everything I sell goes first class mail. You know the 49 cent stamp in an envelope. I have to say thou I do go through a ton of envelopes.

About once a week someone will buy a fair amount and then we just send them in a flat rate envelope.

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by: thebobman This user has validated their user name.

Wed Jan 29 23:59:03 2014

Ebay,no. It takes me 15 minutes to make a listing (with a good picture). Amazon, yes. I can make a listing in under a minute. Also it helps even out the defect rate.


I sell some light bulbs that for for 1 cent plus $4.99 shipping. I pay $1 each for them. Someone will go and buy 4 of them. Theres about $11 after expenses.

when everything is said and done, I figure I average about $45/order (not per item, total for an order) and make about $30/hr for my time.

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by: thebobman This user has validated their user name.

Thu Jan 30 00:06:52 2014

Hmm, drop shipping. I think I ended up doing that about a dozen times last year. Usually happens with a "Sold, Ship now" email and realizing that the description doesn't match my item (got damaged in storage/listing somehow changed/item vanished)and I ended up ordering an item from ebay and ship it to the person on Amazon.


Funny how the item is $48 on Amazon and $15-$20 on ebay. Do people just not trust buying things on ebay?

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by: Puamelia This user has validated their user name.

Thu Jan 30 00:33:37 2014

I often find I'm better off just donating some low-end items to the local thrift store. I can't price the things to sell and cover all my fees and other costs.

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by: blaumann2 This user has validated their user name.

Thu Jan 30 00:46:38 2014

I sell stuff 8-20 dollars. I don't make much on some items on ebay. My choice is don't list and make nothing.  

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by: LinneyPinney This user has validated their user name.

Thu Jan 30 00:47:49 2014

I do not list anything under $30.00 on eBay. Waste of time. It takes just as long to write a listing for a 20.00 item as a 200.00 item, just as long to photograph it, pack it and ship it. I do list lower dollar items on etsy because the listing platform is fast and fees are lower. Customers are nicer too.  

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This user has validated their user name. by: Bill

Thu Jan 30 00:55:05 2014

The only way it is profitable is if you have large quantities of the same item. If you have OAK items it does not pay at all since it takes time and time IS money.

Bill

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This user has validated their user name. by: Bill

Thu Jan 30 00:57:37 2014

Also eBay is a dumping ground and it has been that way for around 4 years now when everything started falling apart in the economy and on eBay. Mainly on eBay.

Bill

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by: pfft!! This user has validated their user name.

Thu Jan 30 04:23:47 2014

It amuses me to think back to how JD said he wanted to change the "flea market" reputation of ebay or whatever...................and THEN he proceeded to dump all store items into core..............and NOW they give away a TON of free listings everytime you turn around.

Heh...GREAT Job JD.

Back when people actually had to PAY to list items on ebay they were a LOT more discerning about what they'd list.

PLUS....back then a common practice was to put your best stuff in core and use that to cross-sell the other store items.

But NOW????  OMG 5,000 "free" listings here..........50,000 "free" listings there.  And many people use them to throw up any old piece of cwap they want because .........hey.......it's FREE to list!

I USED to pay ebay a LOT more money per month to sell on their site.  But I didn't CARE because I MADE a LOT more money back then.

Now...???  I don't pay NEAR as much........but I don't MAKE near as much either.

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This user has validated their user name. by: Rexford

Thu Jan 30 09:03:00 2014

pfft!! says "It amuses me to think back to how JD said he wanted to change the "flea market" reputation"....

All he did was turn it into a Chinese flea market.  He seems much happier with the Chinese flea market.

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by: Moonwishes This user has validated their user name.
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Thu Jan 30 09:20:27 2014

It looks as if Amazon is gunning for the sellers of items below $7 in specific categories. While I do have some items listed for that amount, most are for more and in some cases much more, although my average profit per item is $11 which considering health reasons keep me from doing other things, like what I was trained for like nursing at $25-30/h. Selling on line is both a way to keep food on the table and a few extra 'treats' and is also my occupational therapy.

I'm glad that Amazon is doing this as it galls me to list an item with a MSRP of $30 and see that someone is selling it for $1-2! I've never seen items in that category being sold for so little--anywhere, so where do they get the inventory in the first place to resell it for so cheap and by the time all costs and expenses are taken out they maybe cleared $1. Lot of work for not much. The sellers that seem to do this are the one's that seem to have no understanding of the category of items they are selling in. I've seen some things that are rare or hard to find with those same cheap prices. But yet when the item sells, many times it is my copy which is twice as expensive as the next closest competitor. :)

I thoroughly enjoy what I'm doing and by selling within the arena that is also my hobby, I can get many of my hobby expenses deducted on the taxes which is a double bonus! I have done the math as well and I do run a profitable business and if I didn't do it I would be wasting my time watching TV or reading a book (not that much waste of time). I guess some people us that excuse for selling so low, but if they would just up their prices somewhat wouldn't they have more fun with 2-4 times if not more, money in their pockets???

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by: ebay refugee camp This user has validated their user name.

Thu Jan 30 10:31:39 2014

The facts are you have to know if you are making a profit, if you are selling something for $4.00 you are not getting much. Ebay hurts you and Google adwords hurts also it is not set up at all for a business selling low priced items, by the time you would hit the click to sale ratio you are way in the hole. All of the pay for click advertisers are a scam for the small business if you sell low priced items, they know it too and do not care. All of these company's do not care about the small retailers, they are now doing what they did in every town accross America closing down the mom and pop stores. They know the huge retailers will pay their huge fees because they sell more to make it up. It is not going to stop you have the billonaires of ebay, google, facebook and amazon gauging you with fees because they are greedy, they need to feed that big fat bonus check. The answer is sit down and make sure you are getting a profits, sell items in two quantity instead of one, or 50 instead of 40. As far as the postage goes increase your price to cover it because everyone else has to also.  

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by: FREDDY This user has validated their user name.

Thu Jan 30 10:43:10 2014

@Rexford.
Thinking the same thing about the flea market with JD.  You are right -it is now a Chinese flea market.

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