Lessons learned from eBay:

Let's say you have procured an item for $184. You wish to sell this item on eBay. Let's say, due to high demand, the item sells for $230. Being an honest person, you charge break-even on shipping/handling, not wanting to overcharge like some people ($10-$20 for S/H?!).

The listing fees from eBay:

  • Initial fee: $3.60
  • Bold/Image: $1.35 (something that everybody seems to be doing)
  • Final selling fee at $230: $6.95

eBay, in its infinite wisdom, purchased PayPal, so when you handle a $230 transaction via PayPal, they take a nice cut of: $7.95.

Doing the math, you're working up roughly $20 in fees to eBay, Inc. to sell a $230 item. Although you've made roughly a $46 profit on the particular item, you're still only breaking to about $26 profit per item after eBay fees (not counting opportunity cost of shipping it, obtaining it, etc.). You're still looking at a 10% ROI, which is not bad for merchandise that you've gotten from retailers, but still...

Now I know why the power sellers charge so much for S/H. Retailing has such razor-thin margins (besides this month) ... you gotta make it up every way you can.

Time to jack up S/H.

Posted by roy on December 12, 2005 at 12:36 PM in Ramblings | 7 Comments

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Comment posted on December 14th, 2005 at 10:01 PM
That's totally bullshit, doing something like that with shipping is just plain dishonest and I typically don't do business with those people....
Comment posted on December 13th, 2005 at 05:49 PM
how do ebay people get all their merchandise!? do they buy wholesale from ends-distributors??
Comment posted on December 13th, 2005 at 06:16 PM
Yep ;D
Comment posted on December 13th, 2005 at 10:26 AM
now think of all teh xbox 360 sales on ebay.


btw... eBay has the most perfect business model that I know of. no wonder i've held their stock this long.
Comment posted on December 12th, 2005 at 09:44 PM
That's a pretty big cut considering their volume.
Comment posted on December 13th, 2005 at 12:44 AM
Plus, they only have like...150 on the payroll.
Comment posted on December 12th, 2005 at 08:58 PM
-reason why ebay drop shops are falling left and right, going out of business, ebay is no longer friendly.
-Most powersellers use fedex and ups where they can get corporate accounts that are 50% cheaper than USPS if you're shipping larger boxes.