Why are eBay prices so cheap?

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fudjj
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17 Nov 13 12:21:03 am
One of the most common questions we see from new members is "why are some supplier prices more expensive than what I can find on eBay itself?"

Firstly, it's important to understand that eBay itself is a wholesale marketplace, it's not a retail price market. So most of the prices you will see there reflect the wholesale value of the product or even below that on some products, not the actual retail value of the product that you might pay if you walked into a bricks and mortar store to buy it.

So understanding that point about eBay, it's important to understand why it is a wholesale marketplace.

1. eBay is no longer the smallish community marketplace it started out as, it's now a massively competitive open marketplace that has some major players in the game. You have sellers so well resourced that they can afford to buy products in massive volumes from wholesalers or even manufacturers direct, giving them massive price savings, then sell at very low margins to keep the market tight and dominate it, while making their profit through high turnover.

2. You also have a situation where some wholesalers and manufacturers see eBay as a great place to move their own products as well. These types of sellers are the ones you will find in all the hot selling genres, especially the tech genres. These are your main competition on eBay and are why eBay is a WHOLESALE marketplace.

3. As if the first two points weren't difficult enough to over come, you are also up against sellers using the platform purely for marketing. This is called "Loss Leading" It's a marketing technique where the seller is selling the product at COST or even below in some instances. This is designed to create interest, where by the seller can then market and drive traffic from eBay to an off-eBay website of their own where they have other products.

In essence, the money they lose on the Loss Leader item they sell is considered advertising money and can be an extremely cost efficient and effective form of marketing.

So you see eBay or Amazon are like ducks on a pond. All looks like it makes sense on top of the water, but it's what is happening under the water that really matters. In other words, simply looking at a price on eBay and then comparing it with a suppliers price isn't always a fair comparison, because you aren't aware of the seller's method.

I've only covered a few different methods in play here, just to give you some examples of why some of the prices are as they are. Trust me, there are plenty of other techniques in play in these online platforms as well, all of them effecting the price down, down and down!

I see so many people just expect to turn up, place an order with a dropship supplier and then sit back and watch the cash roll in. It's really important to keep expectations in check, this is a business that you are in and I'm not aware of any business where it's that simple to be successful. Business takes planning, it takes dedication to the cause and most of all, it takes persistence and some might even say a degree of luck to ultimately succeed.

Not only are you up against the well resourced suppliers mentioned above, but when you are trying to use a dropship model to go head to head with these sellers, you have very little chance. Actually, I'm being far to conservative, you actually have ZERO chance of beating them head to head.

Dropshipping has many advantages for sellers wanting to get into the market on the cheap, but Dropshipping isn't Wholesale and that is a fact you have to remember. Those buying in volume to get big volume discounts do that to get the very best price possible, dropshipping can never, ever provide you with the best price possible, because you are not buying in the volume required to secure those sorts of prices.

Now dropshipping can be successful on eBay, we have members here that prove that point everyday, but if eBay is your marketplace, then you have to find ways to position yourself in the marketplace and that often comes down to research, research and then even more research.


Mark (fudjj)

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wrosa
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17 Nov 13 02:26:13 pm
I think something else that needs to be mentioned is the fact that you cannot sell online without the proper research this involves researching your competition, those selling what you are selling, and You need to be able to compete on the whole shopping experience. People do not buy on price alone - yes this is true. You need to make your online shop/eBay store as up market as possible, great terms and conditions, competitive or free shipping, good return policy, great customer service and your listing/product description needs to be compelling. People buy with emotions and justify with logic after they have bought and you must ask them to buy the product, tell them to go ahead and click the buy it now button don't just expect that they will do it - tell them to.
You cannot sell your item for $300.00 when someone else is selling it for $100.00 but if your price is slightly higher but your terms and your shipping are better and your store looks more impressive then you stand a good chance of making that sale.

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albertinos
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26 Mar 14 05:53:28 am
Being new I am learning lessons
1. Research, research and more research not just on suppliers but on products and how many sellers, how many sales, profit margins and sales frequency.
2. Whether to sell on e-store or eBay or/and on other sites or on multiple with an e-store.
3. where to buy, on own homeland or worldwide, wholesalers, drop shipping or liquidators.
4 Shipping costs air or sea - if time is not a problem then sea may be better with larger volumes.
and I am finding this exciting and challenging with high profit running second place as a goal.
Albertines.
I ask did you guys feel the same about on-line selling? thanks

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fudjj
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26 Mar 14 08:15:15 pm
Me personally, I started in the second hand market as a bit of a hobby. Myself and a friend would just go around for a casual look at the weekend markets for something to do. Started finding some really good stuff at some really good prices and we saw an opportunity to maybe make a few spare dollars on the side while we were out and about enjoying ourselves.

Soon found that if we picked smart and stepped up the negotiations with the sellers, we were able to start turning some good spare cash each week. That then lead us to garage sales as well, where it got even more serious as we came to realize the potential of scope in up-scaling our efforts. That in turn lead to buying at auctions, out of classifieds and so on.

I still think the second hand market offers the very best opportunities around, but most people don't have the time or don't want to put that level of effort in.


Mark (fudjj)

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danny.singh64
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10 Jun 14 07:02:41 pm
when i first started selling on ebay marketplace ,i got good reponse in the beginning but after couple of month selling went down because i was doing dropshipping only then i changed strategy and went for used product and it did well .so ebay market place one should always change strategy if things doesn't work .


Danny Singh
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fudjj
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10 Jun 14 09:58:49 pm
It's a good point Danny, being flexible to adapt is important in most business's, but especially in online sales.


Mark (fudjj)

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radburndwilliams
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11 Jun 14 08:00:41 am
So realistically if your looking at starting a dropshipping business on Ebay.. dont bother because you wont be successful? So why are we spending hours trying to find dropshipping companies if its a fail system?

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fudjj
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12 Jun 14 08:08:27 pm
I'm not saying it can't be done, but you have to be realistic about it. Most people have the intention of dropshipping the hottest selling items. and that in my opinion is a massive mistake. That's where you're going to find the big dealers who have purchasing models in place that make it near on (if not completely impossible) for a dropshipping supply model to work.

You have to remember, dropshipping, just like wholesale, both have their advantages. But when it comes to dropshipping, price isn't one of them and when you try to compete with a seller using a wholesale model, you'll lose every time.


Mark (fudjj)

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benjspaff
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20 Oct 14 08:27:26 pm
I have been selling the second hand market items since 03 on eBay, and have been VERY successful at it. However, it is a VERY volatile market. I liken it to being a used car salesman, sometimes it's feast, sometimes it's famine. This is why I searched out other avenues to add income to my store. Dropshipping does help ease the burden of a bad month of selling second hand items. It does not make me rich, and likely won't if I don't commit 100% to it. My advice is basically, don't keep all your eggs in one basket, and you will make it on eBay.

Just like Marc, I hit all of the second hand stores, garage sales, auctions, craigslist, etc. This IS my bread and butter. I spend 7 days a week cruising my town, and craigslist. I research every item and leave NOTHING to chance. This way I know exactly what my profit margin will be BEFORE I purchase the item. This is exactly how you must approach the dropshipping market items. Yes, it takes time and effort to do, but will become easier with time and experience.

The best advice I ever got concerning dropshipping was to find a niche. I tried playing with the big boys, and got plowed over within a day. Then I read up as much info on THIS site as I could, and tried finding an area that the big guys neglected. It took ALOT of research and web surfing, but I eventually found my niche. As Marc said, It is futile to try to compete with the big guys. This is why you have to get creative and out maneuver them. I may not sell massive volumes, but I sell enough to fill in the gaps of my second hand item selling.

Also, remember that the most important thing to success in this market is work, work, work! Seriously, if you put in just a couple of hours a week on your store, you won't see great profits. Double that time, and you will see improvements. Triple that time, and it gets even better. Quadruple that, and you can quit your day job! Again, just like any sales job, you only get out of it what you put in.

I am eternally grateful to the Salehoo team, and their wealth of advice and experience.

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fudjj
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21 Oct 14 05:13:31 am
Thanks for sharing your experience and your tips Ben, very much appreciate your kind comments as well

Cheers


Mark (fudjj)

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aahchng
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7 Apr 16 12:17:28 pm
Thanks Ben awesome help, great advice as I'm trying to find my niche in this competitive market. Thank you.

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