Why people buy at a premium price on eBay?

Hey guys,
I am occasional seller on eBay. But want to start dropshipping brand name perfumes.
I was just checking the prices how much they sell on eBay to compare with my dropshipping prices. Some of the sellers are selling the same product from the same location with almost same feedback score, using same stock photos. But one is able to sell it at a higher price compare to other competitors. My question is, why would anyone buy at a higher price when there are other sellers with the same listing and with the same reliable feedback score? I noticed this with many of the product not only perfumes.
So is there a trick we can use while listing or I shall think people really do not compare at all?
Any help will be much appreciated.
Thanks,
Shreyas

Hi Shreyas and welcome to the forum

That does seem quite bizarre on the face of it, but I suspect it's not as clear cut as it looks. My guess is that they have received the feedback on other items, maybe even selling off some cheap things around the house to build up some good feedback or similar. There are a few different factors in play for being successful, but being competitive on price is right at the top of the list with Ebay.

Hi Marc,

Thank you for your reply. Yes that is correct. In fact it is a good idea to build feedback score :)

However, is it practical to use dropshipper? I mean wholesalers would always get better deal and they can always sell at a lower price.

For instance, I live and sell items in Australia through eBay. So I was checking the dropshippers in Australia. I found Link hidden: Login to view through Salehoo directory. As most of the reviews are positive with 5 stars, I checked their dropshipping policy. They charge $220 account set up fees and $500 bond.

I contacted this supplier and they were able to send me the price list. I compared the price on eBay. Obviously, wholesalers are selling at the same price on eBay. How do you recover your $220? Looking at the price on eBay, I think there would be hardly a margin of $1 per item after considering eBay charges and shipping cost and that will take 6 months to recover my investment.

Do you suggest I shall go with them? Really confused.

Thanks,
Shreyas

Absolutely no doubt that wholesale is a far better option than dropshipping if you have the ability to use that method. Volume buying gives you volume buying discounts, which of course then make you more competitive in an environment such as an eBay. Of course the problem is that not everyone can afford to buy wholesale or they don't have the space to hold the stock if they can.

Dropshipping offers certain benefits over wholesale, but it can't rival price. When someone starts in online sales with no to low start up costs then there is a payoff, and that is in the case of dropshipping, price per item. Not every drop shipper charges account fees, but it's getting more and more popular for them to do so. Having said that, that charge is one of the highest I have ever personally heard of.

I would ask them if they have some sort of a premium membership program for high volume account owners. Something where you will be offered a greater discount for a high selling account. If so, then you might have a chance to sell at cost for the first 6 months or so, just to cover your costs. Build up sales and then be in a position where you can get a better per item buy price from them and then you can set about making some money.

To be honest, it's an idea, but they would need to be offering a substantial discount for me to sign on to that sort of deal. Makes no sense to do all the work for nothing for 6 months, then find that what ever discount they offered wasn't going to make me much more at all. It sounds to me like they are a better matched supplier for someone with their own online store, not one with the competition that eBay brings.

Just a quick tip, reviews about our suppliers are great, but remember that all the suppliers in our directory are full verified by us as completely safe to deal with.

Hi Marc,

Thank you for your reply and your suggestion. Your suggestions are always helpful in all the forums. :)

Regards,
Shreyas

Welcome : )

Hi shrey208,

i noticed in your original question, was why do some sellers selling the same product as other sellers with a similar feedback score, but at a higher price than others sell more than those with a lower price, well the secret is Keywords, this is a number one when it comes to online selling, so you should look closely at each sellers description to see why one sells more than the others. Good example is a few years ago i used sell a particular model of Nokia phone, drop shipping from a supplier at a profit margin around $15 to $20 per item, was doing quite well untill one day had a heap of orders and found out my supplier no longer had stock of this item and no more to come, so did a big search of other suppliers of this phone but no luck, so was about to give up, when i found a seller on Ebay who sold the exact same item at around $50 cheaper than me, tier feedback score was around 10 times more than mine, but not many sales on that item, so contacted them, and started purchasing their phones of them dropship style by purchasing them on one Ebay site and selling on my main Ebay store. The bottom line here is even though their feedback far out weighed mine, my Keywords meant i sold more of them at a higher price than they did at a lower price, so hence i kept buying and selling of them for quite some time untill they could no longer supply the product. So the right Keywords are essential especially in search functions.

Thanks Paul, that's really good advice that I shouldn't have overlooked myself.

Making yourself as visible as possible to pull as much traffic as possible is what it's all about. So using well targeted keywords with listings is where that all starts. If others aren't doing that, well Paul just gave a perfect example of what can happen.

Thanks Paul. That is really perfect point, honestly I always overlook this point.
Great advice.

Also worth considering is the fact that sales are not always made on price. Many sales being made might be to repeat customers who have been burned or disappointed by other sellers in some regard, but who have had a good experience with the seller at the higher price point and therefore keep coming back to them. There is also the somewhat difficult concept of "reasuringly expensive" pricing, which might well factor into perfume buyers, since perfume is a luxury of sorts. It is possible for someone to offer a price that is simply so low that a buyer's bs light starts flickering -- I run into this a lot with cars. After having been in the export business for a few years, I have a good general idea of the realistic price range of a given used car. If that price range is say $10,000-12,000, then if I happen to find one for $8,000-9,000 I get excited about the prospect of a great deal and better margins. But if I find the same car for $6,000 often before I ever have info on the car, my assumption is that there is something terribly wrong with the vehicle, or it wouldn't be priced so low. This is not that uncommon of a mentality across the spectrum of consumer goods, and it might well be a factor in leading people to pick a higher-priced item over a lower-priced similar or identical item, particularly if the item is a gift (which, again, is probably quite common in the case of buying perfume.)

Short version - too late -- is simply that price is not always the most reliable metric by which to gauge sales.


Frank

Thanks Frank for the best advise and showing a different aspect to consider. :)