Saturday, February 20, 2016

Not making maximum profit

I've been watching a new seller who sells everything with free shipping. She gets most of her items from the GW by the pound outlet. She has only been selling full time for about 5-6 months.

I started watching her sales and her store when a fellow blogger recommended her approach to sales. She sells some great items, great brand names and she finds good stuff. She has a great style, photos look really good (better than mine) and she stages really well. From her shipping info I think that she could use some refinement. If you ship something poorely it reflect on how you perceive the item and therefore how the buyer will perceive the item when received. Wrap a piece of crap in tissue with a bow and it is still a piece of crap, but it looks nice!!

(Opinions are like a** holes....everyone has one and this is mine. No names and no store names please.)

This seller is selling good name brand items for what I think are way too low prices. But the kicker is free shipping. I agree with a lot of her prices but the free shipping is what I am having trouble with. If a skirt sells for $8.99 with free shipping that is not leaving much of a profit margin. I know, I know, ebay wants us to all do free shipping. Build the shipping into the sales price. I just can't bring myself to do it. As a seller, I just don't like free shipping. I do offer free shipping on occasion just because the number of similar items listed  all have free shipping. That's about the only time.

And the mark downs. If you list an item, a skirt for example, at $10.99 and it doesn't sell, then lower the price each week by $1 until it does sell then you end up selling very cheap. Look at the numbers for a hypothetical skirt that eventually sold for $8.99. I estimated that it was  purchased at the GW outlet for $.99 lb and weighed 8 oz. shipped. Shipping for 1-8oz would be the same so I assume it fell in there somewhere.

Sale price                      8.99
Shipping                        2.60
Paypal fee                       .56
Ebay fee, 9%                   .81
Cost of skirt                    .50
Poly mailer, label             .15
Total cost                      4.63
Profit                             4.36

I don't know about you but that is a lot of work for $4.36 profit. I know its almost half of the selling price.This isn't taking into account vehicle expenses, time, storage or any other fees. Just the actual cost of this one small item.

I think my time is worth more than this. The only way to make any money doing ebay this way is very large volume. Frankly, I don't think I could do business this way. My daily goal is $100. Most days I do this amount or pretty close. Some days I go over, most days not. But I would have to sell 25 items like the example above each and every day to make it worthwhile. Yesterday I sold one item at $19.99, purchased for $1. and shipping charged. I made a profit of $16.58 after fees. Imagine if I had sold one item for $4 profit.  I would be devastated. I would soon go under or burn out.

I don't mean to berate this ebay seller. I wish her all the luck.But my fear is that she will burn out fast and never know what hit her.She is working very hard with lots of sales but low dollar sales. I don't see the point of lowering listings every week when they don't sell. Customers who watch the store see what is happening and decide to wait until the price gets lowered before buying. Does lowering prices each week draw more buyers?

I want customers who buy now at the price I am asking. I set fair prices and I don't like to take less unless something has been sitting for 2 years, not 2 weeks.

Just my humble opinion. I hope the seller slows down and raises her prices and makes more money. Flame outs are never good.

10 comments:

  1. I don't understand the logic of lowering prices every week. I do lower mine if people aren't interested in a certain item but I evaluate that on a monthly basis. Of course I could be wrong.....

    Free shipping is interesting. Right now I'm shipping things free but I go back & forth. Seems to be helping right now. There is something psychologically that makes people want to buy an item that says free. If it stops working....Ill switch back. Haha!

    Love your Arizona finds! Sounded amazing in your comments on my post but the pictures bring them to life :)

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    1. I understand the psychology of free shipping but you have to set your price high enough to make a living. I've worked for minimum wage and I prefer working smarter.

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  2. I don't use free shipping. I found on my cheap items I was losing money on returns. Since I charge returns I at least break even. I know I could use a restocking fee but I don't want angry buyers.

    I'm not certain if I know who you are talking about but I think I do. I have enjoyed watching her do things and I think her prices are gradually going up. When I first started I just wanted sales too and then realized that for the time I put in I had to make more per item.

    I use best offer but only accept fair market prices unless the item has been around a long long time and I need to see it go. Then I drop the price until it sells.

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    1. When I drafted this post this person had low prices but I just checked and it seems prices are going up. Sometimes all it takes is really looking at the bottom line and including all supplies and time involved. A lot of work for a little return is no fun. Been there and don't want to go back

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  3. I tend to agree with you, while many people do high volume sales, I'd rather work smarter not harder. I'll wait to make a $20 profit over selling fast for $5.00. Just me, everyone has to do what works for them. I do some free shipping if the profit is high and the item is light!

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    1. Working smart is...well smart.I may have to go to free shipping but it will be kiƧking and screaming. I really don't like to refund shipping when someone returns an item...heck I don't like refunds but it's something you have to do. High and light is a good motto!!

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  4. Not certain of who you speak of, but a similar seller I do know about prefers a quick nickel over a slow dime. She has a very active store with high volume sales. Seems like a lot of work to me; I think I prefer the slow dime. I understand everyone runs their business how they see fit but this also affects the rest of us. For those of us who are trying to make a decent profit with reasonable prices, unreasonably low prices create an unfair market value and a "walmart" mentality in buyers so they look for those "bargains". That's also where those ridiculously low "best offers" come from. Anyway, that's just my opinion. Thanks for letting me add my 2 cents.

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    1. I'm willing to wait for a better price. I know that some of the stores that slash prices have goals that they need to make each week or month. I need to make money too. That's why I sell on ebay. Can't get a job and need to take care of my hubbie so I sell on ebay. Sales over the course of time averages out if you just don't panic and cut prices. Like you said it makes it like shopping at walmart. I've seen some sellers that their feedback is all best offer accepted and if you check some of them they have accepted less than half of the listed price. My time is worth full price.

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  5. I guess we'll see how long this lasts. So much work for so little money. Crazy!

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