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Why eBay Sellers Sell Below Cost

I got a question last month from a reader who wanted to know why
people are selling things on eBay below cost.

* * * * *
Are common eBay selling mistakes costing you money? This short quiz will help you earn more money in your eBay auctions.
Check your eBay knowledge now.

Seven Reasons Why eBay Sellers Sell Below Cost.

Here’s seven reasons why eBay sellers sell below cost, and how to tell exactly which reason is behind each seller’s actions.

  1. Maybe the sellers are losing money? Look at any discussion board and you’ll find a few dozen posts from someone who thinks he can make money by posting advertisements. Unfortunately, within an hour or two, a moderator will delete the posts. Chances are the poster will post on a few dozen boards, invest some time, realize he’s wasting his time, and move on to some other “something-for-nothing” endeavor.

    Then someone else will buy into the concept and start posting ads. To a casual observer, the constant stream of ads on discussion boards seems like a way to make money.

    The same things happens on eBay. There is a constant stream of eBay sellers failing and exiting the market only to be replaced by others making the same mistake.

  2. Another reason sellers sell below cost is to get cash back. Perhaps the eBay seller bought inventory expecting to sell it for a profit and learned how competitive the market is. Rather than trying to get his investment back, they are happy to get what they can and move on. He is selling at a loss in order to exit the market.
  3. Maybe the eBay sellers are getting a better deal than you can find? If the sellers are constantly offering items month after month at prices you cannot match, this is one explanation. See Finding eBay Products article.
  4. Maybe the eBay sellers have a back end? For example, I did a joint venture with someone where we sold items below cost on eBay. We were not interested in the initial sale. The purpose is to wrap a long sales letter around the product, and then follow up with the buyer to get additional high profit sales.

    This joint venture and the eBay auctions we use is explained in my book Prospecting On eBay. book.

  5. Maybe it’s a scam? If the seller doesn’t plan on delivering the goods, his cost is zero.
  6. Maybe the items fell off a truck? Stolen goods are always cheaper than legitimately purchased goods, until the law comes for it’s cut.
  7. Maybe the items are fake? I don’t know about computers, but many items are faked. I had a guy try to sell me a surround sound stereo in the parking lot of the bank last week. He told me he was a delivery driver and the company had doubled the order by mistake so he could sell one cheap. I saw him a week earlier at a gas station pitching the same line.

Note – there are surely other reasons for selling on eBay below cost, but chances are they will fit into one of the seven given above.

You can get an idea which one of these reasons applies to a seller by looking at his prior auctions and feedback.

For example, if the person has never sold anything before and is now selling expensive computers, I’d bet on a hijacked eBay account and a scam.

If the seller has been listing computers over and over again at lower prices without getting sales, they just want out.

If the seller has been consistently selling the same items below wholesale, he either has better connections, or a back end.


PS If you would like to move beyond eBay and start making money with other online methods, there is a good introduction in the Auction Revolution.

The Auction Revolution will help you build your first website and start a newsletter. It also contains a detailed explanations showing you exactly how to get the highest profits
in your eBay auctions.

Did this answer your question? If not, try looking at the questions and answers within the Finding Products, General category, or do a search for other questions.
If you are unable to find an answer to your question, send me an email, and I will answer it.

"The IWantCollectibles Guide to Ebay Sales"
is now available for immediate download.

Many of the articles and free reports here on IWantCollectibles were originally sent to readers of my Antiques and eBay Newsletter. Not all articles make it onto the website, and readers also get notices of free reports and special offers.

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