I misplaced my USB sync cable that connects my Blackberry Storm to my PC, so after refusing to pay $35 + tax at my local cellular store, I bought one on Ebay for $1.99 with free shipping.
The seller is located in Hong Kong.
How on earth can this guy make a profit selling this data sync cable for $1.99 & free shipping?
You’ve got the price of the actual cable, the envelope, the stamps from Honk Kong to Canada, the printing of the label, and then someone to do all the work, put the label on the envelope and take it to the post office.
I also forgot about the Ebay insertion fees, the final value fees, and Paypal fees.
What am I missing? How can there be a profit in this for such a low price? I’m not complaining but I almost feel guilty.
Maybe it is drop shipped from Canada, so postage is cheaper, by workers paying off their transit from China to Canada in the hold of a ship.
How does anything useful sell at retail at that price? Really, when you think about it, how does something at the supermarket earn enough at retail to justify making it and distributing it and retailing it for $1.99. I wonder this stuff all the time.
He’s only interested in the feedback for this transaction - maybe he’s trying to build a decent amount of feedback before embarking on something else that requires it - possibly (but not necessarily) something less than honest. Or maybe his feedback has taken some kind of hit due to circumstances beyond his control, and he just needs to rebuild it.
It’s a loss leader of some kind - people have their reservations about buying from HK, but will take the risk on a low value item, or will take the risk on a higher value item from a seller they’ve used before.
He’s minimising his overhead by stealing the cables, packing materials and stamps from his place of work.
The actual production cost of small cables in China is probably pennies and if he’s plugged into getting factory overruns or off the clock overproduction he may be getting them for almost nothing. It’s also not a bad way to build a good eBay rep. which can be worth quite a bit re people choosing to deal with you vs someone with less feedback.
I see this on eBay all the time, usually from sellers with feedback in the 10,000’s. The products aren’t loss leaders because everything they sell is priced absurdly low. The parts are shipped from Hong Kong and take about 3-4 weeks to arrive. Meritline and Deal Extreme are the same way. I’ve wondered this myself because even after shipping them in bulk to the U.S. or Canada, they still have to mail it the rest of the way to my door. I can envision Chinese/Hong Kong schoolgirls fabricating and packaging these things up in their “schools”.
Are you sure he’s mailing them individually from Hong Kong? If he’s shipping them in bulk and getting them packaged individually in Canada it could make sense: if he’s wholesale purchasing data cables (possibly of pretty low quality) that are manufactured in China, each cable could be absurdly cheap, and same goes for bulk shipping. If he manages to make, say, 30 cents profit per cable and sells 1,000 a month that’d be $3,600 a year just from selling data cables on eBay. But you’re right it does sound a bit odd.
This is how you unload lots of the same commodity item. The idea is that you fill the ebay market with 100 of those little chargers. Now you need to set them at a low price so people bid them up. You dont know the demand so you sit and wait. At the end of the week 90 of them sold for 5 or so dollars but 10 or so sold at the opening price. Next week you only sell 90 instead of 100.
In the meantime you take your 10 loss because your minimum price covers shipping. Its not much of a loss, just a waste of time and labor. This also gives you the benefit of aquiring feedback and not letting your competitors get to your customers.
If you were more conservative and sold 50, that means you werent able to sell those extra 40 from the 90 that sold over the opening price. So thats a loss of a couple hundred dollars of profit and your potential customers get to meet your competitors.
This is also why starbucks has so many stores so close to one another. If store A is too busy, theyd rather have you go to store B down the street than get in the habit of going to Caribou Coffee, even if that means store B, which is in a less desirable location, doesn’t make much money during the non-peak peroids.
Oddly enough, things can actually work this way sometimes.
In the last place I worked (a book warehouse), some of the smaller, cheaper orders were never profitable in themselves (because we charged our customers - the publishers - a rate based on goods value) - but it was still advantageous to have them because they contributed to the necessary volume that got us substantial discount on all of the shipping.
USB cables are ungodly simple little things. They cost maybe 10 or 20 cents to make in bulk. The real surprise here isn’t that you can get one online for a couple of bucks. The real surprise is that retailers routinely gouge customers for $35 bucks or more for the damn things. Too many people don’t understand that these are just really simple, really cheap cables and there’s no reason to pay more than a couple of bucks for one.
I recently ordered a few USB cables from monoprice.com. They charge shipping, but the USB cables are often under a dollar, even in single quantities. With shipping and everything I think I paid about 5 or 6 bucks for 3 cables, so 2 bucks per cable certainly isn’t surprising. That’s the going rate for these things from reputable online sources.
I don’t know how it is done, but twice I have bought similar items (cheap, offshore) and they arrived in a couple days, shipped via snail mail from within my city. (Albuquerque)
I can only guess that the seller is connected to some sort of a network of stocking locations and transfers the order to the nearest location.
Ahh, I remember now that one of the items was a pair of replacement hinges for a laptop computer. Can’t recall what the other one was.