I have bought many hard to fine CD’s and books on line for 1 penny plus shipping (usually $3.49 or thereabouts).
How do these folks make money? Do they get any of that shipping money? Why would they sell things for 1 penny?
Volume, volume, volume. That, and grossly inflating shipping costs.
Shipping. Books and CDs can be sent Media Mail which is quite cheap. I generally sold CDs and the like for around 4 or 5 bucks shipping. Between packaging (which can vary widely) and shipping, about half that was profit (‘handling’). Still, I generally paid eBay and PayPal fees out of that total, so maybe a buck or two per item. The more you ship, the better - this was back when I was selling hundreds of items on eBay a month, and many people do far more than that.
Plus, even if you’re selling at about break-even, feedback is often worth the price. Some items will sell for a penny, others will sell for $5, $10, $20 or more, and it takes a lot of time and effort to research that so penny starting bids tend to even themselves out (items tend to sell for what people will pay).
They may also be buying items in large unsorted lots, then re-selling them individually. Most of the profit probably comes from a few gems sifted from the lots, but if you can make a few more bucks by selling the cheap bits, why not?
The Op doesn’t explicitly state that the market is ebay - if it is, are these one penny Buy-It-Now listings, or are they auction style? - if the latter, the seller may have been hoping for a few more bids - listing with a higher starting price attracts more fees.
But yes, inflated shipping costs are another way of making money whilst appearing to give things away - that is, shipping costs inflated above the post office counter rates, where the seller may be enjoying a further slice by getting a cheaper bulk postage rate if despatching as a part of the mail for a large company.
Sounds like a grading scale for porno mags.
Amazon has a ton of used stuff that sells for a penny and a set price for shipping. A lot of these transactions can’t possibly net the seller any more than 30 or 40 cents after postage, and that’s not even taking into account the price of envelopes and padding and the acquiring of the item being sold. Frankly, unless they’re selling thousands of items a month I don’t see why they bother.
Another possibility is that some of them may not have paid anything for the item (by fair means or foul), and/or are not paying anything for the postage (slipping it in with the mail at their place of work). I’m sure it happens.
I spend a substantial amount of time selling books and the occasional video game on Amazon.
The sellers doing that are in two camps.
The first camp has no idea what they’re doing. You’d be surprised how large that camp is.
The second camp is in the following situation:
- The merchandise was either free, nearly free, or was bundled with other worthwhile items in a bulk lot. Alternatively, it cost them good money, but became nearly worthless due to market factors. It’s now a sunken cost.
- All book/music items sold on Amazon are assessed a $3.49 shipping fee.
- The item sells for 1 cent.
- Amazon pockets $1.29 out of that fee.
- The seller is left with $2.30.
- The seller uses recycled [effectively free] packaging materials.
- Media Mail is $1.59 for up to 1 lb. Sometimes CDs can go First Class, which is even cheaper. Very large sellers can get cheapers rate than that by using bulk rates.
- The seller winds up with 71 cents.
Commentary:
If your operation is huge and you have minimum-wage labor available, along with huge discounts on packaging materials and notable discounts on postage, this is economically viable. Not real lucrative, but viable. It has certain other business advantages, including fuller utilization of your facilities, assuming you had nothing more profitable to do with them.
Edit:
Incidentally, come the 19th of this month, postage is going up. Amazon shipping fees are going up 50 cents. Amazon is pocketing 15 cents out of that. The math changes slightly then.
Feedback is sometimes worth more than hard money on eBay. If you want to start selling books for a profit, for example, what better way to get a very high feedback score than to have a thousand feedbacks for previous book auctions? So you only end up making $300-400 off your 1000 sales - you now have an excellent rating and can start selling more books at a higher price.
Wow!
Hi Zipper!
Good point on the feedback.
Incidentally, on Ebay it’s easy to get good feedback- sellers use retaliatory feedback to blackmail good feedback from buyers.
On Amazon, selling penny items is a recipe for disaster. No such thing as useful buyer feedback on there, so you can’t blackmail your buyers like folks do on Ebay.
The lower your sale prices, the more complaints you get, and the more negative feedback you’ll get. College students buying textbooks are the trickiest group to work with, immediately followed by cheapskates buying anything.
Additional note:
Edit: Oh, and the book market on Ebay is positively LOUSY. Terrible. Seriously.
Last month I sold $1,660.48 worth of books.
Out of that, $8.31 was from Ebay sales.
Consumers view Ebay as an unsafe, labor-intensive way to get books. It’s a bad bookselling venue unless you’re selling items that are genuinely scarce and in high demand. Either that, or you’re unconcerned with getting reasonable money from the books.
Is this a regionalism or a personal thing or a typo?
One other explanation that may be relevant in some cases:
I sell used books of mine at Amazon - books that I won’t want to read again (that I bought for lack of anything better shortly before a long train trip etc.), or books that I impatiently bought in hardcover and later got in paperback to save shelf space.
For some of them the other sellers quote a nominal price (like the penny of the OP), so I do, too, or I’d never have a chance to sell.
Why do I offer them at a price that (with Amazon’S shipping allowance) barely covers shipping?
Because in my view you don’t throw books away. You just don’t.
Whoops!
I forgot to mention you folks.
I had run into a few before on the Amazon forums, so I should have remembered.
Incidentally, in the US there are thrift and charity stores that will gladly take my books and resell them for 25 cents to 3 dollars, and use the profits to provide jobs training or shelter to the less fortunate.
If you run out of time to sell penny books, a German equivalent might be a handy time-saving device… plus you can go and look over the donated books.
Interesting. My experience with selling books (just ordinary stuff such as petcare manuals and gardening books) on eBay has been quite positive - they’re the one category, for me, in which sniping is uncommon - I still see regular bidding wars. My sales operation is far smaller than yours, though, so maybe I’ve just been lucky so far.
I think some of the really cheap books, CDs, etc. are sold with the same mentality as they might be sold at a garage sale: I’m done with this and I don’t want it cluttering up my house. If someone else can get some use out of it and I can get a little money in return, even if it’s only a few cents, why not?
If you’ve bought a large volume of books at bulk rate, and have winnowed the wheat from the chaff, why not donate some of the ones that don’t sell as quickly to a library? Instead of a $0.71 profit (plus feedback, which has its own intrinsic value) and the hassle of shipping, you drive the items once to a regional library and donate them. Your business gets a tax write-off, and you can probably still claim the purchase of the bulk lot as an expense (since it was not for sale any other way).
For example, you buy books (A,B,C…Z) for $13 total, each with a face value of $3. You sell A,B,C,D, and E for $3 each, for a gross of $15 ($2 profit). Place all of the remaining books on eBay for next-to-nothing until you’ve sold 16 of them (let’s say $0.70 profit each) raising your profit to $13.20. Now donate the remaining 5 books for a $15 write-off.
Expenses: $13.00
Income: $26.20
Donations: $15.00
Doesn’t this effectively eliminate your tax burden?
Jurph,
The other option is to simply use cash accounting… you already got your tax deduction when you bought the books at a loss.
If I DID do cost accounting…
I am skeptical that the IRS would let me buy books at the Akron library sale at 15 cents apiece, decide they’ll sell for $1 apiece at the Akron Salvation Army [because I’m not gonna’ bother selling them onlie], and write off 85 cents I never had to spend.
Because, let me tell you, not only could I use that strategy to hide my book business’ $500-1000/month profits, but I could also probably “write off” enough such charitable donations that the other $60K per year annual income my household has would go away.
I can’t imagine that’d be legal.