Very cheap items on Amazon. How do sellers do it?

kevinyork

Seen a few posts on deals sites recently spotting very cheap items on Amazon from marketplace sellers and Im wondering how they do it.

As an example, an adapter for an mp3 player headphone socket selling at 63p with free shipping.

Out of this price would come 12p of VAT (these are generally big sellers with huge feedback so presumably VAT Registered). Then Amazon charge 8.2 percent costing 5p. The cheapest shipping method would be Royal Mail 2nd class Packetpost costing 43p (its too thick for a letter rate). This makes the total costs 60p leaving just 3p towards the cost of the item and profit.

What am I missing here? How can a seller make a profit?

Crowqueen

Those 3ps add up .

theonlywayisup

kevinyork wrote: »

Seen a few posts on deals sites recently spotting very cheap items on Amazon from marketplace sellers and Im wondering how they do it.

As an example, an adapter for an mp3 player headphone socket selling at 63p with free shipping.

Out of this price would come 12p of VAT (these are generally big sellers with huge feedback so presumably VAT Registered). Then Amazon charge 8.2 percent costing 5p. The cheapest shipping method would be Royal Mail 2nd class Packetpost costing 43p (its too thick for a letter rate). This makes the total costs 60p leaving just 3p towards the cost of the item and profit.

What am I missing here? How can a seller make a profit?

Packet post is not the cheapest if you sell volume. It is a good platform for standard business purposes, but there are cheaper alternatives for volume. And don't forget your price is base on your average, not per item.

I don't know about Amazon charges as I have not sold there for some time.

Prices of items from the Far East are sometimes dealt with in pennies per 1000!

the_lunatic_is_in_my_head

When you say with free shipping is that fulfilled by Amazon? If so the fulfilment fees can be less the actual shipping cost. To post a DVD via Amazon fulfilment only costs a seller 15pence if under 100g and Amazon seller fees vary if you are big enough. Could also be loss leaders or pricing software pushing prices too low.

porto_bello

I also used to wonder how smaller sellers managed to sell books for 1p that would cost more in postage fees than Amazon's postage credit! But having bought a couple, and noticed the franked mail and business address on the envelope, it seems what they're actually doing is using their employer's postal services ... and making their money from keeping Amazon's postage credit!

kevinyork

ludovico wrote: »

When you say with free shipping is that fulfilled by Amazon? If so the fulfilment fees can be less the actual shipping cost. To post a DVD via Amazon fulfilment only costs a seller 15pence if under 100g and Amazon seller fees vary if you are big enough. Could also be loss leaders or pricing software pushing prices too low.

No its not fulfilment. They are satisfying the orders themselves.

kevinyork

theonlywayisup wrote: »

Packet post is not the cheapest if you sell volume. It is a good platform for standard business purposes, but there are cheaper alternatives for volume. And don't forget your price is base on your average, not per item.

I don't know about Amazon charges as I have not sold there for some time.

Prices of items from the Far East are sometimes dealt with in pennies per 1000!

So who is cheaper than RM packetpost?

theonlywayisup

Royal mail have various options for high volume.

RFW

There's any number of explanations, from seller not realising the costs to it being a high volume seller. Both Amazon rates and postage rates would be less for high volume sellers.
As well as loss leader as mentioned the seller could be collecting customers (ie email and postal addresses) and sending other sales literature with the item, so essentially using it as free advertising.

forgotmyname

Pay VAT? If its like my local computer shops they will be long gone by the time the TAX bills arrive.

All bought for export so TAX & VAT not payable, Sell them quick and move on?