How do these people make money??

mrs_sparrow

OK, so this is a genuine question and no doubt I am going to get mocked for asking it......

There are a few retailers selling what I do, I usually never check the prices but I've got some good stock in that usually sells quickly and very little is selling so I checked the prices of competitors (all UK Ltd VAT registered companies) and they are all selling below cost & fees prices.

Am I missing something?? An Anchor shop (or whatever it is called) - is this fee free other than the monthly cost or are there fees to pay on top of this?

There are other lines on there - current lines - which they are selling for less than cost and fees, as an example, something that retails for £38 is available for £24, I cannot even buy it for that let alone pay fees on a sale. I know where their stock comes from, the same place mine does, and the suppliers do not offer discounts.

I cannot afford to sell for less, and while I make a few pounds profit there are things like packaging to pay for, toners for printers, phone, broadband, etc.... how do people make money when selling for less than cost? They are selling huge volumes and so must be working all day packing - how can they afford staff costs if not making any profit?? Am I missing something really very obvious here?

Meh? Wish I had not looked now. Depressing. I suppose I should be grateful I am selling something. One day I will have a B&M shop, hopefully this keeps me going until the kids are old enough to look after themselves.

lovinituk

They could be getting them cheaper than you.
They could be selling fakes or copies.
They could be clearing old stock.
They could be running at break even or a temporary loss to increase their best match ranking.
They could have less overheads/costs than you.
A combination of some or all of the above.

There are probably more reasons but you get the gist.

lovinituk

mrs_sparrow wrote: »

I know where their stock comes from, the same place mine does, and the suppliers do not offer discounts.

They might tell you that, but....

mrs_sparrow

lovinituk wrote: »

They could be getting them cheaper than you.
They could be selling fakes or copies.
They could be clearing old stock.
They could be running at break even or a temporary loss to increase their best match ranking.
They could have less overheads/costs than you.
A combination of some or all of the above.

There are probably more reasons but you get the gist.

I can honestly say that none of the above apply without answering every single item.

The only one I would say es on is that they are making a loss on everything as pretty much everything is cheaper than cost - but that makes no sense at all. I've not even factored running costs into it, but I know specifically where the stock is coming from, the same place I get mine from as it is pretty much the only place to get it from, I won't bore you with the why's and wherefores but I KNOW where it comes from, and how much they cost.

This is why I asked if an anchor shop is free of FVF's. But that makes no sense either.

The other difference is that they have all gone to being Ltd companies, but I cannot see how making a loss as a Ltd company benefits anyone either.

mrs_sparrow

lovinituk wrote: »

They might tell you that, but....

Trust me, they really don't. Again, I won't go into why's but they just do not - these are the same items I am able to buy, I can tell by the variations we have available.

In this industry one supplier forbids you to sell any current range on eBay - discontinued ranges are fair game - but if they find you selling full price items at a discount they will take your account away. You cannot sell for less than RRP and offer free postage on your website and you are not allowed to sell on Amazon either, if they find you doing any of these they will close your account and there are a whole range of retailers waiting to grass you up (someone reported me as I came up in that match thing at the bottom of Amazon and they thought I was on there so I was subject to investigation).

I have worked in this industry for a long, long time now, I know what I see and I see people selling for less than cost. I did get told once that a certain retailer would sell at a loss just to get the sale - that makes no sense at all though. How long can you work for free.

mrs_sparrow

Hmmm, after thought, maybe losses can be offset against other things like a partners wage or it is some sort of tax break - but I am not sure how that works as being a ltd company. I do not ask enough to know but I guess I just have to wait for their cheaper stuff to sell out before the customers want mine.

Thanks for listening to me have a whinge.

RFW

There's any number of possibilities. Starting with an obvious one, they might not know they're not earning anything. I've seen people buy for £1, sell for £2 and think that they're earning £1 per item, no factoring in of fees, shrinkage, running costs, etc.

A super high volume business with some employees can afford to earn just a few pence on some items to keep cashflow going, even losing money occasionally to bring trade in (it can be cheaper than advertising).

Acting as a limited company they may be able to take more risks and offset more costs, there are other possibles too, but they aren't legal and I don't want to be giving any ideas out!

It is also possible that they're fed up selling it, selling up and moving on.

porto_bello

Are the items the kind of things that are manufactured in China?

I ask because a garden tool (non-electrical) on sale on eBay from UK sellers for £7.99 just cost me £3.58 incl. p&p direct from a seller in China.

[I only bought 1 for my own use, but I can see how importing them in bulk and selling them on might be an easy way of making 123% profit.

Could there be one, two or more links in the chain, each taking a percentage between you and the original supplier, which the competition is avoiding?

mrcol1000

I still think that they are getting them cheaper than you. There are lots of ways of getting stock than just wholesalers. I regularly buy large amounts of items which I can sell for less than everyone else on Ebay simply because I got them for a much cheaper price.
I wouldn't worry anyway. If you have a good product and you are a good seller than people will still buy from you even if you are more expensive. I have an item which I am selling for £3-£5 more than a lot of sellers on Ebay but still outselling them.

cherylsurrey

A friend of mine works for a wholesaler who sells on to retail business both on and offline. He told me they had customers who sold their products on at cost, sometimes even below that. It puts him in a difficult position when people call him angry convinced that their competition are getting a lower price than them, when they're not. He said when one person gives up, another idiot replaces them, thinking they will make money at it.


If you are retailing unless your product is unique, you will always have people selling at cost to get the sale, and it could take them years before they give up.


It would be a good idea to check the competition selling at cost out online if they are a limited company, you may find their accounts interesting reading.

sequence

What is the item ? I couldn't sell any of the items I sell if I bought them from a UK wholesaler, most of them are far too expensive, and/or have ridiculous t&c's.