How do these people make money??

sequence

mrs_sparrow wrote: »

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.

I think you should ditch them. I wouldn't buy from any supplier like that.

RFW

The last seller who strongly undercut me was getting from the same supplier as me at a higher rate (we had the same sales rep), they lasted about 3 months.

mrs_sparrow

porto_bello wrote: »

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?

No, these are only sold in the UK, they are direct from the manufactuer, they are a UK brand and costs 3x this outside of the UK. Definately not fakes and definately not available elsewhere. Definately not closing up and selling on. A few years back I got into a price war with one of these until they pushed the price down to lower than cost and it git ridiculous and I stopped, I just put my prices back up until I made a profit but they continued selling at a loss.

I guess it is to do with tax and it is not something I am bothered about doing, there are 2 companies on there, both Ltd, both trading for the same amount of time as me and both are a few pence apart in price.

I'd have to say though, it is not 123% profit as you have your fees on your sale (say postage is £3.20 and you charge £3.50) so that is £1.20 in fees and 60p Paypal fees so from your sale you are left with £2.91 but, if you are buying in volume you would also have import taxes to pay.

Edit: PS. There are no other links in the chain.

mrs_sparrow

mrcol1000 wrote: »

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.

I know you do not believe me but they are not. I understand you do not know my industry but I do, we all get our stock from the same place as it is the only place to get it from in the UK. I know you do not believe me but it is true for these specific items that I talk about, there may be the odd item you can pick up elsewhere but they are few and far between and you certainly could not run a business with them selling the volumes they do.

I guess I am just a bit irritated that my best selling line is being sold for £14 less than I have got it up for with postage and even reduction from the RRP is eating into profits. Even if I reduce them to cost price though I still cant get them as cheap. I had a whinge to the manufacturer though as they are a high profile brand and they are being pretty much given away and this devalues the brand too.

StumpyPumpy

Have you considered that your competitors may have got hold of bankrupt stock?

At the tail end of last year I got a shed load of a small branded electrical item from a closing down shop. The unit price worked out at £1 and I was able to undercut everyone by listing them for £20 +p&p. which was about £5 over wholesale and £1 below the next lowest seller. They literally walked out of the door and basically trashed everyone else's sales until I'd sold out and normal service resumed for them.

I'm sure all my competitors were thinking the same as you are now. But in my case it was simply being in the right place at the right time. That's what happens on eBay. Sometimes there are huge plots involving loss-leaders and manipulating sales figures to attract more customers but other times you just get lucky and cash in whilst bemusing other sellers. And more often than not it is you that is the bemused other seller.

SP

mrs_sparrow

sequence wrote: »

I think you should ditch them. I wouldn't buy from any supplier like that.

If I did I would lose around 80% of my annual turnover.

mrs_sparrow

StumpyPumpy wrote: »

Have you considered that your competitors may have got hold of bankrupt stock?

They haven't.

OK, I wanted to have a whinge but without giving everyone the ins and outs of my business it is hard to explain how I know they haven't so I am going to leave it there as I can't say anything else without diviluging what industry I am in and I do not want to.

This industry is quite unique I guess, there are no wholesalers or fakes from overseas, you cannot buy from overseas cheaper, in fact I only buy from UK companies - yes, they are expensive but they are worth every penny and are actually deemed the best products on the market, in the world and this is why one of the manufacturers is cracking down on stock being sold on eBay. It devalues the brand. I think that the other manufacturer will not be far behind either to be honest.

paddyrg

Maybe the other seller really is losing money on each one - maybe they've got a load of lines and after the price war, they didn't realise they were losing on those ones.

Remember the old gag 'we lose a dollar on each one, but make it up with volume' - some people really do think like that.

lovinituk

Could it be the manufacturer themselves secretly selling at retail under a different business name?

ballisticbrian

I have posted before about the chaotic effect of different business models working at odds with one another on the same selling platform.


Here's one example:


Seller 1 , a business man from Watford, invests £30,000 by buying in a large amount of stock (e.g. container full) and the figures stack up.




Seller 2, a school kid from Bognor Regis, discovers that if he buys the item while it's on sale in B&Q, he can sell them and make 50p on each item and it takes less time than a paper round.




Seller 1 sees what seller 2 is doing, decides he can't complete, but needs to dump the stock at cost price so he can get the items out of stock and stop paying for storage.


Now the interesting bit. Seller 3 comes along, someone new to business, 23 year old from Crawley, lives with parents. He decides to learn his trade and mark up from the other sellers without doing the math. He decides the best bet is to go 1p cheaper than the others. "Surely, it must work if all the other people are making it work."


Seller 4 comes along... (need I go on)