How can they pay so little for shipping?

mim · #1 10-29-2011

This may not be the same seller, but it is similar.

Item 180539173020. The item costs around $0.15. The item sells for $0.99 with free shipping. They ship using USPS 1st class. The package weighs 3 oz.

Using PayPal shipping, it would cost me $1.95 to ship. I checked the USPS site and the volume rates appear to be around $1.50.

How do they ship and still make a profit?

KingRay · #2 10-29-2011

I have a similar one I just weight with packing. I went as light as I could and it was 1oz. still costs .88cents though on average. Even that dont see what they are doing.

Maybe using it for advertising. maybe sending flyers or catalogs with coupons or something for a return visit? just trying to think of something.

jeffweico · #3 10-29-2011

Are you CERTAIN the package weighs 3 ounces? To me, it look like the item weighs less than an ounce and would fit into any regular envelope.

mim · #4 10-29-2011

I am certain because the USPS label said so. The label said 3 oz first-class parcel rate.

123 · #5 10-29-2011

A lot of the times big sellers like that don't mind losing a few cents per sale for a product like that. Since its easy to ship and pretty much a guaranteed positive feedback, which increases the company's goodwill that can lead to more sales in more profitable products as well as higher ratings on ebay which also leads to lower ebay fees. As a business you got to think outside the box and look at the overall picture and study the direct and indirect effects, in the long run he's definitely"profiting" more from that than he's losing.

mim · #6 10-29-2011

I considered that the may sell this item at a loss. Also, there was a flyer stuffed in advertising their website. I looked at the site, but it there was nothing special about it.

BiN4RY · #7 10-29-2011

Pretty sure he signed a contract with USPS to drastically reduce the price.

mim · #8 10-30-2011

What is this contract? It would need to be defined on the USPS website somewhere.

Sandy D · #9 10-30-2011

Marketing, it is all about the marketing of building up future sales and potential new customers.

And like others here have said, building solid feedback while doing the above is just good business.

For instance, I have an item that I pay 1.05 for. Is less then 13 oz. I played the game and listed some at 0.01, 0.99, 1.99, 2.99 etc

I sold several at the 0.99 and a few in the 0.60 and 0.70 range but also sold many for more then 3.00 because people bid them up beyond 3.00. Already have repeat customers and those who went to other items I have listed and bought other items to be combined. I now have a potential regular group of customers from this.

If you see someone selling tons of items and losing on a few it is nothing more then a smart business plan and marketing to get customer to their store or other listings. Or to cover up any competitions listings by having something cheap listed.

I also noticed the competition for this above product was listing them to end at night between 7 and 9 pm. And was listing tons of them to go off every 5 minutes. I listed mine to end every 4 minutes. When I terapeaked his sales I was able to sell far more items in that date range then him by doing this. And of course I had a much better picture! :D

mim · #10 10-30-2011

I really just wanted to see if they were making a profit.

Thanks for all the input.

KingRay · #11 10-30-2011

You already had the answer, and its NO. lol

Its like walmart stores, they sell camcorders below what they actually pay for them in many case. They take a $20 loss on them so you will buy accessories.

Same with either disposable diapers or formula, Not sure which now that I am thinking about it but they know you will get those staple items and grap more stuff while you are in there.

Its business. the smart successful ones must have it right..

Artann · #12 10-31-2011

3 oz first-class parcel rate for volume shippers is 1.75... sorry but there is simply no way to go lower that that!

nobody999 · #13 10-31-2011

actually, the seller might make a little bit if they sell it in mulitples. if you look at his sales history for this item, numerous buyers bought more then 1, he even had someone buy 200 peices! it's when he sell 1 that he loses money.

KingRay · #14 10-31-2011

Quote:

Originally Posted by Artann

3 oz first-class parcel rate for volume shippers is 1.75... sorry but there is simply no way to go lower that that!

I said above I weighed one and it came out to 10z pkgd.