eBay Secrets?

March 15, 2004 6:39 PM

I'm sure many people have wondered this: Where do e-bay sellers get all their products? If the buy it now price on a barebones computer system, for example, is not significantly higher than the price of the individual components from an online retailer like tigerdirect or newegg, how are these people turning a profit? ~..MI..~

I'm almost tempted to buy one of those "Secrets of Ebay Power Sellers" just to prove to myself that there is no secret. But a regular person cannot get wholesale prices at a small enough scale to make an ebay shop practical.

posted by Grod to work & money (13 comments total)

There was an interesting article on eBay in a recent issue of The Economist, which they have graciously posted online. Among the salient points are: 5% of eBay sellers are big-name retailers, and tens of thousands of people are using eBay as a primary source of income.

That eBay sellers are by no means bound to the same business methods as traditional retailers. If you have a buddy who runs a computer shop, he can probably provide you all the parts you need at near-wholesale price. Ideally, you would act as a broker, assembling the machines, managing the auctions, shipping orders, and so on. If you charge near-retail prices (either via auction or Buy It Now) for, you make that much money over your costs, minus a cut of the profit for your friend. Multiply this by the number of concurrent auctions you can run any given time, and you can walk away with a significant amount of money.

This sort of concept isn't limited to computers, either. The same could be done for yard sale find, antiques, clothing, items you produce yourself, etc..
posted by Danelope at 7:28 PM on March 15, 2004

I wondered the very same thing the other day. I needed quite a few 7' cat5e patch cables for work and found an auction for 125 of them, new, booted, my color choice, for $101.99 BIN plus $20 S/H. I was skeptical, but it was work money and the seller's feedback was good. They're everything they were presented to be and test great. So I'm thinking . . . 7*125= 875 feet of cable. Each one has two RJ45 terminations, so 250 of those, plus the booting, plus their manufacture, plus each one was coiled and bagged. You see where this is going: how the hell?

Anyhow, I left positive feedback to the effect of 'I was skeptical, but they rock!' and the seller emailed me back and said they had to double the price because other people were similarly skeptical. Since doing so, he reports sales have tripled.
posted by littlegreenlights at 7:48 PM on March 15, 2004

A friend paid much of his college tuition by buying discounted clothing at Abercrombie outlet and then selling it on eBay. He could usually clear $20/shirt and $30/pair of pants.

I see a lot of stuff that people purchased as overstock/clearance merchandise that they can sell as "new in box" or "new with tags."
posted by Coffeemate at 8:15 PM on March 15, 2004

My sister-in-law supplements her income as a teacher selling on Ebay. She picks up china (and matching napkins, etc.) at outlets and salvage stores, then sells them at a significant profit. The key is to find a niche that hasn't been exploited (yet).

I myself have made a couple of bucks here and there buying limited edition vinyl indie albums, holding them for a year or so, then selling them on Ebay. Of course, my sister-in-law sells them for me (and I can take advantage of her +2000 feedback rating), and I give her a commission .
posted by kickerofelves at 9:05 PM on March 15, 2004

IANAE, but I would assume that Danelope's point holds true because of the sheer size of the buying market which eBay provides. It's not uncommon for people to have access to a cheap commodity—wholesale through a friend is an excellent example. It was uncommon for those people to have access to a virtually unlimited world market to which they could sell. eBay provides that.
posted by DrJohnEvans at 9:09 PM on March 15, 2004

Through work, I'll sometimes be able to get good unopened boardgames for $1.00, often I can turn around and sell them for near list price on ebay. It's all finding cheap prices and knowing what will sell.
posted by drezdn at 10:51 PM on March 15, 2004

Ask the sellers, thats what I do. I saw an Aibo for $600 and asked the seller how he managed to get all of them (he had a dozen or so).

"Sorry I can't tell you."

Buyer beware.
posted by skallas at 12:21 AM on March 16, 2004

Liquidation sales is one source. Companies go out of business, their inventory is sold for pennies on the dollar. A lot of the DVDs for sale are acquired this way (I know 'cause I have a friend who does this). You'll often be buying a palette of DVDs or whatever it is sight unseen. You don't know exactly what DVD's are in there but if you spend under a buck per DVD you should be able to make some money. Sometimes you get lucky and find a popular DVD which more than makes up for all the duds.
posted by substrate at 6:16 AM on March 16, 2004

Ah, but how do you locate liquidation sales?
posted by mecran01 at 6:18 AM on March 16, 2004

It's not uncommon for people to buy on eBay and then turn around and resell the same item on eBay. At a profit, mind.

It is done by finding undervalued items. "Undervalued" items are those which, at auction close, will sell for less than their market value. As famously reported in the New York Times, much to the chagrin of people who have been finding these items for years, many undervalued items are due to misspellings in listings, meaning that they are hard to find by people who are searching under the correct spelling, and so will draw fewer bids.

Undervalued items are also due to sellers who simply don't know how to write a good listing. About four years ago I bid on three LaserWriters on eBay, foolishly assuming I would win only one auction because they were all valued so cheaply. I won all three auctions. So I kept the best one of the three and resold the others, writing the best advertisements I could: it was art, let me tell you. I sold both units for $100 more than I bought them for.

Other indicators that an item might sell for less than it's worth: The listing is laden with restrictions, stipulations, or going-through-hoops verifications. The design and layout of the listing are horrendously amateur. There are hundreds of similar items for sale (in which case, you buy a couple, hold on to them for a while until there aren't many listed on eBay, then resell them--doesn't work well for video games or computers, or anything which tends to appear in newer, updated versions on a regular basis). The seller has a low rating due to just having started out, not due to having negative feedback. The seller has listed the product oddly: not included the full product name, or used the generic brand (HP, let's say), when the full product name (HP Compaq 7500) would appear in more searches, or has neglected to include insider information (for example, if selling a PowerBook 266MHz, you would draw more searches if you also included the words "Wall Street," which is what the Mac die-hards are likely to know it as). Look for products which are "authored" but are in listings which do not give that authoring credit (for example, DVDs which don't list the director and key actors, or first-edition books which don't include the full publishing information: publishing house, imprint, ISBN or LoC no., no. of pages, trim size, table of contents, etc.).
posted by Mo Nickels at 6:31 AM on March 16, 2004 [1 favorite has favorites]

My company gives away new computers as grants, and we've found more than one of them on e-bay after they were reported to us as stolen.
posted by pomegranate at 6:55 AM on March 16, 2004

To add to Mo Nickels' comment: sometimes listing something in a different category really drives the price up. An example being, say, a common WWII era stamp with a plane on it, which fetches a higher price in the WWII memorabilia section than with the other stamps. Memorabilia types look at it and say "oooh stamp" and the philatelists look at the same listing and say "eh. that stamp again."
posted by whatzit at 7:12 AM on March 16, 2004

I know one guy who buys DVDs from a huge online retailer and just turns around and sells them on eBay at a profit. He makes $3-8 on each one, which is not a lot, but in the numbers he sells them it sure adds up.

He's able to do this, I think, because people have bought things on eBay at quite a savings in the past so when they see an item on there that is less than the SRP, they assume it's a good deal. However, if they shopped around online or checked some dvd forums, they'd see that many online retailers sell for 25-30% under SRP.

This fellow also buys up other peoples' auctions and then bundles them together as one auction. So he'll buy 20 DVDs from 20 different sellers and, lets say, 5 of them are out of print and fetch high prices. He'll then bundle the 20 together and, because 5 are out of print, he'll get more than he would by selling them individually.

$1 CDs, to my knowledge, is the largest seller in eBay history (sold more items through the site than anyone else). The way they get their product is to go to the surrounding used CD stores and buy up all of their CDs that don't sell for around 50 cents each. They then list them all on eBay at $1 and many get bid up from there. I read an article about the couple last year and they net a ridiculous amount of money doing this (i don't remember the exact figure but I believe it was several hundred thousand dollars a year), but they work 7 days a week and have at least one employee who enters titles into eBay full time.
posted by dobbs at 10:19 AM on March 16, 2004 [1 favorite has favorites]