Amazon E-Bay

How The Hell Is The Competition Offering Free Shipping?

free-shipping-reviewed
Written by Dave B

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Hello Folks and welcome back to Seller Addiction!  Today I want to cover a little E-Bay secret your competition is hiding from you that you might be trying to figure out! I will also cover a few workaround options to keep you in the game.

Ever ask yourself “How can they possibly offer free shipping on something that big or heavy and still make a profit?”.  Seriously!  I had a electric Smoker (Landmann – 26″ Electric Smoker – Black, 3 racks; 3-in-1) I bought brand new for $12.69 (I will cover how to obtain items like this at such a great deal later on in the blog) that is currently selling for $109.00 With Free Shipping!  For me to ship to the East Coast (always assume the furthest distance in your shipping so you don’t take a hit) from California, this would run me anywhere from $48.00 to $54.00 using UPS as the shipping service (UPS tends to be cheaper with bulky / heavy items).  I would also have to factor in E-Bay fees – since this is the Home & Garden / Yard, Garden & Outdoor Living / Outdoor Cooking & Eating Category for Ebay, my fees would be $15.70.  Plus consider the $0.30 listing fee.  Wait, not done yet!  Subtract the Paypal fees which are typically $2.9 + $0.30 per transaction.  So lets add it up.

$109.00  (sold cost)

– $48.00 Shipping

– $15.70 E-Bay Fees

– $0.30 E-Bay Listing Fee

– $3.16 Paypal Sale Fee

– $0.30 Pay Transaction Fee

– $12.69 My Cost For the Item

(This product shipped in the box it came in, so I don’t have to factor in Box cost, packing peanuts / bubble wrap etc.)

My Total Profit from this item is (DRUM ROLL!!………………………………….)

$28.85

WTF!!

I mean this is not a bad profit considering I took $12.69 and more than doubled it.  $12.69 – turned it into $41.54 in a few days (minus my $12.69 investment, leaves me with a profit of $28.85)

But how is the competition doing this and making more?

 

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Option 1

The Amazon Approach:  Most of the large / heavy items we acquire we send them straight to Amazon (FBA) because of the discount shipping contract Amazon has in place with UPS.  I can take an item that would normally cost me $40.00 to send to a customer and send it to Amazon for about $10.00 or less and let them work the shipping arrangements.  Factors to consider if you are choosing or using this method are as follows

  • Amazon Fees / Returns
  • Product Storage Fees (Long Term)

Amazon Fees:  I’ve learn the bigger / heavier the item, the more you pay in Amazon Fees (which make sense).  The Landmann – 26″ Electric Smoker is currently listed on Amazon for $139.00 with a BSR of 114K (We will get more into BSR Later) and 2 1/2 Star customer review.  (Note — Because it has less than 3 stars – I would not send it to Amazon, 3 Stars and below is likely to get returned which will just cost you more in the long run.  If it has less than 3 stars, its better to list it on E-Bay – but lets just keep the Amazon scenario going).

amazon sample

$136.46 – NOT BAD!

-$10.00 Guesstimate, to ship to Amazon – usually all big items go back East 🙁

-$12.69 For my cost to purchase

That leave me with $113.77 Profit.  That’s Outstanding!  If it has more then 3 Damn Stars.  You don’t have to stick to this, it could have 1 star and sell, I just don’t chance it.  From my experience it always seems to get shipped back to Amazon after the customer opens it and messes with it.  Guess what, now its not new any more and I have to Pay Amazon to ship the shit back to me to inspect.  Now I have to drop the value, sell it ‘LIKE NEW’ and ship it back.  You see how this is going hopefully.

 

An employee pushes a cart past rows of storage aisles as he processes customer orders ahead of shipping at one of Amazon.com Inc.'s fulfillment centers in Rugeley, U.K., on Monday, Dec. 2, 2013. Online retailers in the U.K. are anticipating their busiest day as shoppers flush with end-of-month pay-checks seek Christmas deals on the Web. Photographer: Simon Dawson/Bloomberg via Getty Images

An employee pushes a cart past rows of storage aisles as he processes customer orders ahead of shipping at one of Amazon.com Inc.’s fulfillment centers in Rugeley, U.K., on Monday, Dec. 2, 2013. Online retailers in the U.K. are anticipating their busiest day as shoppers flush with end-of-month pay-checks seek Christmas deals on the Web. Photographer: Simon Dawson/Bloomberg via Getty Images

Product Storage Fees (Long Term): On February 15 and August 15 of every year, FBA conducts an Inventory Cleanup, at which time inventory units that have been in Amazon fulfillment centers between six and 12 months are assessed a Long-Term Storage Fee of $11.25 per cubic foot. Units that have been in fulfillment centers for 12 months or more on the Inventory Cleanup date are assessed a Long-Term Storage Fee of $22.50 per cubic foot.  It’s important to check product BSR before sending in to Amazon FBA.  BSR stand for Best Seller Rank .(Sales rank) Indicates how well an item is selling within its product category. The lower the number, the better the item has sold – which implies the BSR is mainly if not completely defined by sale numbers.   You don’t want to send a product that has a BSR of 4 million to Amazon because you will more than likely be paying that nice additional cost of $22.50 per cubic feet which not dips into your profits.

 

 

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Option 2

The E-Bay Approach:  Most companies have multiple warehouse throughout the country which allows them a cheap rate for USPS, UPS or Fed Ex – if the Company is in Utah and a customer ordered a product in Maryland – and the company just so happens to have a warehouse in Maryland and that product is in stock there.  The customer not only gets it quick, but they didn’t even have to pay for shipping.  These big wigs are making it tough for the small guy to play ball.

For me, shipping large items from California across the Country cost lots of money which hurts the profits.  In order to attract customers, my listing has to be better / more unique than competitors offering the same product with Free Shipping.  Usually the main attraction is going to be price!  I have to have a lower price with the shipping rate incorporated into that listing price which has already hurt the profits.  And even better,  it really sucks when someone clicks ‘Buy it Now’ or ‘Makes an Offer’ and they live in New York or Miami (Profits are in need of a respirator at this point).  The good thing – if its an offer they are making, I can always decline and wait for the West Coast customer to eventually make an offer to save me a lot on shipping cost.  But the downfall to that is I have a bulky item sitting in my warehouse taking up space longer than it needs to be.

So there you have it.  Decide wisely my grasshopper!

 

About the author

Dave B

Thanks for stopping by and visiting! No intervention needed, this is a good and healthy addiction. Come along for the ride and hopefully you can learn from us!

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