Seven Reasons Why eBay Sellers Sell Below Cost.

I got a question last month from a reader who wanted to know why people are selling things on eBay below cost. There are a few answers to the question.

In this article you'll learn seven reasons why eBay sellers sell below cost, and how to tell exactly which reason is behind each seller's actions.

1. Maybe the sellers are losing money? Look at any discussion board and you'll find a few dozen posts from someone who thinks he can make money by posting advertisements. Unfortunately, within an hour or two, a moderator will delete the posts. Chances are the poster will post on a few dozen boards, invest some time, realize he's wasting his time, and move on to some other "something-for-nothing" endeavor.
   Then someone else will buy into the concept and start posting ads. To a casual observer, the constant stream of ads on discussion boards seems like a way to make money.
   The same things happens on eBay. A constant stream of people losing money and exiting the market only to be replaced by others making the same mistake.
2. Another reason sellers sell below cost is to get cash back. Perhaps the eBay seller bought inventory expecting to sell it for a profit and learned how competitive the market is. Rather than trying to get his investment back, they are happy to get what they can and move on. He is selling at a loss in order to exit the market.
3. Maybe the eBay sellers are getting a better deal than you can find? If the sellers are constantly offering items month after month at prices you cannot match, this is one explanation.
4. Maybe the eBay sellers have a back end? For example, I have a joint venture with someone where we sell items below cost on eBay. We are not interested in the initial sale. It's only purpose is to give us the ability to wrap a long sales letter around the product, and then follow up with the buyer to get additional high profit sales.
   This joint venture and the eBay auctions we use is explained in my book Prospecting On eBay. Note - my partner is changing his sales path and I pulled the auctions until he gets the new website tuned up and selling. You can see the auctions in the book though.
5. Maybe it's a scam? If the seller doesn't plan on delivering the goods, his cost is zero.
6. Maybe the items fell off a truck? Stolen goods are always cheaper than legitimately purchased goods, until the law comes for it's cut.
7. Maybe the items are fake? I don't know about computers, but many items are faked. I had a guy try to sell me a surround sound stereo in the parking lot of the bank last week. He told me he was a delivery driver and the company had doubled the order by mistake so he could sell one cheap. I saw him a week earlier at a gas station pitching the same line.

You can get an idea which one of these reasons applies to a seller by looking at his prior auctions and feedback.

For example, if the person has never sold anything before and is now selling expensive computers, I'd bet on a hijacked eBay account and a scam.

If the seller has been listing computers over and over again at lower prices without getting sales, they just want out.

If the seller has been consistently selling the same items below wholesale, he either has better connections, or a back end.

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Terry Gibbs has taught over 7,000 people how to make a good living on eBay. Terry's most recent eBay instruction manual is The Auction Revolution . The Auction Revolution is your guide to eBay and beyond. Here on Iwantcollectibles.com, you will learn about buying and selling antiques and collectibles, and about eBay.

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