Am I missing a trick here
Looking at some of my MFN listings I see that some sellers are selling items extremely cheaply. With the best will in the world the Amazon fees, postage costs & Vat will be the same for all MFN sellers. The cost of the actual item will be the same or very close to same as only one UK manufacturer is available.
So how are these guys making a profit when selling items for say £4.99 with Free P&P.
For example:
£4.99 Selling price
£0.83 Vat payable
£0.75 Seller Fee
£2.40 Postage (Small Parcel using OBA)
£1.50 Cost of item
I work this out as making a loss per item of £0.49
So, as the title says ‘Am I missing a trick here?’
Look forward to your comments.
Am I missing a trick here
Looking at some of my MFN listings I see that some sellers are selling items extremely cheaply. With the best will in the world the Amazon fees, postage costs & Vat will be the same for all MFN sellers. The cost of the actual item will be the same or very close to same as only one UK manufacturer is available.
So how are these guys making a profit when selling items for say £4.99 with Free P&P.
For example:
£4.99 Selling price
£0.83 Vat payable
£0.75 Seller Fee
£2.40 Postage (Small Parcel using OBA)
£1.50 Cost of item
I work this out as making a loss per item of £0.49
So, as the title says ‘Am I missing a trick here?’
Look forward to your comments.
0 replies
Seller_mBENc0rmDmw5W
Sellers going for short term loss leader sales maybe - to boost sales figures (and fb)?
Or /and those sellers have cheaper postage / better margins ?
Seller_lljyzgTxr5fgI
I understand your calculation but it’s not necessarily the case that they are making a loss. Factors such as one seller might have negotiated a better base price for the product than an another; if a seller is not VAT registered they do not need to factor in the 20% VAT; the shipping might be through a contract with a courier whereby they have negotiated a lower price based on volume perhaps.
As Amaback says, they could indeed be selling the items as a loss leader to encourage other trade or (as often happens on Amazon) people sell items at a deliberate loss in order to get positive feedback. This can be very helpful if their metrics are messed up from A-Z’s or negative feedback. So overall, there could be lots of different factors involved.
Seller_t4qiTnhVAnRmT
hi, it should read more like:
4.99 - 4.16 = Vat payable: 83p
75p seller fee
2.40 - 2.00 = 40p vat claim
1.50 - 1.25 = 25p vat claim
profit: 34p
Vat due to HMRC: 18p
= net profit: 16p
Although having said that, I am persoanlly aware of several sellers (including our own customers) selling several KEY lines at between 85p to £1.50 loss via FBA, to create sales for postive feedbacks and get in Amazons good graces, just so the negs received on the self fulfilled side are not paid attention to by Amazon.
Seller_z5IIdzraU6omK
Great, thanks for your input.
I will be doing a few trial items and see how it goes.
Seller_io6d9YS1y34K8
Sadly there are a lot of idiots out there ( I know the trolls with no idea will jump on this) who come into the industry after listening to a guru who claims that Amazon will make them rich with no idea of P&L. getting a parcel less than £2.40 is near impossible so that argument is false as posted above about cheaper postage deal as that is about as cheap as it gets , couple in packing etc and the profit is gone. However the clowns will go on about they sell cheap and increase the price , rubbish as the next clown appears soon as the 1 st drops off depressing the price to a worthless product with only the supplier making money. So in answer to the question no you not missing anything just surrounded by people who have no idea about business and the costs that go with it. Soon as they have to pay the bills for a shop / unit and wages they realise that the product is worth jack all and quit
Seller_wQUjIxGWybFgG
This is called, for obvious reasons, “the race to the bottom” … the dodo model of capitalism at it’s best… 
Bankrupt everyone else and you will be the winner … of course they are missing the reality of the fact there won’t be anyone to sell to with the way everyone is pretending that global warming is not a problem or is being tackled effectively !!
My personal opinion is to try not to get dragged in to the downward spiral if you can avoid it !
Seller_Ie3ILyE1a0jGE
Stolen Good? Loss Leaders? Who knows?
Seller_yiRUVIh3PBIbW
Parcel prices - we pay £1.87 up to 1kg with Royal Mail, less around 5% volume discount - a little complex but additional discounts based on volume in each manifest and the prices are averaged over each manifest - so if you sent 99 items at £0.60 and 1 item at £2 the average would be £0.61 so some sellers use the average across all inventory - and base the sell prices across the average not necessarily on the individual item postal cost. All major carriers can offer similar sort of terms for volume - we move around 50, 000 packages a year and we do not get the best terms by a long way.
Seller_LGJVYEnsBVTiN
Maybe your supplier is expensive compared to theres, nobody is gonna sell at a loss unless they just want rid of the stock
