A question for all. Sellers selling that can't be making a profit....
Is anyone else dumfounded as to why sellers/competitors are selling items but simply can't be making a profit? Whats the point? Is it their intention just to try and destroy other sellers? The only one it seems to benefit is amazon and their advertising and general fees. Or is simply just bad business sense?
A question for all. Sellers selling that can't be making a profit....
Is anyone else dumfounded as to why sellers/competitors are selling items but simply can't be making a profit? Whats the point? Is it their intention just to try and destroy other sellers? The only one it seems to benefit is amazon and their advertising and general fees. Or is simply just bad business sense?
10 replies
Seller_mS10UjVYuuGor
That would be working under the assumption that a competitor knows the other sellers costs.
There are many reasons why one seller may have a lower cost than another for the same item, a few examples include:
Different supplier / direct from manufacturer / they are the manufacturer
Bulk buy discount / free stock offer / multi product purchase discount
Best friends with the manufacturer / mate's rates
Limiting / not spending on advertising
Lower postage / packaging costs
Happy to work on low margin balanced by high volume
Those are just a few that spring to mind.
Seller_uP9LqiYV3yKFy
For sure you get them, works out they are making 5-10-20p a sale, for me its on items that are £2-£4 range, they simply cannot be making enough to cover the workload of sorting and sending, whether its fba or fbm
Sadly these are called the 20 percenters, they take 20% of the business away from everybody and contribute nothing to anybody
Seller_afyjRDyMeCC5k
I believe some sellers just don't know how to calculate a margin.
They believe mark up is the same as margin/return.
The don't factor in VAT on Amazon fees or the digital services fee and most important how the buyer returns eat into the overall margin.
Also Amazon constantly telling you to match prices and sellers dropping prices by a few pence/pounds thinking it makes little difference.
or of course they could be just clearing out stock
Seller_ZQyopdiwkUHOZ
They could be using loss leaders, could be reducing lines to clear them. could need a quick cash injection and are OK making a loss to be more liquid.
Seller_d8YGbIjNqwFxn
One thing to consider is whether they are VAT Registered or not. I have some competitors who are not VAT registered as they can sell cheaper than me as they do not need to account for VAT.
However these competitors wont be able to match my volumes without becoming VAT registered.
I have had competitors who have folded part of the item in order for it to fit in a smaller envelope and pay less postage than me. There are all kind of tricks to get lower postage prices.
There are though a percentage of sellers who do just sell at a loss, I am guessing they know why they do this. They do not always last long though.
It is also a problem with Amazon who try to push sellers into lower prices to get the featured offer.
Seller_lncJ33ORWEySW
There are many sellers who are sucked into the hype of "make a million on Amazon" only to realise many months down the line that they are never going to make anything, and as they have often funded stock against a bank loan, they end up running for the exit and liquidising all their stock at below cost just to end their nightmare. There will always be a ready supply of new sellers, badly advised by some get-rich-quick schemes, who end up selling products below cost to exit.
Seller_k3oWYDCksyCAO
There are many reasons why sellers choose to sell items at extremely low prices.
You can see this strategy in supermarkets as well. They do it to attract customers—selling bread and milk at a low cost so shoppers come for the cheap essentials but end up buying additional items.
On Amazon, some sellers might sell their stock at very low prices simply because they acquired it cheaply. Although the cost of the items is usually only 7–10% of the selling price, Amazon’s direct and indirect fees can be quite high.
Some sellers might do this to gain market share. Others might need to show the banks strong sales figures to secure financing.
Seller_QFivb25YBNqBc
They could be selling at a cheaper price to boost feedback.
