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Fred Koschara

bad business

I’ve stopped selling on eBay

Jul. 03, 2018, under bad business, bootstrap finance, disturbing, really???

Purple turtle figurine, previously for sale on eBay

Purple turtle figurine

I recently sold a small item on eBay:  I bought a 10-piece lot of small turtle figurines a few years ago for $40, so the cost for each item is $4.00.  I had them listed for $4.95 each, plus shipping, so my gross margin on each sale would be $0.95 – not a lot, but at least it looked like a profit.

At that price, I couldn’t offer free shipping.  I listed the shipping and handling as $1.00 for handling (to cover the cost of a box, packing material, tape, etc.) plus the actual cost of shipping via the customer’s selected method.

The customer paid $16.36 to buy this $4.95 item – eBay added $11.41 for shipping and handling to the bill, which astounded me.  As it turns out, though, that wasn’t out of line, considering the actual cost of sending the package from Wellsville to Tulsa, Oklahoma via FedEx Home Delivery was $10.39 (after eBay’s bulk discount):  The assessed shipping and handling charges left me with $1.02 to cover the cost of materials.

Adding the gross margin from the sale, plus the handling fee, it would appear I gained $1.97 from the transaction.  The problem, though, is that there are fees involved:  eBay charges a 10% “final value” fee for sales at this level, so I had to pay them a commission of $0.50 to make the sale.  Fair enough, but now my gross margin is $0.45.  Then, PayPal charges 2.9% plus $0.30 per transaction to process the payment – so PayPal collected $0.77.  Now my gross margin has disappeared, and I’ve already lost $0.32 on the deal – and that’s assuming my time has zero value, and there were no costs in packing the figurine to send it.  Using those assumptions, I’ve still had a net income of $0.70 because of the handling charges that the customer paid.

However, today the last nail in the coffin arrived:  eBay’s invoice for the month of June shows they have assessed a $1.14 “final value” fee on the SHIPPING CHARGES!  Ignoring everything else, that means they charged $0.12 more for their profit on my mailing the package to the customer than I received as a handling charge.

Together with the gross loss from the transaction, the loss from the shipping charges means I had a net LOSS on the $4.95 sale of $0.44.  No business can survive with a 10% loss on every deal.  That plan is fundamentally flawed, and is the reason I will no longer be trying to sell things on eBay.

I tried sending them an email about the situation, but I expect it will bounce…

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