eBay – A Buyer’s Market or a Seller’s Market?

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I love eBay. I hate eBay. I’ve used eBay since 1999.

If you are looking for a hard to find, vintage, used, discontinued or rare item, eBay is the first place to look. If you want to find the latest tech gadget at less than retail, check eBay first. A lot of people won’t even consider buying something online or at a “brick-and-mortar” local retailer without checking the price on eBay first.

With all those “Get Rich Selling On eBay” books and seminars out there, you would think everybody could quit their day job and watch the money pour in when they become an eBay seller. Don’t bet on it. Most eBay sellers hardly make enough to make it worthwhile. When you factor in the amount of time you have to invest to set up an auction, respond to buyer’s questions, deal with deadbeat bidders, and pack & ship the item, and the cost of eBay’s and PayPal’s fees, it’s hard to make a profit. Meg Whitman, eBay’s CEO, and eBay’s stockholders have made fortunes on eBay. If you want to make money on eBay, buy some eBay stock rather than trying to sell on eBay.

eBay has incrementally introduced new features over time that makes it a more secure and useful platform, but eBay has also devolved into an uneven playing field that benefits few but eBay itself. In category after category, you have sellers selling items for pennies, but charging outrageous amounts for “shipping”. Even the majority of sellers who aren’t selling through “Buy-It-Now” auctions for $0.01 are still inflating their shipping charges to try and make some money. This is especially true with sellers from countries like Chins, which have become a larger and larger presence on eBay.

I’ve seen it over and over again… For example, very small items selling for a few pennies, but with a $29.00 shipping fee. Shipping that will cost the seller anywhere from a first-class postage stamp to perhaps a dollar or two. Few buyers or sellers seem to care much about the practice, and eBay is certainly not complaining. There is so much competition between sellers that they all have to resort to this tactic. eBay actually helps sellers inflate their shipping fees by allowing them to build their margin into eBay’s auction shipping charge calculator.

Why is this happening? eBay does not charge a commission (final-value fee) for shipping charges assessed by a seller, so sellers shift all or most of an item’s cost to the shipping fee. eBay appears to have made no serious attempt to curb this practice. Why? I think it’s because eBay also owns PayPal, the bank thru which the vast majority of eBay transactions are paid for. If eBay doesn’t get their cut thru auction fees, it will still earn it’s money through PayPal fees.

If you’re looking for a bargain on the latest high-tech gadget, I doubt you’ll find a bargain on eBay. Items that are in demand usually sell for prices close to retail, especially when you add in the “shipping” charge. Most eBay sellers will not accept returns or issue refunds. Many manufacturers will not honor rebates or warranties on items purchased thru online auctions. While most sellers do a good job of describing an item and it’s condition, some do not. Some are deceptive.

For items like used or out-of-print books or DVDs, eBay is great, and there are many bargains available. I think eBay has done more for the environment by keeping stuff out of landfills than any recycling program has ever done. If you want to get rid of it, don’t throw it out. Put it on eBay.

One of eBay’s strengths is it’s feedback system. I like the very democratic rating system, where buyers get to rate and comment on sellers and vice versa. It encourages people to treat other eBayers they deal with fairly. It also holds you hostage to some extent. You have to avoid giving negative feedback to someone you’ve dealt with, even if it is justified, for fear of receiving retaliatory negative feedback. The feedback system is a double-edged sword.

…When I continue, I’ll discuss some of the issues I’ve touched on in greater detail.

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Filed under China, Consumerism, ebay, Employment, Environment, Home, Life, Money, Movies, Rebates, Retail, Retailers, Scams, Shopping, Technology, The Planet

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