The Economics of Ebay
I have quite a bit of computer and consumer electronics junk in various closets, drawers, and the attic of my home. In an effort to clean up, and make a little money, I decided that I would try and sell this stuff. Being the tech-geek that I am, obviously I want to sell it on the Internet. So where’s the first place that I would want to try, eBay of course right — wrong!!. Why not sell on eBay? in addition, to having to follow their listing rules (limited external links), and submit to their requirements for payment (they reserve the right to hold payments for a certain amount of time on some products from some sellers), and their shipping cost requirements (shipping must be ‘reasonable’ according to eBay’s standard), they are also very expensive. Here is an example based on my initial junk sale.
I have 10 items with an estimated average $12.50 final sales price, and I’m guessing it will take, on average, 3 weeks to sell them. (I’m not counting PayPal fees, since you have to have some type of payment method) I plan to sell my items with the default 7 day auction style and a ‘Buy-It-Now’ button. Here’s what I would have to pay eBay:
The cost of a single listing is $0.35 for a standard 7 day listing plus a $.10 for ‘Buy-It-Now’ (fee for a price over $10.00) for a total per listing of cost $0.45. I have 10 listings so my per week listing cost is 10 x $0.45 for a weekly listing cost of $4.50.
Muliply my weekly listing cost times 3 to cover my three week sales average and my total cost is now $13.50 for my 10 items over 3 weeks just to list (doesn’t matter whether they sell or not)
Once you sell an item, you pay eBay an additional percentage. In the case of my items the eBay fee is 8.75% (the percentage gets lower the higher the price) So my total final value cost is 8.75% x $12.50 x 10 (items) or $10.94
The total cost to sell my 10 items is $24.44 (13.50+10.94). Thats 19.6% of sales.
That quite a bit to give up on a sale (in addition to the cost of processing the payment -about 5%).
But what does eBay bring to the table for all that money and effort? Millions of potential buyers, who know that when they need to find something, they just go to eBay– and this is a heck of an advantage. There is no way I can possibly get that kind of presence for about $25.00. But then again all I have to do is sell my stuff, not the millions of items listed on eBay.
My challenge is to see if I can sell my stuff for less without eBay. Next time, I’ll let you know what platform I have chosen to use for my sales and why (which just may surprise you).
eBay, PayPal, and Buy-it-Now are Trademarks of eBay, Inc,Calculations are based on the fees posted at http://pages.ebay.com/help/sell/fees.html on 2/22/09 at 10:00pm EST.

