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Postage Costs - How can you make a profit?!

Discussion in 'Logistics - Payment & Shipping' started by soapstar, Jul 10, 2015.

  1. soapstar

    soapstar

    Joined:
    Aug 21, 2011
    Messages:
    3
    Hi,

    I've been doing a lot of lurking on this forum for a while now with the idea of starting up my own ebay business (how unique!). From my research i seemed to have missed out a major factor, postage! I have sourced a few items at good prices which i think are popular and would make a small profit. However when I start to work out the actual costs I am very confused to how some sellers on ebay are making a profit at all!

    For example one item I am interested in selling is currently on ebay for £2.49 which I have sourced for £1.32 (inc VAT). Now when I get an online quote from Royal Mail this item is going to cost around £4.98 to post (furthest location in UK from my postcode). How on earth can this seller send this item with such low costs?! I must be missing something?

    Thanks for any help much appreciated

    Stuart
  2. CMS Medical

    CMS Medical

    Joined:
    Apr 16, 2015
    Messages:
    33
    Hi and welcome to the forums.

    There are lots of eBay sellers who sell certain products as loss leaders. This means they sell the products at a loss to encourage sales and thus increase their feedback ratings and also their search position rankings.

    You also have to remember that some of these eBay sellers can buy in huge bulk meaning they will get much better prices for these products than you currently are.

    In respect of the postage there are many alternatives to Royal Mail, quite often much cheaper. Can you advise what the size and weight of your item is? I would be point you in the right direction better with this info.
  3. soapstar

    soapstar

    Joined:
    Aug 21, 2011
    Messages:
    3
    Hi,

    Thanks for the welcome. Ok that makes a lot of sense! Although this is bad news for little would be traders like myself!

    The dimensions of the item I was speaking about is 50/10/10cm (Length/Width/Height) and weighs approximately 200g. Any suggestions to where i could post this relatively cheap would be very much appreciated.
  4. CMS Medical

    CMS Medical

    Joined:
    Apr 16, 2015
    Messages:
    33
    Have a look on www.parcel2go.com, they will compare prices for you but also look at MyHermes. I think their prices are £2.98 collected or £2.78 if you drop it off at a parcelshop. They also include tracking.
  5. Parcelhub.co.uk

    Parcelhub.co.uk

    Joined:
    Sep 3, 2015
    Messages:
    74
    Hi Stuart, the bigger eBay sellers out there tend to use a 'pooled volume' broker such as ourselves, where they are basically clubbing together with hundreds of other online retailers to access discounted rates from multiple carriers. Thanks, Simon
  6. Iffy.m

    Iffy.m

    Joined:
    Sep 10, 2014
    Messages:
    99
    Hi..
    If you register as a business seller you get very big discounts with Royal Mail.
    Like the item you described above would cost me around 85p to send with Royal Mail.
    Hermes offers very good rates for heavier goods but only if you sign up as a business user..
    Hope this helps
  7. TerryYang

    TerryYang

    Joined:
    Dec 2, 2015
    Messages:
    11
    The item with low costs is non-profitable. They just sell it to attract clicks, then get huge traffic on their other profitable products.
  8. Lee John Belcher

    Lee John Belcher

    Joined:
    Feb 22, 2014
    Messages:
    134
    Sorry to Bump an old post but 85p for a parcel the size of a small parcel?

    I must be missing something here? :)
  9. Iffy.m

    Iffy.m

    Joined:
    Sep 10, 2014
    Messages:
    99
    Hi..
    I don't think you are missing a great deal as their has been a price increase.
    I don't know what lone of business you in but if you are and eBayer than you should open an account with Royal Mail and see what happens.
    Obviously all depending on volume you send..
    Lee John Belcher likes this.
  10. Lee John Belcher

    Lee John Belcher

    Joined:
    Feb 22, 2014
    Messages:
    134
    Thanks for the reply,

    We send around 50+ small parcels a day and I currently pay £2.50/parcel

    I use Royal Mails OBA account
  11. Iffy.m

    Iffy.m

    Joined:
    Sep 10, 2014
    Messages:
    99
    I send over a 1000 a day.
    Have had 900 yesterday but generally over a 1000
    Lee John Belcher likes this.
  12. Lee John Belcher

    Lee John Belcher

    Joined:
    Feb 22, 2014
    Messages:
    134
    Thanks again for the reply

    Wow ok that clears things up, I mainly do wholesale hence the low quantities.

    Since we are now moving into more retail I am looking for better postage options as I don't think it will be long until we are doing 4-5 x our amount (300+/day)

    Is there much discount available for this quantity? I would love to know what you pay for a small parcel ;)
  13. Iffy.m

    Iffy.m

    Joined:
    Sep 10, 2014
    Messages:
    99
    Yes..
    They seem to have changed the system slightly but once you hit 200 + the discounts start
  14. Lee John Belcher

    Lee John Belcher

    Joined:
    Feb 22, 2014
    Messages:
    134
    Ok I'll hold up and hopefully be contacting them next month, thanks for the advice!
  15. uhafmail

    uhafmail

    Joined:
    Aug 25, 2008
    Messages:
    6,468
    So what do you pay now then?

    85p for a small parcel must be a typo?
  16. Sc0tty

    Sc0tty

    Joined:
    Jan 19, 2010
    Messages:
    701
    Unless he had managed to get some amazing deal I think he has not read the size. If I put in a 1000 pieces on CRL it goes down to £1.79 excl VAT
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