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  #1  
Old 07-24-2006
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How do ebay stores turn a profit?

So I have been comparing prices between car audio sites like crutchfield, and ebay hosted dealers. The prices are pretty much on a 30-50% marginal difference, between crutchfield and ebay (for the most part). How on earth is this possible, I understand there is a difference between MSRP and what the dealers pay for the product, but for there to be a 30% difference in the price? How is this possible, and still turn a profit? Is crutchfield just raking in the cash on every sale, and ebay dealers are making like $5 on every product sold?

Anyone know how this works?
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Old 07-24-2006
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Quote:
Originally Posted by Carrottop688
So I have been comparing prices between car audio sites like crutchfield, and ebay hosted dealers. The prices are pretty much on a 30-50% marginal difference, between crutchfield and ebay (for the most part). How on earth is this possible, I understand there is a difference between MSRP and what the dealers pay for the product, but for there to be a 30% difference in the price? How is this possible, and still turn a profit? Is crutchfield just raking in the cash on every sale, and ebay dealers are making like $5 on every product sold?

Anyone know how this works?

My experiance in retail from college and on the Job is, that everything you buy at retail price is about 100% Mark up, So if I sell widgets at $10 to a retailer, he'll sell them at $20 This way he takes $10 and Buys another widget to replenish his inventory and pockets $10 of profit.

Now he opens a store in a bigger market and can influence people to buy more form him at a discount he might sell said widget for $17. If he sells 10 Widgets at $20 His profit is $100. If he sells 20 Widgets at $17 his profit is $140.

Does that make sense?

~HJ
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Old 07-24-2006
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Depends on where they are getting there products, if they are getting them in the States, they aren't making much, but if they are exporting products from over seas they are generating a profit. Plus alot of Ebayers are ripping people a new one with outrageous shipping and handling charges. Also alot of ebay stores are selling refurbed items (not there is anything wrong with this) except they aren't telling you that and says all sales are final to get over it. I am a wholesaler, or I was until I got a real career.
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Old 07-24-2006
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there is roughly a 200% mark up on car audio/video equipment for the manufacturer to you
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Old 07-24-2006
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It makes sense, thanks for the heads up!
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Old 07-24-2006
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Ebayers have little to no overhead, and can afford to undercut retailers. Just imagine, most ebay vendors have no inventory, no advertising costs, one employee, and no store front. Just having little to no staff saves a ton of money.

Most are also not "official" dealers for the products they sell, so they don't have to honor the manufacturers suggested price. The price point is there so no retailer can grossly undercut another retailer if they are both buying as authorized retailers. Problem with unauthorized retailers is that your warrenty is automatically void. You may also get damaged, grey market or used goods.
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Old 07-24-2006
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Cruthchfield is a rip off I dont think there is a place you can find that is more expensive
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Old 07-24-2006
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Originally Posted by Roach2004
Cruthchfield is a rip off I dont think there is a place you can find that is more expensive
They can actually be a good deal since they offer a fair shipping price, free support, and the install kits are free. If you are buying just a single component (like home audio speakers), then they are expensive. It costs a lot for their catalogs and staff. I try to support them, since they are an American company. I've never had customer service issues with them.
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Old 07-24-2006
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it all depends whre they get there stuff from... i got my brand new sealed autometer gauge for 11shipped compared to 57 shipped off summit, granted i was the only bid, but when i emailed him about getting vacuum gauges, he said that he gets the stuff when autometer has 'extras' after they do a big order ( incase they get damaged or something)
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Old 07-25-2006
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And by "grey market" you mean?

Probably a sketchy way of getting the product?
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Old 07-25-2006
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MSRP means nothing. People that list that next to their reduced price are trying to pull a fast one. A wholesaler buying a truckload vs a wholesaler buying 1-10 pieces means a huge difference in buying power. Guys of my size are lucky to make 10% on a sale once all is said and done and still be competeive with the big guys. The big guys are in the 30-35% profit range most likely.

A small example on a small scale. When I was pursuing the water pump pulleys for the 3.0 the retail would have to be $200 on the first one I bought. After I bought it and ran it for a few months and was happy I bought a bunch and the retail went down to $80, which drops down to $60 when purchased with an alternator pulley. That's just one scenario.

I used to be in the hardware business and went to big shows in Atlanta, Houston, Vegas. You buy a pallet of KILZ and they give you $300 cash on the spot. Stuff like that pays for the trip when you are in aposition to make the purchases. In that case thay are buying to position that product on the sales floor. One company flat out gave you one each of every pair of gloves they sold in hopes that you peg them and reorder a case when you sold the one.

It's all marketing dollars and it's very wastefull. Phillips would buy all your GE lightbulbs so they could sell you phillips. Phillips would then sell to a large company that would resell then in lots at a discount. There's one of these resellers in my town. I bought a crate of Leather work aprons for $3 each that retailed for $20-$40. Made a killing selling them for $9.99. When I toured the place it was mops, gardening tools, cleaining supplies. I thought it was auction goods from store closings but they said these were all products swaps where one manufacturer bought out someones elses product to get their business. It's crazy.

I guess there's a lot of different reasons why.
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Old 07-25-2006
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So the end result is that ebay is a (insert adjective here) site?
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Old 07-25-2006
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i wouldn't say that. There are good deals on new stuff. The problem is it is mixed in with unreputable sellers and guys that overcharge shipping to the point that it's not a good deal.
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Old 07-25-2006
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Quote:
Originally Posted by Carrottop688
And by "grey market" you mean?

Probably a sketchy way of getting the product?
Grey market goods are typically items that are not supposed to be sold in the US.

Say a particular headunit is made to only be sold in Japan. The warranty is only good in Japan, since none of the support techs or parts are available in the US. Also, say the company sells them cheaper, since they know the product doesn't have to meet US specs or pay US tariffs.

Now say some Ebayer buys these, and sells them in the US. You will get a deal, but won't get a warrenty or any afterpurchase support. Your item may not meet US quality specs, and the manual will be in Japanese.

They term "grey" often means that the items are just a little better than "black" market items, which are stolen goods.

Last edited by SilverTank; 07-25-2006 at 04:24 PM.
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  #15  
Old 07-25-2006
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Alright, fair enough. I'll make a post in the Audio section to ask if anyone knows of a reputable audio ebay dealer
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  #16  
Old 07-31-2006
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On ebay its the Quantity you sell...
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