eBay Strategy: Don't Get Stuck with Bargain-Priced Goods

So there you are, browsing your local Wal-Mart. You turn down an aisle and there before you is an unbelievable bargain on summer clothing or a popular DVD. Or maybe you're in Radio Shack, where you find a half-dozen $50 remote-control cars on sale for $10 each.
"eBay!" you think. You snatch up the bargain goods and head for the checkout.
Wow! You're buying merchandise for less than a quarter of its list price, and you can post it on eBay as new for half retail and double your money. You can't lose, right?
Maybe.
You post the items on eBay in 7-day auctions, but they draw no bids. You re-list them, at a lower price - and there's still no action. This makes no sense; these items have always been popular. You decide to see if perhaps, by incredible chance, a couple of other sellers have posted similar items at lower prices.
Mysteriously, 22 sellers are offering the exact same goods, at prices well below retail. Could others have gotten to the bargains at your Radio Shack or Wal-Mart before you, and left just a few behind for you to find? You check and that the other sellers are from different parts of the country. What could this mean?
What, indeed? It means that these massive chain stores are dumping the same merchandise at most, if not all of their locations. It also means that you haven't stumbled on an opportunity - not when 20 other sellers are offering the same goods at a big discount, some for less than your price.
I first observed this phenomenon at Half-Price Books (http://www.halfpricebooks.com), a national chain with 80 locations in 14 states. I am a book collector, and once a month or so I go on an expedition to the three Half-Price stores in my area to see what I can find.
On one such trip several years ago I noticed that the same new, expensive hardcover books were on sale at a 70 percent or greater discount at each location. My mind immediately made the eBay connection. But I knew that Half-Price Books was a big chain, and that publishers sold off copies of slow sellers to outfits like Half-Price, so I didn't scoop up a dozen copies of these $40 books on sale for $12 each. I went home and did a search for the title on eBay. And you guessed it - in each instance I found a number of sellers offering the same book. And each seller lived in an area where a Half-Price Bookstore was located.
Obviously, you shouldn't count on a bargain being restricted to where you find it. All retailers clear out poor-selling items periodically. Some buy large stocks of merchandise direct from manufacturers who sell slow-moving products at absurdly low prices to get rid of them.
(Note: Publishers of books, CDs, DVDs, and software are particularly likely to do this, since they sell items to wholesalers and retailers on a returnable basis. When the merchandise isn't moving, they dump it to save warehousing costs. Thus, Half-Price Books might buy 4,000 copies of a $40 hardcover book for $3 per copy - the publisher's cost. The 4,000 books are then distributed among Half-Price's 80 stores, where they are sold for ten bucks each, earning Half-Price a $28,000 profit.)
Because each store in a chain stocks the same merchandise, the bargains are distributed across a large part of the country, where eager eBay sellers snap them up - and often end up reselling them for just a dollar or two profit after listing and relisting fees. You can avoid this by curbing the impulse to buy until you check eBay to see the bargain is local to your area, or nationwide.
However, a patient seller can still profit from retail dumping. If you're willing to sit on items for a while, you can buy the bargain now and wait a year or so before selling it. By then, the rest of the sellers who grabbed this item will have sold theirs or given up, and you'll be the only one offering it.
Not incidentally, there's something for buyers here, too. When you see a number of eBay sellers offering the same book, toy, or whatever there's a good chance they got the items from the same source. And the source just may be Wal-Mart or Half-Price Books or some other national chain where you can get the item at the same bargain price-half or less of what the sellers are asking.
About the author:
Michael A. Banks is the author of The eBay Survival Guide: How to Make Money and Avoid Losing Your Shirt (No Starch Press, 2005. ISBN: 1-59327-063-1). He has written 39 books and more than 3,000 magazine articles and short stories. A full-time freelance writer and editor since 1983, Banks has written for most major computer magazines, and has served as a Contributing Editor for such publications as Windows Magazine, Computer Shopper, Connect Magazine, and others. He began writing about computing for Popular Computing in 1981. In addition to writing for the computer press, Banks has contributed to a diverse range of magazines, including Writer's Digest, Science Digest, Analog Science Fiction, Cavalier, Grit, Visual Merchandising, Starlog, Modern People, Good Housekeeping, and many other special- and general-interest publications. His work has been reprinted in Japan and South America, and he has written features and columns for magazines in Japan and England. His latest book is How to Become a Full-Time Freelance Writer, published by The Writer Books. http://michaelabanks.com