Are there any Benefits of Being the Lowest Priced Seller on eBay?

Working out how to price your items on eBay isn’t easy. Quite often, sellers get it wrong and price their items as the lowest price on eBay, or matching the lowest price of other sellers.

This isn’t the right thing to do and ultimately, you’ll be losing out on profit. Why sell something for £10, when you can sell it for £20?

In this article, I’ll be showing you exactly why you shouldn’t match the cheapest price on eBay. I have some great examples which will help to prove this point. I’ll also be discussing the effects of being the lowest priced seller, to help you understand if there are circumstances you should price items lower.

So, Are there any Benefits of Being the Lowest Priced Seller on eBay?

Understanding the eBay Marketplace

If you’ve been reading my other blog articles, it should have given you a good understanding on the core concepts on eBay such as the Cassini Algorithm. New here? There’s still time to read! eBay is basically a marketplace where anyone can list items for sale.

The price of your item is a huge factor in whether it sells. Price it too high and you might not make the sale. Price it too low? No profit! There are many things to consider, but today we will be focusing on the strategy for being the lowest market price.

Sorting by Lowest Priced First on eBay

Now, on Amazon FBA this is known as Price Tanking, and sellers hate a price tanker. It can also destroy profit on eBay, as it sets precedent for further price dips. However, there are times it may be good to adopt this kind of tactic.

Advantages of being the Lowest Priced Seller on eBay

It’s pretty clear what the advantage is, of being the lowest price seller on eBay. You’re going to sell your items FAST.

In addition to this, you’re going to make your money and exit the scene before any further price dips. This might protect you in some circumstances where supply evens out with demand.

Most sellers look for the lowest priced listings, and would be more inclined to spend money on your items knowing that there will be a discount, compared to buying from another seller. This comes at your cost (less profit) but you get sales velocity in exchange for that.

Disadvantages of being the Lowest Priced Seller on eBay

As a lowest-priced seller you’re going to sell super fast.

However, you’re not going to get the same return on investment as other sellers, which over a longer period of time, will stop you from reaching your goals.

Short term, it’ll seem great to be having super-fast turnover, products coming in and products going out. However, let’s take a step forward 3-5 years. Quite a leap, actually!

If you’re pricing yourself out at around 20% less than other sellers, you won’t see much difference after one £20 sale. £4, who cares for that? At least you’ve sold it before it bricked!

As an experienced reseller, you should be selling around £30,000 a year in stock. Now, take 20% of that figure. You’re talking much higher figures now… around £6,000. All because you were underpriced.

Take a look at this example, on a promo card which has led to massive profits during the end of 2023.

Lowest Priced Seller loses out on Profit on eBay

I mentioned 20% above, but this is considerably more at 40% less. The seller has probably spooked himself and listed this at £76 thinking the promo card will fall in value. However, the number of daily sales on this have been outrageous. It’s still selling at £85 with ease, and at this time I have an auction ending at £87 with less than an hour to go!

Another disadvantage is that you’re going to be selling to a bargain hunter. Now, this may sound like a bit of a strange disadvantage, but I do find that bargain hunters expect super fast delivery times and the product to arrive pristine. In the trading card world, that’s a complete pain. They want a PSA10 (the card world equivalent to perfect condition) which they probably should’nt expect when shopping in the bargain bin.

This is where your photos and description must be utilised to back you up. You don’t want any claims etc.

The final disadvantage is that you’re actively contributing to the downfall of profitability. It’s going to hurt you, and your community also. Most sellers, rightly so, don’t care about the community as long as they’re making money. But if the reselling community stops making money… it’s going to stop existing!

Price wars in any sector are a nightmare. It’s great news for buyers, but it’s terminal for sellers. It’s hard to recover. The eBay market runs on ‘comps’ – Comparing last sold items.

It only takes a few panicked sellers, and you can take an item from £60 to £40 within a few days. That could be the difference between profit, or a brick.

Conclusion

I’ve kept this article short and sweet, as it doesn’t need a full lecture worthy of a university degree. I think to answer this question quickly, I would suggest that it’s all about having a good balance when choosing your pricing. If there’s not much supply of an item on eBay, there’s no need for you to be the lowest priced seller.

However, at the same time, it depends on your circumstances. I know lots of sellers that only have the bankroll to purchase the current item, sell it quick and move on to the next. I can’t judge on that, and it shouldn’t stop the person from selling.

When I first started selling online, I was disappointed when I saw undercutters, and I’d search their eBay whilst frowning and Auditing their pricing strategy. Now? I just do my thing.

As long as we are making money, that’s the main thing!

Author
Tom P
Hi, I'm Tom Paddock! An Amazon & eBay seller, who has helped over 10,000 people start their own online business. I provide cutting-edge techniques to help sellers with Online Arbitrage, Retail Arbitrage & Wholesale on Amazon.
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