Expert: Marvinator - 3/9/2006

Question
hi,

i am new to ebay. i just dont understand how these phones are starting off at such at $1 bid. they claim they r in perfect condition. click on the link...

http://cgi.ebay.ca/PANASONIC-KX-TG5432M-5-8-GHZ-CORDLESS-DUAL-HANDSET_W0QQitemZ5...

what is the story/catch behind these stores that i see so many of online that seem to sell things that r too good to be true. i know they are r returns, but from whom? from where? refurbished? i ask them these questions and they just give me a one line answer. do u know anything about these stores? thanks, sk in canada.

Answer
To understand auctions like this, you need to understand marketing.  The seller knows they have an item worth more than $1, but they also know that by offering it at a rediculously LOW price of $1, that people will be bidding.  

Now, couple this with the fact that most intelligent people will know that they are not going to get this item for $1, mainly because they also know the value of the item.  So, instead of just bidding $1, they put in a proxy bid of anywhere from $2-75.  The proxy system ends up bidding for them against any other bidders and they end up paying more than $1.  

And, yes, there are times that the auction ends with the price of $1.  These times the seller must take a loss. However so long as he has more auctions which make higher amounts, he can afford to sell one or two at the low end price.  


How does the seller do this, you ask.  Most sellers of this nature have found a huge lot of high end electronics for pennies on the doller.  Whether they are store close outs, refurbished unsold store stock, or railroad damaged cartons, they purchase a large number of the items, paying anywhere from 50-90% reduced pricing. This means that even when they sell an item for far less than retail, they still make money and in the long run, selling one or two for $1 is no big deal to them.

Many outlets offer store returns (items returned to the department stores which can no longer be retailed) and refurbished (items returned to the Manufacturer due to defects and are run through a refurbishing center, cleaned and repaired to work properly).  And, if I may, let me ask you a quesiton.  If you were selling an item on Ebay and making good money and some guy wrote and asked you where you got the items so he could also sell them, would YOU give them more than a one line answer?  No? I didn't think so.  Sellers protect their sources better than anyone on the net.  Never ask a seller where they got their item, regardless of what it is, because 9 times out of 10 you're not getting the truth.  

And while we're at it, many times these sellers are the wholesalers themselves, not third party sellers.  They get the lot ends, and pay hourly wage people to list their auctions.  The more they sell, the better they all do. Selling to you would only reduce their profit lines.

Lastly, let me touch on a problem seller in this area. THis is the seller who sells an item for $1, but charges highly inflated shipping.  This gets them thier profit, and prevents them from paying a large 'Final Value Fee' to ebay. (This practice is against Ebay rules and can get a seller kicked off the system.)  In order to be sure, always check the shipping before you bid.  If the shipping is not listed, be sure to write and ask the seller about the shipping.  AND of course, if you are not satisfied with the answer, DON'T BID.   It's as simple as that.  

I hope this answers your questions.