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Can you give an example? There’s a few methods that I can think of:
1) The 1 penny book. You see these on amazon a lot, a penny for a book with 3.99 shipping. They are making their money on shipping and shipping literally thousands of books, their money is in bulk.
2)Clearing out stock. Some people would rather offer their products at a lower price thinking that it will clear faster, which may or may not work. In this route, they are making less money than they could be.
3) Oversees subsidies. This is popular with Chinese sellers. Shipping is subsidized from China to the US and results in super low prices, but long wait times. See: Wish. They can sell low grade products for pennies because of unfair working conditions and subsidized shipping, making it much cheaper to run all their operations out of China than moving it to the US.
Let me know if any of these are what you’re thinking, I’m sure others will chime in.
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Keep in mind that sellers have different profit thresholds. Sometimes, people are just desperate to move stuff out of the house and will sell at any price. If they’ve been sitting on the item for years, they may have just pulled the plug to get it out. Other sellers who are listing the item for the first time may have higher hopes and will keep it priced higher. I occasionally reach a point where I’m willing to take a loss just to make space in my house. Someone with more space or who’s just now listing the item for the first time may be more optimistic about what they can get.
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For example, I noticed this when I looked up Eddie Bauer shirts. I have a few of these and I wanted to see the lowest price they were sold for. The lowest priced sale was for $2.69 with free shipping. Even sending something locally with USPS First Class is a few dollars. Many others were sold for under $10 with free shipping. They couldn’t make any money on that. If you’re just trying to get rid of stuff and not really make money, wouldn’t it be a lot easier to just donate it?
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A lot of people would just donate it. But others think about all the time (and money, if they use hired help) they have invested in the item. They might rather get “something” than “nothing” for work they’ve already done.
Another thing to consider is condition. I would look closely at the condition as described in those low priced listings. Those may have been items in poor or questionable condition.
A third thought is overall listing aesthetic. A listing that includes beautiful photos and a complete written description (including measurements for clothes) can often command a higher price than a sloppily/lazily presented one line description. (As a seller, I benefit from this ALL the time. As a buyer, I actively seek out such listings. I will often pay more for an item that is professionally presented.)
When I see a competing item that has sold for very little, I just think “well, that one’s gone so now mine can move up in search”. Of course, the more long tail your item is, the better your chances of not being forced to compete on price in the first place.
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