Sellers who sell used CDs for a penny- how do they make a profit?

Interesting thread. I just bought my first penny CD the other day. Mom and I went to Jersey Boys and she wanted the soundtrack so I got it from Goodwill. It came with a good booklet and liners and the CD plays fine. Plus, I even had some amazon points to use to pay for the shipping. A positive experience for me.

 

This ain't the gravy train it sounds like -- 1,000 CDs do not pack themselves. 100 CDs a week would be a big job, IMO.

 

Right. It's a lot of man-hours of work, plus other expenses.

 

They lose money on each transaction, but they make it up in volume.

 

In my post #26, does a seller like Goodwill even have to make a profit? I don't know just asking.

 

Yes, because the profit of the sale is what they use to fund their programs. The advantage they have is that they (obviously) don't pay for any of the CDs they sell because they're all donations that are tax-deductible by the original owners who donate them.

 

I think if you have a pro-seller account (or however Amazon style it) you can set your own charges. If you're just an individual selling stuff then Amazon sets it. The fees they set for me posting any cd overseas from the UK doesn't come anywhere near covering the actual costs, which is really annoying so I only sell to the UK now.

 

http://forums.stevehoffman.tv/threads/why-sell-a-cd-for-a-penny.317395/

 

As a former Amazon seller I can hopefully clarify some of this. Unless the listing says "FULFILLMENT BY AMAZON" then the individual seller is shipping your items directly to you. Ordering multiple items from the same seller is not a valid way to save money on shipping because Amazon charges the full $3.99 for each CD you add to your cart, regardless of who you order them from. This is an automated process and no seller who fulfills orders directly can opt out of the charges being passed on to the customer. As an independent seller I can safely say that there are much more economical ways to expand your collection than Amazon's $3.99 + $.01 model. As to the seller's profit, this is dependent upon their shipping practices and varies greatly based on volume and fulfillment practices.

 

Thanks for stating some facts about the Amazon selling platform. What you do not state is that the seller does not get that whole $3.99 to ship the item out, and that Amazon takes more than one dollar of it for themselves.

No, the pro seller account as you've called it does not change the shipping cost, nor changes the cut of it Amazon takes off the top.

The penny CD does not make the seller any profit unless they can pack up several in one package and can get that package sent fairly cheap. This $3.99 per cd charge is one thing Amazon was not going to give up their cut of. No combined shipping unless seller wants to give up his cut of the take to do it. It seems cruel the way Amazon and eBay both want the sellers to give discounts, lose money shipping items. But they damn sure don't want to give up one cent of their hefty cut of the action.

Ive learned a lot from them, and I also worked at an artist's label that did web sales and learned some tips there as well.

The shipping profits should cover your time and gas to the post office. I try and make $1.50 shipping profit per package, and I think that this is fair. I lost $5.00 the other day on a package to the UK, but I make up for it on others no thanks to Amazon. I do eBay, Amazon. as well as have an Ecrater store. Ecrater is a site that has free stores, web stores like eBay. The oh thing you need there is product that is not too common, and google search will pick it up and you gets sales over time. It's quite nice to pay none of those high fees at the bay or the river. And set your shipping prices to exactly what you need them to be.

 

It's been a bonanza for me! Lotta great CDs dirt cheap. Yowza!

Evan

 

OK...a lot of iffy info in this thread.

Here is the true dirt.

If you sell a CD for 0.01 on Amazon, your net proceeds (including the $3.99 shipping credit) will be:

$1.66 (if you are not a Pro Merchant)
$2.65 (if you are a Pro Merchant)

Pro Merchant means you pay Amazon a fixed fee every month and, as a result, save $0.99 per sale in fees.

A standard single CD in a jewel case is going to weigh between 4 and 5, including a padded mailer.

Shipping a 4 oz package is $2.01. Shipping a 5 oz package is $2.09.
Padded mailer is $0.20-$0.30 in bulk.

If you sell a CD for $0.01, and taking the best case scenarios on shipping cost and cost of mailer:

Not Pro Merchant: $1.66 -$2.01 -$0.20 = -$0.55 (you lose 55 cents, plus your time, plus cost of the CD to you)
Pro Merchant: $2.65 - $2.05 -$0.20 = $0.40 (again, that assumes the CD was free to you)

As the original poster thought: This is a loser's game if you're not a Pro Merchant. And if you are a Pro Merchant, you

A) Need to source the CDs for close to free
B) Need to do huge volume
C) Need to hope your returns/lost/damaged claims are very low.

 

Thanks for the information. This has been a very informative thread!

 

The sellers probably have a large number of these CDs and just want to get rid of them, I would imagine.

Evan

 

A lot of the $.01 CDs happen to be ones that sold really well, yes.

 

The only plus side I can see for a seller doing these loss leader transaction is: you can include a coupon inside the mailed package advertising your website.

I designed these color coupons that said "Free Shipping on any order in the US" or $5 Off on any International order". They are quite cool, I found some in my mailbox (Goodyear tire sales. etc.) and redid them in photoshop 6 to a sheet and printed them up at FedEx Office.

I inserted them into each Amazon pack I sent out and got a sale of about one sale per 15 coupons sent. They had my Ecrater store address and my email in bright exciting colors. Amazon does not give you buyers email address, so this direct marketing was a pretty good pitch.

For eBay, I sent them an email with the item that they bought in the subject line, and the coupon in the body of the email. I got about 1/2 the responses for the eBay promo. But the idea of using eBay and Amazon to harvest customers I learned very early on from a book I saw at the bookstore Book Soup across from the old Tower Records on Sunset.

The only drawback is penny CD buyers are not the kind I try to capture for my own store sales. I prefer Japanese collectors, and US buyers with deep pockets. But the idea is good if you have some good stock offered on your own site or store.

 

Boy you guys are aging yourselves! I remember my mom being so pissed at me for falling for that that I was not allowed to go get the package at the PO box when the first 13 records showed up! Never found out what she did about that.

 

Oh, wow! That is almost like a form of child abuse! I would've been devastated!

 

You can find plenty of highly collectable CDs on ebay for less than $4 if you are prepared to dig deep and ask lots of questions. You may be disappointed a lot of the time, but when you hit the jackpot, then it's worthwhile.

 

I have sold hundreds of CD's on ebay, not Amazon, but it is as kwadguy says in post 37 above. After postage, packaging, and the fees charged by ebay or Amazon, tape, ink, etc, I do not beieve you can make any money selling a disc for less than $1 plus whatever you are allowed to charge for shipping ($3 on ebay). And even then, it is break even. The focus here has been on cost, but time is a huge factor: listing, sending invoices, packaging, and waiting forever in line at the post office!

I really do not know how any seller manages to make a business out of one cent CDs, even if they can get them for free. If you are selling a large volume, just imagine the headaches of managing inventory and the overhead for employees and workspace.

 

I suspect the overheads, although relatively small for a volume seller - the post office will pick up the items direct from your warehouse, wipe out any profits. On the other hand, you pick up 1000s of ratings which makes you more trustworthy than a newbie or small seller who doesn't get their act together. Volume sellers don't make huge losses because they buy stock in bulk and at ultra low prices.