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Apr15
Using Loss Leader Concept When Selling on eBay

You've seen the grocery store ads, "Gallon of milk for a penny with $10 purchase." This is called the loss leader concept and can be used on eBay to draw customers into your store.

Basically, a loss leader is a special offered at or below cost and widely promoted to attract customers into the store. The concept is often used in retail to get customers into the store, and as a consequence of being in the store, the customers purchase other items that bring a profit to the seller. The loss leader is the bait.loss%20leader%20ad.JPG

This is what (legitimate) 1-cent listings are all about. I am not talking about the unethical 1-cent listings that have $18 shipping for a 3 ounce item. I am referring to 1-cent auctions, with fair and reasonable shipping fees, that are a seller's strategy for attracting customers.

Computer manufacturers and retailers know this strategy all too well. They sell us printers for practically nothing, or even give them away for free, knowing that we must buy the expensive cartridges on a regular basis. Same with razors. The razor handle is often sold at a loss, yet the replacement blades are highly profitable.

You're probably thinking, "No way, I'm not doing it. I'm not taking a chance of something selling for a penny and losing money." Fair enough. Offering a loss leader is a risk. Many sellers use this technique on items they want to purge from their inventory, or can purchase inexpensively at a local sale or special. The 1-cent auction receives lots of visitors, some of whom will look around and buy other items. Some will get the item for a penny. Some will come back and make a purchase at a later time.

I consider using the loss leader concept on eBay as my advertising costs. Say for example I am selling an item in a highly competitive category. I want to beat the competition. I want to get the sale. I am willing to take a risk and start my auction at 1-cent because:

1) More bidders will see it - the auction gets a lot of attention

2) 1-cent auctions make the bidding exciting for auction addicts - they often get caught up in the auction, their ego kicks in, and they will not be outbid

3) I want to do something different than the competition

4) I am pretty confident that the item is going to sell for much more than 1 cent

Consider using this technique when you are in the mood to experiment and do something new. You won't know if it works for you until you give it a try.


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i always use the loss leader concept to lure ebayers into my store; it is very helpful

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