Where Do You Shop?

Shopping on the Apple2OnlineStore

vs

eBay & other venues

 

Markup

We conducted an analysis of how much it costs customers to purchase items via eBay (compared to through our own webstore where there are no fees).  As of 12 December 2023, eBay charges 13.5% of the cost of the item + 13.5% of the cost of S&H + 13.5% of the cost of the buyer’s state sales tax.  Think about that for a minute:  eBay’s charge for using their platform is justifiable (although you might argue about their percentage).  But eBay taking 13.5% of the cost of S&H?  What is the justification for that?  And eBay taking 13.5% of the state sales tax paid?  Jeeze, Louise, what a rip-off!

We analyzed how much eBay’s fees were as a percentage of the item’s cost for our sales in the first 11 months of 2023.

For CY2023, eBay’s fees added an average of 21.8% to the cost of the item, and the range was from 16.11% to 48.60%.  Why the large variability?  Two factors enter in: the cost of shipping an item relative to the cost of the item, and the amount of state sales taxes.  There is also the mathemagics of compounding intererest, which we will describe in detail in a moment.  First, let’s look at two simple sales transactions for example:

Sale #1:  Item sold for $10, it cost $6 to ship and was purchased by a customer in a state without sales tax.

Sale #2:  Item sold for $10, it cost $20 to ship and was purchased by a customer in a state with 8% sales tax.

eBay’s fees for the first item would be 13.5% x ($10.00+$6.00+$0.00) = $2.16 or 21.6% of the item’s price.

eBay’s fees for the second item would be 13.5% x ($10.00+$20.00+$2.55) = $4.39 or 43.9% of the item’s price.

The Effects of Compounding Interest

There is another aspect to consider:  the effects of compounding interest on the initial cost of the item listed, most easily explained by way of example:

A seller has a computer to sell and targets$100.00 for the computer.  S&H is a flat fee of $25.00.  The buyer’s state sales tax rate is 8.5%.  Without eBay’s fees, the cost to the customer would be:

Computer $100.00
S&H $25.00
Sales Tax (8.5%) $10.63
Total $135.63

But eBay takes $13.5% of that total, or $18.31, so that leaves the seller only $81.69 clear ($100.00 computer sell price – $18.31 eBay fees).  In order for the seller to get the $100.00 target price, he has to add in those eBay fees, so the sale price goes up from $100.00 to $118.31.