The first is these sellers sell lots of other higher value items. Ebay gets paid for every item thats sold (a percentage of the sale price). Lets say one of these power sellers has ebay fees of $1000 per month.
But ebay gives incentives to the seller to try and give good service to their customers, they gave up to 40% reduction in fees if sellers get good DSR* scores.
* Everytime a buyer leaves feedback for a seller, they also give the seller a rating for (1) Communication (2) Shipping Time (3) Item as described and (4) Shipping Costs. These ratings are called DSR - Detailed Seller Ratings.
Ebay looks at these DSR scores to see if a seller qualifies for the 40% discount, so if I seller pays $1,000 in fees per month, they have the opportunity to get refunded $400.
So the seller may decide to sell 3 items per day for $0.01 + free postage. The total monthly cost/loss to the seller could be around $1.50 x 30 days x 3 per day = $135.
But in return these customer will then leave excellent feedback as they are very happy to buy something so cheap, and the seller is happy as they get the 40% discount from ebay.
In reply to the people on linkreferral who claimed my idea is taking advantage of lower paid workers in Asia. This isn't true, the ebay seller isnt manufacturing the goods and pays full price for them. He/she takes a loss on these, but then he/she gets this back with the ebay discount.
And in reply to the comment about the goods in Asia being of lower quality, are you aware if you buy items like this on ebay from USA sellers, 99% of their stock is sourced from Asia.
So I'm just explaining a method of buying the stock cheaper than the USA powersellers, obviously if they buy from a factory in Asia, they dont pay $0.01 per item.
Theres lots of other interesting reasons for these low $0.01 prices, I'll explain some more tomorrow.
