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Hack 34 To Bundle or Not to Bundle

A simple approach to choosing how and when to
bundle your items for sale.

One of the most common mistakes sellers make
on eBay is selling too many things together as a
"lot." Sure, it's
easier to list fewer auctions, but bundles are usually worth much
less than the same items sold separately, and may even be less likely
to sell.

One of my favorite eBay anecdotes involves a single auction for a
large lot of model trains, for which I paid approximately $800. I
then turned around and sold about half the
collection, all told, for about $800. I estimated the value of the
remaining items to be about $1000, all of which I effectively got for
free. (This is similar, in concept, to arbitrage, but relies more on
skill than on simply taking advantage of inefficiencies in the
marketplace.)

Obviously, the original seller of the collection
would've earned quite a bit more money had he listed
each item separately. But how could he have known?

The most direct approach is to compare the expected value of a
collection with the total expected values of the separate items, as
described in [Hack #33]. But this can
take a lot of time, and you'll be hard-pressed to
find another auction with exactly the same items.

So instead, just ask yourself this question: How likely is
it that any single bidder will want all of the items
I'm selling?

Bidders who buy large
collections
or lots typically do so with the intention of reselling some or all
of the items. Since they'd only do this if there
were profit in it, it's unlikely that anyone would
pay the full value of such a collection. However, if
there's a good chance that a single person will want
to keep all of the items you're selling, then you
very well may get what they're worth.

Never bundle unrelated or incompatible items. For instance, say you'd like to sell two camera lenses, each for a different brand of camera. It should be obvious that they should be sold separately, but even experienced sellers sometimes try to sell odd things like these together. In this case, anyone who bids will likely be interested in only one of the lenses, and as a result won't bid higher than that single lens is worth.

Accessories can go either way. Sometimes, adding $50 worth of
accessories to an item will increase the desirability of the item by
at least that much, if not more. Other times, it
won't make a lick of difference.

Take, for example, a $300 handheld computer, sold along with a $40
memory card, $25 leather case, $10 screen protector, and $150 worth
of software. Here, knowledge of the market will save you time
researching the value of each item. Accessories like used leather
cases (at least the cheaper ones), used screen protectors, and
especially the software are all pretty much worthless when sold
separately, but will probably raise the value of the handheld. Why?
Because it is likely that any single bidder will actually want all of
those things, and will pay more to avoid having to buy them
separately. You might fetch a few more dollars for the memory card if
it's sold separately, but it might also raise the
value of the handheld by $25-$30. If you have several memory cards,
include one with the handheld, and sell the rest separately.

Naturally, the market for your particular item will be different, but
this should give you an idea of the methodology used to determine the
practicality of bundling related items.

4.3.1 Leveraging Dutch Auctions

If you have a large quantity of an inexpensive item, you may be
inclined to sell the entire lot in a single auction. But who is going
to want 4,000 pairs of shoelaces, even if you do offer them all at
the low, low price of only $200? Naturally, it also
doesn't make sense to list them separately at 5
cents apiece, but there are other options.

Probably the best choice is a
Dutch auction, but not necessarily the
kind you might expect. The nature of a Dutch auction suggests that if
you have 4,000 items, you enter a quantity of 4,000, wherein a single
bid buys a single item. But then you'd be back where
you startedhandling up to 4,000 different customers at a
nickel a piece.

Instead, try selling 400 bundles of 10 for $4.00 each. So a single
bidder would be able to buy 10 pairs of shoelaces for $4.00, 20 pairs
for $8.00, and so on. You'll have to build only one
auction, you'll get eight times as much money per
shoelace, and you'll be much more likely to get any
money at all for your bizarre collection.