elRopo wrote:If you are holding cigars in your warehouse you are losing money. By selling here you either make money or cut your losses. Either way its a win for CI/ C-Bid. I wouldn't say shipping is TOO high....yet.
That's a bit of an oversimplification.
There's an economical concept known as profit maximization. It's a combination of the correct price and quantity produced which provides the biggest gap between revenue and cost (biggest profit). What may surprise people is that you can actually raise profits in some cases by lowering output and/or price.
There are a lot of reasons why a manufacturer would sit on inventory, even if the value of said inventory was dropping like a rock.
It's obvious that the shipping charges are marked up beyond cost. Because many of the costs are fixed and/or the variable labor expense is minimal, the incremental cost in packing and shipping an additional item in the same box is close to zero. Adding a lighter or cutter to a few 5-packs? The extra dollar you pay on shipping is almost entirely profit. It's a great approach, because humans are inclined to keep buying once the big up front shipping cost is charged (after the first weekly auction is won).
There's a thing called price discrimination. It's not what you think :P It's a technique of offering the same product at different prices in order to get the most money possible from different demographics. It happens at a small level all the time, like grocery stores charge higher prices in rich neighborhoods, and lower prices in poor places. The idea is that they want to charge the maximum their customers are willing and able to pay. Negotiating each sale is the highest form of price discrimination and the best way to maximize profit. Auction sites are a variation of that. If my max price for a 5-er of tatuajes is 14 and yours is 25, C-Bid will eventually get to sell to both of us at that price, and to everyone else at their max price in between.
As time moves on and wholesale prices go up, and labor costs go up, utilities go up, rent, etc, and our maximum price stays the same, the profit margin for C-Bid will shrink. Because the price is driven by the consumer, they can't do what the local tobacconists do and simply raise prices. They can try to alter the volume of items for bid to manipulate price (i.e. only have a hot item on free fall or quick buy)or try to get the suckers to overbid on garbage, but ultimately that's not really going to be enough. They're going to have to continue to raise shipping costs as they are the only item over which they have traditional retailer-like control. So raise fixed prices where you can to offset the fact that people don't adjust for inflation when bidding on cigars.
As long as we are able to still save money overall by using C-Bid, the shipping prices will not drop, because we will still pay them. My spidey sense tells me shipping costs here will only continue to rise, it's sort of the natural order of things.
TLDR: Your bids are not accounting for inflation, so shipping has to.
