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 started?handling 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.