Why Do Books Sell for a Penny On Amazon.com?

(Updated to reflect changes 05/11/09)

In brief:

A seller lists a book for $.01

Amazon collects $3.99 from the buyer and gives $2.66 ($.01 + $2.64 shipping allowance) to the seller. (The $1.35 'closing fee' is subtracted from the shipping allowance by Amazon)

The seller is a ProMerchant, so doesn't pay the $.99 fee (but does pay $40 per month to be a ProMerchant).

The 15% fee on 1 cent is zero.

The seller pays $2.38 or $2.77 in postage for a 1 or 2 pound package (or less, if it is very light weight and can go First Class. Much less if the penny seller is high volume and uses Bulk Mail).

The seller cost for the book is zero, because he got it for free somehow.

The seller used recycled packing materials, so those cost nothing, too.

The seller ends-up with $.27 (if it's 1 pound media mail) profit in a domestic shipment (a bit more if it's mailed using Bulk Mail).

The seller is happy with his "profit".

Of course there's overhead and taxes to consider in this equation. Ink and paper to print a packing slip and shipping label, computer, connection to internet, gas to the post office, etc.

And the time spent working to scout, transport home, clean, store, pull, pack, mail, will pull that "profit" number into the negative real quick.

Amazon ends up with $1.35 from the shipping.

Amazon is even happier than the seller.

An add'l money saver for the large volume sellers is to use Bulk Rate Mail, which can lower their shipping cost to approx .80 per package. That is for *large* operations though, the number of pieces mailed at one time are in the hundreds.