MYTH: I always sell everything keystoned (or more) in my shopping cart.

Exploring the “loss leader” in e-commerce. In short, a loss leader is usually an item which is sold at a loss. You either just meet the COGs (Cost of Goods) or you claim a loss. (There are also certain tax benefits from this, which I will get into later)

If you are not familiar with the “Gillette model” or “razor and blades model”, I will break it down real quick. Most razor blade handles are sold at a complete loss. It’s ok. The loss is marginal. But once you have the handle and run out of the stock blades, you must trot on down to the store and buy a pack of razor heads. They are quite pricey. You will continue to buy them..and buy them.

A lot of times your vendor or manufacturer will offer a product (which is dependent on other high margin components) at a very low price. You inturn sell it for a very low price. The customers buy them up and in due time, they come back for those crucial high margin components and you make bank.

BONUS INFO: Along the same lines as the loss leader is “branding at a loss” or saturation of your product in the marketplace. If you need a quick “gorilla” style branding to take place, aim towards the mega-commerce sites: eBay, NexTag or Amazon. While you will probably not make near the margin as selling through your own online store, these avenues provide a fair Litmus Test of your product(s) and if they due sell, then your name and product are everywhere.