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Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Sun Apr 8 2012 22:25:35

Does Free Shipping on eBay Lead to Higher Sales?

By: Ina Steiner
Sponsored Link
In Monday's EcommerceBytes newsletter, we debunk eBay's "free shipping" myth. While eBay executives say shoppers expect free shipping, most consumers understand there's usually a catch - many sites require shoppers to spend a minimum amount in order to qualify for free shipping ($50 was most common among the largest online merchants), or pay to join a program such as Amazon Prime.

eBay CEO John Donahoe has made a practice of revealing free-shipping adoption rates to Wall Street analysts each quarter. In January, he said eBay sellers offered free shipping on 43% of transactions during the holiday shopping season, up 14 points over the prior year.

But as our chart in Monday's article shows, only 3 of the top 25 ecommerce retailers on Internet Retailer's Top 500 Guide offer unconditional free shipping. Yet eBay expects small sellers to subsidize the cost of offering free shipping (or build it into the sale price and risk lower sales due to higher prices).

We would like to know if you offer free shipping on eBay, and if you think it leads to higher sales. Please take our survey, and we'll publish the results in a future issue.




Comments (39) | Leave Comment | Permalink
Readers Comments

Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
This user has validated their user name. by: Anonymous Annie
       
Sun Apr 8 23:22:09 2012
Yes, sadly I do. And I hate it.

Why do I do it? Because eBay forces me to.

How do they force me? By punishing me in the search rankings... and by letting the uninformed (and intentionally MIS-informed buyers do eBay's dirty work for them.)

How do misinformed buyers do that? By giving a ''4'' (the horror of it all) in the DSR ''Shipping Costs'' category.

Which in turn turns into more punishment from eBay in the form of higher fees (with the loss of the FVF discount.)

I can only avoid this by succumbing to eBay's blackmail.

Yes, blackmail. Coercion.

I resent it. But I do it to try and salvage what little bit of business I can still get out of eBay. --- These days it's not much.

I see a day in the very near future where the effort (of ANY type) needed to be a ''success'' on eBay will simply not be worthwhile AT ALL.

And by ''success'', I mean only that I'm not losing money. (In eBay-speak, they have redefined what the word means anymore.)
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: robertom This user has validated their user name.
       
Mon Apr 9 00:32:36 2012
As an ebay seller, I LOVE free shipping (and I am no fan of ebay's rules, trust me)
Here is why:
I used to offer shipping costs of $2.99 for the first item, plus $1.25 for each additional item.
Invariably, many buyers expected further discounts on S&H if they purchased several items, and some even left neutral or negative feedback because S&H was too high (in their opinion).
After struggling with this, I simply offered free S&H on all my items, bu rolling the S&H cost into the price.
So, an item that used to sell for $5 + S&H, is now listed at $7.99. When buyers buy more than 1 item, I make a larger profit, due to combined S&H costs. And, buyers don't ask for a discount, because... free is free :)~
It's been great!
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
This user has validated their user name. by: elpereles
       
Mon Apr 9 00:34:26 2012
Every seller in eBay know that the "free S&H" for small sellers is a fantasy. The problem is when you have an idiot in a chair telling it as a real truth story.

Good luck to anyone that is under the foot of the "Free S&H".  
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: Henry This user has validated their user name.
       
Mon Apr 9 01:33:37 2012
There is no free shipping. As robertom pointed out a seller simply adds the shipping cost (usualy to the farthest distance from the shipping point) so buyers pay more when purchasing more than one item. Buyers who live closer to the seller also pay higher prices. It is simply an illusion.  I read where one seller told a buyer who wanted to return an item that they wanted free shipping on the return - he suggested he ask USPS for free shipping.
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: Steevo This user has validated their user name.
       
Mon Apr 9 02:06:13 2012
There's no such thing as free shipping. The buyer pays for the shipping, the listing fees, the final value fees, the packing labor and supplies. Your internet access, office space, electricity. They have to.

Anyone who thinks anything is free is delusional.

Who pays to replace burned out fluorescent lights at Walmart? You do when you shop there, of course. Where else can they get the money to pay for that stuff? You think Walmart gets a job at night to pay for it? Nope, they add it to your bill. Naturally.

What's going on at ebay is the ebay company is tampering with all their different sellers and their businesses. Trying to force us to do things that result in an unsustainable business model. Disciplining us if we don't toe the line by burying us in search so we sell less. Deliberately trying to hurt us, when we should be on the same side, all trying to make a living.

Ebay buyers have gotten used to everything being dirt cheap. They think they should get it so cheap we'd have to have gotten it free in order to sell it to them that cheap.

Unfortunately many ebay sellers do not understand their business and it's costs. Every business has costs. Just because you are working on your kitchen table does not mean there are no costs unless you want to work for free.

The sales have to cover the costs or there is not enough money to buy more stock to sell.

Ebay doesn't get it. They claim buyers were leaving. No kidding, buyers who wanted everything free were leaving when they couldn't get it anymore.

Only a fool would buy mail order if the price wasn't right. Ebay is mail order. The price has to be right. Free, that's not the same thing.

Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: Boo_who? This user has validated their user name.
       
Mon Apr 9 05:18:02 2012
The main thing that increases with "free shipping" is the FVF for ebay. Why do you think they push it so much? Nothing at all to do with "improving buyers experience".
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
This user has validated their user name. by: Anonymous Annie
       
Mon Apr 9 07:11:50 2012
Boo Who says: Nothing at all to do with ''improving buyers experience''.

You're correct! Many of my customers end up paying more than they would have with calculated shipping.

A couple of very clever customers have even ASKED FOR A DISCOUNT on the ''FREE SHIPPING''!!!!

They know that the shipping is built-in... and that the built-in shipping assumes ONE item is being shipped.

They're also smart enough to figure out that the 2nd item (when added to the same box) increases the actual shipping cost approximately 25-50 cents.

Yet, because each item has the FULL cost of shipping built-in, they end up OVERPAYING for shipping for multiple items that ship together.

I've never liked making a ''profit'' this way... it's just dishonest!

It's a big hassle to refund the difference that the customer ''overpaid'' on free-shipping... so instead, I always try to include a little extra something in their package. A freebie that has the same approximate value as what they ''overpaid'' for ''free'' shipping.
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: OneDandelionWish This user has validated their user name.
       Web Site
Mon Apr 9 07:30:53 2012
When the Free Shipping promises of better search came on the scene I did jump on the band wagon even though my items (collectibles) are heavy. What happened was that my sales came to a screeching halt!  So, eventually I changed back and re-evaluated this farce. First of all eBay is beholding to their stockholders... all decisions are made to increase the coffers (of course).  Free Shipping is a win win for eBay because they KNOW that sellers must add $$ to their selling price to make up for expenses.  Selling price goes up, FVF's go up on the selling portion (you are getting shipping fvf free but that is simply moved over to selling price fvf).  It is an "illusion" of free FVF, with the exception of International FVF, those do turn out to be the real savings.  Ebay receives higher fees whether you choose free FVF or not! Better search? Don't believe it... the moment I added BACK IN my shipping costs my stats returned to normal.  I surmise that I was pricing OUT my local buyers, local being Zones 1,2,3.
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: booklady This user has validated their user name.
       
Mon Apr 9 08:25:43 2012
I tried the free shipping method on ebay on almost all of my listings for about a year. Of course I added the shipping cost to the price of the item to make up for it. I rarely ever got multiple purchases. I then got rid of all of my free shipping and went back to charging regular shipping and adjusting the prices. My sales were better and got a couple of multiple purchases with one shipping combined. I find that I'm giving my buyers a better service when I don't offer free shipping because it gives them a clear visual on how much the item costs and how much shipping is. And they also save on shipping when I charge it separately rather than included in the price. So I'm not doing the free shipping anymore. It's so not worth it.
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
This user has validated their user name. by: Tula
       
Mon Apr 9 08:26:30 2012
Free shipping works well for me. I sell lightweight, relatively inexpensive unique items, so I can price things the way I want. I've had more than one buyer comment in their feedback on how they love the free shipping. If I were selling heavier items that would have zoned shipping cost differences, I would have to run the numbers to see if it would still be a good thing, but so far, I'm seeing good results from free shipping.

Since eBay charges FVF on shipping costs now, there's no cost advantage to not offering free shipping. I like it because it means there's one less DSR to worry about and it does make listings simpler. I suppose it depends, at least in part, on what you're selling and what your competitors are doing. Since my items are unique, I don't have direct competitors as such, but I can see where sellers of commodity items might have difficulties competing with bigger players who have lower shipping costs.
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: JustTheFacts This user has validated their user name.
       
Mon Apr 9 08:33:08 2012
ebay is constantly MAKING UP whatever they feel they need to in order to try and TRICK sellers in to agreeing with whatever new SCHEME they  come up with to make EBAY MORE MONEY!
No matter what the SCHEME is you can count on these few things.

1. It will make ebay more money.
2. It will ALWAYS cost the sellers more money.
3. It will give the buyers an UNFAIR buying advantage and UNUSTLY ENRICH them at the SELLERS expense.
4. ebay will always claim it is ''industry standards''.

ebay will always say it is to get MORE BUYERS to try an appease the sellers but because their SCHEMES are so UNJUST to the sellers the type of ''buyers'' they do bring in, NO ONE WANTS!

Buyers no longer have to PAY for their items, they can CLAIM whatever they want without proof and if sellers do not agree to being EXTORTED then they pay AGAIN with their FB and DSRs and ebay set it up this way in order to FORCE sellers to let the buyers do whatever they want and DEMAND anything they want.  

In fact their new policy coming out in June just reinforces this when they are planning to just GIVE the buyers a portion of their money back AND let the buyer KEEP the item regardless of the sellers store policies.

Ina,  
Of course there is NO ''industry standard of FREE shipping''.  Again, ebay just makes it up.  Just like they MADE UP ''expedited shipping'' for first class.

ebay still works off the mantra that if you tell a LIE long enough people start to believe it.  So what they got some Dutch guy to come in (all expenses paid by ebay) to tell sellers ''free shipping is an industry standard''.  The FACT is, there are PLENTY of people willing to SELL propaganda for the right price and clearly ebay PAID him the right price.

As I have said before, I have one particular competitor that has changed all of their listings to ''free shipping'' but all she has done is add it to the price.  But is she doing better than me?  Well only if she is selling ONE time, when people want multiples of the same or even different ones, they come to me and others because she ends up being much more.  So while they MAY have increased their SINGLE sale, they have LOST all of their multiple sales.  

Even if people do not understand the free shipping SCAM, they can do simple math.
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: rstpete This user has validated their user name.
       
Mon Apr 9 08:58:28 2012
I do offer free shipping with 75% of the shipping cost built into the item price but only for the following reasons.

1) ebay can not or will not make their combined shipping work correctly and all the refunds to correct the errors were time consuming, upsetting to buyers and expensive as ebay still kept the fees on their errors.

2) it gave me higher search ranking

But with the changes coming I will loose my TRS and the search ranking anyway so I will go to a very low shipping with no combined shipping offered.  

Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: sassy This user has validated their user name.
       
Mon Apr 9 09:02:54 2012
i think it does, i know when i shop i look for free shipping, and when i shop i have to very carefully watch for postal cost  some so high on ebay its awful...trick u in with low price then attach awful ridiculous shipping...its a shame, thats stuff that hurts others sellers...when i include free shipping my buyer know exactly up front what they paying for and no surprises, and i look for that to....i hate im pay more in final value fees and ebay crazy with fees anymore...i have been here over 10 years and wow the changes...wish they would stop it...but free shipping keeps my customers coming back i think.
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: dmg61 This user has validated their user name.
       
Mon Apr 9 09:23:34 2012
I think free shipping has helped my eBay store a LITTLE BIT. But I just sell mainly media items on there (records, CDs), and yes, I do add the price into the selling cost of the item (they sent me an email from eBay TELLING me to do that anyway). I am shutting down my store at the end of this month and just leaving my seller account open (it's over 7,000 feedback) for future small auctions I might want to run there. I'm moving my wares to Amazon (CDs) and Etsy (records = vintage) where they don't coerce and threaten sellers.
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: JoJo This user has validated their user name.
       
Mon Apr 9 09:53:37 2012
The few times I've tried it my sales have plummeted to zero.  Probably depends on the items you sell as the fees would be easier to roll into the cost on lightweight items.
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: 10 year seller This user has validated their user name.
       
Mon Apr 9 10:09:38 2012
If free shipping is an industry standard then why doesn't Amazon offer free shipping. I always pay shipping on amazon.
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: Harriet This user has validated their user name.
       
Mon Apr 9 10:27:08 2012
Free Shipping is one of the biggest lies told to the buying public. There is no such thing.

The seller either increases their cost to cover shipping to the farthest place, plus a handling charge and calls it free shipping, or they sell the item at a price and then add on shipping plus handling and show that. So free shipping is just a hidden fee.

If a seller gives free shipping and does not include the cost in the item price, then they will eventually be out of business.

Unless you are just selling for fun and to have something to do or like giving your things away to people, you will have to include shipping and related costs somewhere.

It baffles me how gullible people can be.

When researching something you want to buy online, just search for the item price PLUS the shipping cost, then you will have a valid bottom line.

I don't like fooling people.

The main reason eBay is almost forcing sellers to use free shipping is so they can glom onto your shipping prices to collect the FVF on it, plus your item FVF. Of course they are dangling little carrots in front of you to coerce you to offer free shipping, but they will more than make up the carrots with the extra FVFs they collect.  
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
This user has validated their user name. by: Nan
       Web Site
Mon Apr 9 10:39:38 2012
I do _not_ believe that free shipping leads to higher sales on eBay.  

I also do not believe that Free Shipping gets an actual bump in BM placement.  I think the only 'bump' it receives is the little "free shipping" logo, and the ability to sort out listings with 'free shipping' from the sidebar menu.

My current strategy is to offer a fair flat rate shipping with no additional charge for multiple items purchased.   My Reasoning:  the customer feels confident that when they are paying for a service, they get quality packaging. And they are encouraged to purchase more items since the shipping cost remains the same.

Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
by: 16mmfilmseller This user has validated their user name.
       
Mon Apr 9 10:45:09 2012
In my case, the shipping cost can be a substantial percentage of the item price - in some cases, exceeding it. Free shipping on a small item where the cost is a couple dollars is one thing, free shipping on a 15-20lb item which needs to be insured for $300 is another thing...
Perminate Link for Does Free Shipping on eBay Lead to Higher Sales?   Does Free Shipping on eBay Lead to Higher Sales?
This user has validated their user name. by: basset
       
Mon Apr 9 11:10:11 2012
I don't offer it, I think it is a deceptive gimmick since shipping is not free. My buyers have NEVER asked for it - they are smart enough to know that their cost would go up since they currently get a nice discount on shipping for multiple purchases.

When I buy, I don't ask for it & never filter a search by "free" shipping. I am quite able to add & I think in most cases the best prices come from sellers with separate shipping costs. As a buyer, I tend to think of them as a bit more honest. The sad truth is, I think the sellers that have gone the "free" shipping route appear a bit desperate - understandably so, since I am full aware of the carrots eBay dangles with discounts. But my honest take on it is I admire the "shipping charge" sellers for being more straightforward. If all else is equal on an item I am buying, I always choose the "shipping" seller over the "free" seller.  

eBay doesn't really have a dog in the hunt anymore since they charge a fee on shipping cost. I'm not sure why they are fixated on this & don't see what anyone has to gain by this deceptively named "free shipping".

My preference is to work with intelligent buyers. These are the buyers that have a clue that USPS & UPS etc.. does NOT ship for free and that this is a gimmick. Fortunately, most of my buyers seem to fall in this common sense category.  
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