Debunking the eBay Myth of Free Shipping
By Ina Steiner
If free shipping is the industry standard, as eBay states, then 21 of the top 25 ecommerce retailers have not gotten the memo. EcommerceBytes took a look at the top 25 retailers on Internet Retailer's Top 500 Guide and found that only Newegg, Costco and LL Bean offer unconditional free shipping (Netflix is not applicable to this discussion).
Most of the top retailers (18 of 25) offer free shipping as an incentive to increase order size (or in one case as an incentive to sign up for a Visa card), such as requiring shoppers spend a minimum of $25 before becoming eligible for free shipping. Interestingly, Amazon and SonyStyle.com have a minimum of $25, the rest average a minimum spend of $50 to qualify for free shipping.
eBay sellers can offer combined shipping discounts and can set up promotional shipping rules in which they can offer buyers special discounts if they buy multiple items or spend a certain amount, though listings won't get a "free shipping" boost in search results.
Nevertheless, eBay has been encouraging sellers to offer free shipping on listings unconditionally - and since sellers bear 100% of the cost of free shipping, why wouldn't eBay encourage them to offer it?
eBay uses a number of methods to incent sellers to offer free shipping (see eBay Shipping Best Practices), including giving fixed-price listings with free shipping a boost in search results, Detailed Seller Ratings (and automatic 5-star ratings for shipping cost DSRs when buyers chooses free shipping), and creating a "Fast N Free" badge for certain eligible listings that offer free shipping.
During the recent holiday season, eBay gave sellers 20% off of their Final Value Fees when they offered free expedited shipping service with 1-day handling. Sellers had been charged a commission only on the price of the item they sold, but last year, eBay instituted commission fees on the total price including Shipping & Handling charges in an effort to reduce the appeal of offering high shipping charges.
eBay executives say buyers expect free shipping when shopping online. In 2008, Dinesh Lathi, then VP of Seller Experience, told an audience of eBay sellers, "The fact of the matter is that free shipping is the standard for eCommerce now." The new president of eBay Global Marketplaces Devin Wenig called free shipping a "buyer standard" in this March 2012 interview.
But even on retail giant Amazon.com, buyers must work a little in order to get free shipping, either spending a minimum of $25 per order, or purchasing a $79 membership to Amazon Prime.
Unless eBay can figure out how to tie free shipping to a higher order size, it's illogical to assume smaller sellers can afford to subsidize shipping costs, something even large merchants don't do on their own ecommerce websites.
Free Shipping Chart of Top 25 Internet Retailers
|Name & URL||Category||Unconditional Free Shipping?||Qualification|
|Amazon.com Inc.||Mass Merchant||No||Must spend $25 or more. Or receive free ground shipping if you sign up for Prime membership ($79/annually)|
|Staples Inc.||Office Supplies||No||Must spend $45 or more|
|Apple Inc.||Computers / Electronics||No||Must spend $54 or more|
|Dell Inc.||Computers / Electronics||No||Occasionally has free shipping offers on accessories (currently $49 min purchase) Link|
|Office Depot Inc.||Office Supplies||No||Must spend $50 or more|
|Walmart.com||Mass Merchant||No||Site to store shipping free on
any size order. (must pick up)
Site to home - $45 minimum.
|Sears Holdings Corp||Mass Merchant||No||Must spend $49 or more|
|Liberty Media Corp. (QVC, Liberty E-Commerce)||Mass Merchant||No||QVC - Offers shipping discounts on multiple orders.|
|OfficeMax Inc.||Office Supplies||No||Must spend $50 or more|
|CDW Corp.||Computers / Electronics||No||Special shipping offers|
|Best Buy Co.||Computers / Electronics||No||Shipping is calculated on per item or per pound basis|
|Newegg Inc.||Computers / Electronics||Yes *||Free shipping on many, but not all items.|
|Netflix Inc.||Books / Music / Videos||N/A||N/A|
|SonyStyle.com||Computers / Electronics||No||Free Ground shipping on orders $25 and over|
|W.W. Grainger Inc.||Hardware / Home Improvement||No||Must spend over $1,500 Link|
|Costco Wholesale Corp.||Mass Merchant||Yes||Shipping and Handling charges included in price.|
|Macy?s Inc.||Mass Merchant||No||Must spend $99 or more|
|Victoria's Secret Direct & Bath and Body Works||Apparel / Accessories||No||Occasionally offers limited-time free shipping promotions with special purchase.|
|HP Home & Home Office Store||Computers / Electronics||No||Free shipping on orders over $49|
|J.C. Penney Co. Inc.||Mass Merchant||No||Free shipping over $50|
|L.L. Bean Inc.||Apparel / Accessories||Yes||No Minimum.|
|Target Corp.||Mass Merchant||No||Must spend $50 or more or sign up for REDCard credit or debit card.|
|Systemax Inc.||Computers / Electronics||No||CompUSA - No
TigerDirect - Free ground shipping if you sign up for 1-year Inner Circle membership ($49)
CircuitCity - Advertises Free Ground, but checkout does not have free shipping selection.
|Gap Inc. Direct||Apparel / Accessories||No||Must spend $50 or more|
|Williams-Sonoma Inc.||Housewares / Home Furnishings||No||Offers free shipping for a year if you sign up for a W-S Visa card.|
Update: Article edited to add information about eBay's "promotional shipping rules."
About the author:
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to firstname.lastname@example.org.
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