|EcommerceBytes-NewsFlash, Number 2778 - April 09, 2012 - ISSN 1539-5065 1 of 4|
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.
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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Point: Offering Free Shipping Improves Sales on eBay - April 13, 2012
Counterpoint: Free Shipping Does NOT Improves Sales on eBay - April 13, 2012