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Mon Feb 10 2020 12:00:24

Are Marketplace Free-Shipping Policies Anti-Competitive?

By: Ina Steiner

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Reuters reports that antitrust officials in Japan are investigating online marketplace Rakuten over its free-shipping policy requirements for third-party sellers in that country.

"Companies selling their products on Rakuten have complained that the e-commerce giant was abusing its dominant position and putting pressure on them to shoulder shipping costs," according to Reuters.

The Japan Times had written about issue last month, including the company's response to the sellers' complaints:

"Rakuten officials have argued that a free shipping service for a minimum purchase amount would increase the number of customers and the amount of purchases, benefiting merchants in the long term," the publication had written.

Many marketplaces are pressuring sellers to offer "free shipping" - read the full stories (links above) and let us know what you think, and how they apply to the platforms on which you sell.



Comments (20) | Permalink

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by: FeelingFroggy This user has validated their user name.

Mon Feb 10 12:16:05 2020

We have NEVER offered free shipping, NEVER will offer free shipping. If you want free shipping buy somewhere else cause we aren't offering it.

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This user has validated their user name. by: Life During Wartime

Mon Feb 10 13:14:51 2020

The only free shipping I've ever offered (on Etsy or eBay) was for additional small, light weight, items that can be mailed easily in the same package.  Stuff like vintage jewelry and individual pieces of antique silver plated flatware.  Whatever that costs me for the additional weight is offset by the use of less packing materials.

But no venue is gonna pressure me to offer free shipping to all buyers, for all items.  None of the merchants I purchase from regularly online offer that.

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by: Whatever This user has validated their user name.

Mon Feb 10 18:03:48 2020

I just changed my blanket free shipping on all my items.  Did my sales hit a nose dive? Yup but I don't care anymore. I've reached my limit on the hoop jumping.  Unless I'm starving to death that's over.  There's no such a thing as Free and everyone needs to get over it. I think that was the beginning of the end for ebay especially when they decided it was an acceptable solution to their revenue problems. And those tax breaks for corporations? We they certainly never did "trickle" down to the little guy. Enough

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by: Geetar This user has validated their user name.

Mon Feb 10 18:06:44 2020

This is definitely one place where ebay dropped the ball. They forced everyone into free shipping (if you dont do it, your listings get hidden, or at the very least your competitor gets most of the sales, instead of you...doesnt matter what your price is).

Ebay could have the advantage in this one area where buyers could save money. It's all set up. But no, they have to be like amazon. And have to make the extra FVF on inflated shipping costs. What buyer is going to buy 3 of one item 2 of another and three of this one from me? They are not, they are going to laugh and go elswhere.

They lost out on me. If I need several items I look for calculated shipping, if I dont find it, I look on the internet and end up buying elsewhere. Mostly from  websites that were more expensive before, but now offer calculated shipping, and are less expensive than ebay now. And I have noticed some dont charge sales tax.

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by: Whatever This user has validated their user name.

Mon Feb 10 18:14:31 2020

Geet - ebay's driving sales to my website - still doing free shipping on my own venue and buyers are way more savy now then they used to be - like you their learning to internet surf for the products they want.

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This user has validated their user name. by: iheartjacksparrow

Mon Feb 10 19:54:46 2020

I tried "free" shipping but that got me zero sales. With the item's price separated from the shipping cost, and the promise that if multiple items are purchased the excess postage paid will be refunded, has produced a plethora of sales. I sell a lot of items in the 10 to 15 ounce range, and I simply can't fold an extra $4-$6 into the item's price without the cost being too much. Marketplaces need to realize that 3P sellers are not the same as manufacturers and high-volume web sites that can afford free shipping when they are getting their merchandise at wholesale prices.

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by: purpleiris This user has validated their user name.

Tue Feb 11 06:47:57 2020

There is no such thing as free shipping. Someone has to pay for it and small businesses are in business to earn a profit that lends to the owners' ability to support themselves. So, expecting them to cover shipping costs is absolutely ridiculous, especially considering the ever increasing cost of shipping.

You want shipping to be cheaper? Then complain to the government about how they're robbing the USPS of funds retirees probably won't ever see. Further complain to them that we should be seeing a decrease rather than an increase once they finally get other countries to cover their own fair share instead of expecting US to cover that as well.

The American small business owner is being raked through the coals at every turn and it needs to stop!

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by: bd greatbuys This user has validated their user name.

Tue Feb 11 10:35:15 2020

yes, we do not have a other way , only to give free shipping on all my items on ebay, ebay is crumbling from amazon & walmart  & the #1 issue is shipping cost,  i will not be surprised ,that if the us gov will take a brief look , on the antitrust Practice Methods  on the shipping business  in the us the will find it very fast  .but the shipping business is  to big to go & powerful to after tham so the sellers struggle  

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by: ElectronixRecyclers This user has validated their user name.

Tue Feb 11 10:52:24 2020

I don't think people get what "free shipping" is.

If you're selling a small (first class) $10 item, with shipping it's about $13.80 or so.  With free shipping, you're just reducing the $10 price by the amount of shipping.

If you're at the same price as someone charging shipping, they're beating you on price - they're just choosing to use that price point advantage on shipping.  Otherwise, they could charge $6.20 + $3.80 first class shipping, and it would still come out the same as your item.

I've never understood the reticence to offer free shipping.  It gives you far more control over your price structure and folds into a single FVF making it easier to fine-tune and predict those expenses.  Postage and delivery are tax deductible if they are necessary to conduct your business, and of course they're necessary for online sales.  So, you're nerfing your tax deductions by collecting additional income to pay for it.

Unless you are dealing with very large, heavy items where the shipping is very expensive, you should consider building free shipping into your pricing.  If you're working with items that are expensive to ship, you should see if your volume will qualify you for negotiated rates from one of the major carriers.

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This user has validated their user name. by: iheartjacksparrow

Wed Feb 12 11:19:48 2020

@ElectronixRecyclers - No offense intended, but I'm not sure you understand what free shipping is. For people who don't have a huge profit margin, such as used clothing sellers, they aren't making enough to justify eating the shipping cost. And now that almost all shipping classes are calculated by zone, to charge a seller on the East Coast the same same amount for shipping as on the West Coast (where I am) seems disengenious. Plus, without free shipping a seller can refund excess shipping monies and have a grateful buyer.

As far as a tax deduction for shipping, I take that every year and account for every penny paid. But that wouldn't garner me an instant windfall of money had I used "free" shipping, that would simply negate a very small portion of my profits.

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by: purpleiris This user has validated their user name.

Wed Feb 12 16:21:51 2020

I use spreadsheets and have a formula that calculates all fees associated with the sale of something. So, I certainly don't need free shipping to make knowing or accounting for them any easier or more transparent.

Also, as Jack mentioned, with all shipping methods being zone-calculated, you run into the problem with shipping costs varying greatly between zones. I've always been one to charge a customer what I pay for shipping so there is no discrepancy.

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by: Chicago48 This user has validated their user name.

Thu Feb 13 03:09:24 2020

It would seem anti-competitive on its face.  Be interesting to see where this goes.

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by: Coolstraps This user has validated their user name.
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Thu Feb 13 05:25:43 2020

Offering free shipping has made a major difference in my sales. I up my prices accordingly to (usually) cover postage and it has increased my sales. I don't see it as anti-competitive; rather, it's just another tool for sellers to incentivize buyers. I'm not required to offer free shipping but why would I not if it changes a potential buyer into a buyer? The great thing, of course, is that we get to largely run our shops like we want and if we aren't happy with one platform, we can go to another or set up our own.

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by: hawk This user has validated their user name.

Thu Feb 13 07:00:58 2020

none of these venues or companies should have the right to force free shipping on sellers. all it amounts to is greed , stupidity , and arrogance  on their part. people are SLOWLY learning that there is no such thing as free shipping. the real sellers that built all this in the first place are the ones getting the big fat rod up the--well you know !!!

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by: purpleiris This user has validated their user name.

Thu Feb 13 08:37:15 2020

"I up my prices accordingly to (usually) cover postage"

This is a violation of FTC regulations. This is the part that they have deemed to be deceptive and is why it is illegal. There really is no way to claim free shipping because it's simply not free, whether or not you're taking a loss to cover it.

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by: Junkminer This user has validated their user name.

Thu Feb 13 09:50:20 2020

I've found that free shipping on vintage jewelry equals more returns. More buying "on approval". I did a 6 month experiment of offering free shipping and didn't notice any real uptick in sales (both ebay/etsy) but I did notice we had several of these 'tire-kickers' to whom I had to pay to ship to and pay to relist the returned items. Since we've eliminated free shipping returns have settled back to seldom occurring events. Happy to deal with the increased returns if there was a commensurate increase in sales. The argument of reducing the resistance to a sale only goes so far. I actually want someone to value what they are going to buy, to think about it a little more carefully and be sure they really want it.  

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by: Twilight Faerie This user has validated their user name.

Thu Feb 13 11:29:49 2020

The monkey in the “free shipping” argument to me is that somehow selling venues (Etsy) charge the same fees to sellers who don’t offer free shipping, yet fully admit those sellers will not get the same placement. The whole practice of expecting small sellers to offer free shipping in exchange for placement seems shady and unethical. It’s been said a hundred times, the buyer is paying for shipping somewhere in the price of the item.  

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by: JohnGermaine This user has validated their user name.

Thu Feb 13 12:02:56 2020

The ''Free Shipping'' BS is just that BS! There is no way one can go to the Post Office and ship it for free. This ''sales technique'' was invented by Amazon who has duped buyers into belonging to their platform by PRE-PAYING for their shipping with their Membership which creates a POOL of MONEY to use for shipping purposes. Thus NO EXTRA charge is needed to ship the item/s to the buyer. This needs to end, it's nonsense and it's not real, it's like lying to buyers.

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by: BargainzBabylon This user has validated their user name.

Thu Feb 13 15:04:48 2020

Etsy found that their revenue shrank when they manipulated search to favour 'free shipping' which Silverman crowed would be the 'core' of their marketplace. That was a big oops - not enough sellers fell into the trap (their free listing calculation tool only works if you're selling loads of the same thing - which is exactly what the sellers on their forums who champion Etsy's policies are selling - very light items, gag gifts, etc). Fact is, most of us don't have that kind of margin, similar to eBay.

Also, I shop a lot online and most places do NOT offer free shipping unless their prices are high (like Zappos) - they may offer calculated or threshold free shipping. I think these Suits are so focused on Amazon that they conveniently forget that not everyone is Amazon nor wants to be...and, Amazon's 'free' shipping is either threshold shipping, or you pay for it with Prime subscription.  

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by: donald This user has validated their user name.

Fri Feb 14 03:11:09 2020



Rakuten is right. And if Rakuten were to put their money where their mouth is and offer free listing and free final selling fees not only it would dramatically increase the number of customers it would put them out of business for good.



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