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

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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.

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Readers Comments

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by: JustTheFacts This user has validated their user name.

Mon Apr 9 11:29:17 2012

Anonymous Annie said:
"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."

And here enlies the next set of ISSUES with buyers that ebay has created.

As more and more people realize that there is NO real free shiping and that the shipping price is now included in the tiem price, they are now going to scream for BOTH free shipping AND an item price discount.  

Then ebays next set of DEMANDS will be tht the sellers give FREE SHIPPING, 1 day shipping, free returns, partial refunds AND item discounts, then claim it is all "industry standards".

The problem wth ebay (although there are MANY) is that they keep making the buyers les and less responsible for their actions and FORCE the sellers to bear the burden for what they buyers REFUSE to do even though in the real world and according to the LAW the BUYER is responsible.

ebay knows tht 99.99% of sellers are not going to pursue theri rights in court so ebay and paypal will contunue to unjustly enrich buyers at the SELLERS expense and this makes ebay and paypal even RICHER!


I also want to correct Ina about Amazons $25 min.  The $25 min is on QUALIFIED ITEMS.  There are many items that do NOT qualify for the $25 min and am pretty sure the same goes even if you buy the Ship saver plan.

I make this point just to show that even Amazon understand that EVEYTHING cannot be shipped for "free".

Of course let it not go unnoticed that AMazon also raises it's prices in order to offer "FREE SHIPPING".

Oh yeah, and here is something I CAUGHT Amazon RED HANDED doing.

I was lookging for an item and had serched amazon and other places, well about a week-10 days later I get an email from Amazon telling me the item was now 50% OFF so I go and look and what they had done was more than DOUBLE the price making the price actually MORE expensive than what it actually sells for retail, making it still more expensive even with 50% off than I could buy it EVERYWHERE else for.
So the bottom line is, the BUYER needs to pay attention the what they are buying, if they do nt  then they have no right to cry foul later.

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by: BeenAroundAwhile This user has validated their user name.

Mon Apr 9 11:56:32 2012

I do not like to pull the wool over my buyers eyes with free shipping.  There is no such thing as free, because if I do it, I have to add my expenses into the price, just as others on this blog have mentioned.  To me, this is an unethical procedure, and I absolutely will not do it.  I keep hoping that there is absolutely no way that eBay will eventually force this issue, because if that happens I don't know what I will do.  There are problems here, but I love eBay and would like to stay.

One of the biggest problems with free shipping is selling Internationally.  If you put your expenses into your free ship item cost, then an International buyer will be buying an item that is inflated in cost, and they will not only be paying THEIR International ship cost, but they will also be paying the shipping cost of a person here in the U.S.  I do not approve of doing that, because it is totally unfair to them.  Yes, some of that cost can be reduced if they wait for an invoice from you, but then it involves sitting here and doing math all day long to try to figure things out.  

In my opinion, free shipping should not be forced on sellers the way eBay is forcing it.

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by: Tiffee Jasso This user has validated their user name.

Mon Apr 9 12:10:49 2012

I tried putting the shipping costs in my items and it doesn't work at about 80 sales with shipping extra and one sale with free shipping. Also when I checked the search patterns for my items. There was no difference. I was still 5000 or more back in the line of Ebay's best match service. I now just take care of my business the way I have always done and that is making sure my items are what I say they are and I treat my buyers with respect.  

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This user has validated their user name. by: basset

Mon Apr 9 13:56:13 2012

@tiffee - "I now just take care of my business the way I have always done and that is making sure my items are what I say they are and I treat my buyers with respect."

That IS the key. I have learned to ignore eBay as much as I can and continue to treat my buyers as well as I always have. For now, I DO have 100%FB and high DSR's but I think it has more to do with ME & how I have run my business all these years than eBay.

We need to learn to trust ourselves if our business policy  is working for us. Deciding not to bobble along and jump & bite at those dangling carrots has made me feel even more positive about my business.

eBay can pop up every so often like a grinning sock monkey & waggle discount carrots at me but I can see clearly that just like "free" shipping, those discount carrots come with a price.  

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by: Scotty This user has validated their user name.

Mon Apr 9 14:11:37 2012

In case anyone has noticed....ebay has removed the the shipping cost in summary view searches....except for the Free Shipping items....that is shown.  So now, a would be customer has to click the item to see the shipping cost.  This has had the same effect on my sales as the ''calculated shipping'' visibility on non-USA ebay sites last year....it has contributed to the plummet in sales.  My guess is they started this in January of this year.  No notice/announcement, nothing.  Why would they remove the visibility of the cost of shipping in the summary search view?  To force free shipping....  This has had a greatly detrimental effect on sales and it has gone unnoticed.

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by: ibs This user has validated their user name.

Mon Apr 9 17:31:51 2012

Scotty, you are right. I had not noticed. No shipping calculator on the summary!!!
All my items are listed with calculated shipping only. Never done it any other way. Honesty works for me.
I sell via auctions for antiques and collectibles..there is no way to build postage in and start low enough to gather enough interest early on.  

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by: LSP This user has validated their user name.

Mon Apr 9 19:09:22 2012

Ebay knows good and well that free shipping is not the industry standard. This is nothing more than deliberate misinformation created to increase their own bottom line at the seller's expense.

I charge actual shipping charges. Plus I offer less expensive rates whenever I can, even if it means using my own plain boxes. And I have never suffered bad DSR ratings for shipping cost. The main thing is, they don't want us profiting from shipping charges. That's what buyers ''expect''.

Unfortunately, as we have all come to expect, this kind of seller manipulation will continue until sellers get enough backbone to stop falling into the traps that Ebay sets out. In the long run, the value of sending that message to Ebay will be well worth the few additional dollars in sales some sellers think they may end up seeing.  

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This user has validated their user name. by: Ming the Merciless

Mon Apr 9 19:24:43 2012

Thank you, Ina, for publishing what we already knew about ebafia's "free" shipping Big Lie.

"Free" shipping may work for some but not for others depending on the product mix, its size and weight, and customers.

But that's really not the point.

Ming's ebay Law #1:

EBAY LIES. ALWAYS HAS, ALWAYS WILL.

Devil Wenig fits right into ebafia's lying, thieving corporate culture.

Ebafia's decision makers live in bubbles of isolation that have no contact whatsoever with the law, their users, or how their marketplace actually works.

Devil Wenig says "Let them eat "free" shipping" while forgetting what happened to Marie Antoinette.

I hope history repeats itself before he dreams up more ways to again alter the Bait and Switch seller discount program.

If his mouth moves, he's lying about market "expectations" and msot other topics.

Just like The Ho.

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by: Another Coin This user has validated their user name.

Tue Apr 10 01:37:57 2012

Besides shipping cost and calculated shipping not showing on the summary page, sellers no longer can see bidders zip codes. Don't know if this is an issue for most sellers, but I would like to know what area bidders are from.

Also watch your Paypal labels, if printing through Paypal. Date shows label was printed on the 10th but shipped on the 9th!! How can this be?

Another thing to watch out for on eBay if printing a label, it defaults to tomorrow even though shipping is for today. You have to keep an eye out for each and every one of your labels and make sure it is shipping with the correct date.

Alert warning still showing on a seller in my Paypal account but buyer received and left great feedback. So why is there still a red alert showing?

I always feel all these ''glitches'' and constant changes are just setting sellers up for the BIG screw.

Now to the topic of free shipping. I can see maybe free shipping on lightweight items and ONLY on fixed price items, NOT on auctions and heavy items.

While I'm ranting, I have suspected for a long time now that once a bid is placed on an auction the listing becomes invisible or at least that is what it seems. I know there are seldom bidding wars but most auctions ending with only one bid? Anyone else have thoughts on this?

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by: myforumid This user has validated their user name.

Tue Apr 10 03:54:49 2012

Hi there, I do use free shipping from time to time but the only thing it boosts are my postage DSR's. I have a great sell through rate of about 95%. I list in the Vintage Jewellery category, so I am not selling a convenience item. I will not be strongarmed by Ebay into paying more FVF's to them. They can go and take a running JUMP on that one. I already pay them more in fees to participate in the Power Seller and Top Rated Seller program. I am in Australia and we are not receiving any benefits that the US TRS have, other than paying more in fees for the privilege of wearing the badge!

I find offering Free Post has a Neutral impact on my Auctions and I do only use the Auction format.... I would probably have a different view if I offered BIN.



Marian.

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by: 10 year seller This user has validated their user name.

Tue Apr 10 09:57:49 2012

@another coin
''While I'm ranting, I have suspected for a long time now that once a bid is placed on an auction the listing becomes invisible or at least that is what it seems. I know there are seldom bidding wars but most auctions ending with only one bid? Anyone else have thoughts on this?''

I have wondered the same thing. EBay wants to be known for having the lowest prices.
They've been trying to jam down the prices for a long time. It started when they began displaying the end price in feedback.
Search manipulation has worked very well to limit bids.

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by: Dublinkim This user has validated their user name.

Tue Apr 10 18:15:47 2012

Yes - I have had a lot of success with free shipping and started selling more clothes immediately when I did it. I am at a great disadvantage by being on the West Coast (okay, no cracks about Californians), as shipping anything to the East Coast that weighs more than a pound can get expensive. Well, most clothing is more than a pound (which people just don't understand) and although my customers loved my items, they ALWAYS left low DSRs for postage costs. It didn't matter how much I tried to explain that postal rates are based on distance, etc. - I still got dinged for my shipping prices. So about half way through last year, I realized most items could fit into a padded flat-rate envelope for $5 and I increased every item I sold by $7-10. Suddenly, the stuff was flying off the shelves, I got automatic high shipping DSRs, 20% discount on my Ebay invoices and my income went up! I continually push the envelope with pricing things higher as the economy starts to turn, and people are very happy with the "free" shipping! I have to say even when I shopping myself on Ebay or other websites, if the shipping is free, I tend to purchase more!

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by: Digmen1 This user has validated their user name.
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Tue Apr 10 20:50:01 2012

Most commercial sites only offer free shipping on a certain dollar values.
They are not idiots.

How can people who sell low value items on ebay offer free shipping.

And most buyers are not idiots either, they no there is no such thing as free shipping.

The only idiot is the one working for ebay.

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by: booklady This user has validated their user name.

Wed Apr 11 08:51:11 2012

The free shipping becomes irrelevant when buyers search on ebay from lowest to highest. You can easily see what the TOTAL cost is for the item. It's pointless. When I buy things on ebay, I don't care if the item has free shipping or not, what matters to me is who is offering the lowest total price. It still pains me to see ebay taking a chunk out of my shipping. I sell books and we are only allowed to charge a maximum of $4.00 for Media Mail in the Book category. Ebay not only puts a cap on our shipping charge and also steals a chunk out of our shipping charge. This is money that I rely on to cover packaging and ebay fees.

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This user has validated their user name. by: Tula

Wed Apr 11 09:36:26 2012

@BeenAroundAwhile: Free shipping is not unethical, nor does it make sellers who offer it "desperate." Like I said in my earlier statement, it works quite well for me and the type of items I usually sell. Just because it doesn't work or you, doesn't make it an invalid or unethical approach to selling.

Studies have shown that people will go for free shipping more often, even when it might cost more. Not everyone takes the time to add up shipping costs. As sellers, we're probably more aware of it and less likely to succumb to that bias, but that doesn't invalidate it as a marketing tool.

Like a lot of other things at eBay, free shipping is not a one-size-fits-all technique, despite what eBay would like to believe. With heavier items, it's definitely an issue. I also don't offer it on my international sales, though I do subsidize the shipping cost to some extent. In selling unique vintage items, I have more leeway in pricing and a far wider profit margin than sellers of commodity goods, so my pricing can handle the flexibility needed to offer free shipping. That doesn't mean it will work for everyone.  

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by: andanotherthing This user has validated their user name.

Wed Apr 11 13:17:29 2012

At last - an article that actually does set out the hard facts about Free Shipping.  It has never worked for us in the UK, and never will.  It is just a way for eBay to get extra fees.

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by: Abernathy This user has validated their user name.

Wed Apr 11 16:14:38 2012

I'm surviving with free shipping because my competitors haven't thought to look for less expensive ways to ship, and I have. I'm selling more but it's impossible for me to say whether free shipping actually influences the purchase decision, or if its influence on search visibility (or getting to keep my top seller badge) is more of a determining factor. It seems to me that eBay has artificially created an imperative for free shipping by creating the shipping cost DSR, and it's too easy to ding a seller on shipping costs--no one likes them. As a buyer, shipping costs are the most common reason for me to leave a shopping cart without completing a purchase. As a seller, I see most people paying more with free shipping than they would have with regional shipping charges or combined shipping discounts. However unreasonable eBay's free shipping policy, my sales are benefiting temporarily til my competitors get the new situation figured out. I have just crossed the sales threshhold at which a basic store subscription would reduce my fees. After taking a hard look at eBay's fees and requirements, I've made the decision to set up a store, but not on eBay. I will be taking 60% of my inventory elsewhere--and yes, I will be offering free shipping.

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This user has validated their user name. by: baconsdozen
Web Site

Tue Apr 17 08:10:42 2012

For something that tells us ''We are only a venue'' ebay imposes a hell of a lot of rules and conditions on those using its ''service''.
Its constant free listing offers seem to me prooth that its finding things far harder than they used to be and the reason is its constant meddling with the way it seeks to control its customers.
If it aint broke dont try fixing it.

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by: bobbo This user has validated their user name.

Thu Mar 14 21:08:21 2013

It is desperate move by ebay to increase sales by forcing sellers to include shipping in the sale price.  This allows ebay to report shipping as income and paypal to make a percentage off shipping where when it was revenue going directly to the  post office they could not.

Has nothing to do with buyers IQ, the merits of including free shipping.  It has everything to do with ebay's ceo punishing sellers to coheres them into including shipping into the sales price so he can keep his job by hiding a huge decrease in revenues.  They cannot include shipping the sales numbers.  

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