Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Thu Apr 12 2012 22:18:28

Point, Counterpoint - Does Free Shipping Improve Sales on eBay?

By: Ina Steiner

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Does offering free shipping improve sales on eBay? That's a question we posed to readers this week, and the results are in: 83% say no, free shipping does not improve sales on eBay, while 17% say it does improve sales.

I was not surprised to see that many respondents said they tried testing listings with and without free shipping. Small independent sellers are lean and mean and are always looking for ways to improve sales and make more money - and they are always looking for ways to save money as well.

eBay gives sellers plenty of incentives to try offering free shipping, including giving fixed-price listings with free shipping a boost in search results, and awarding sellers automatic 5-star ratings for shipping cost DSRs when buyers chooses 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.

That helps explains that while 83% say it doesn't improve sales, 37% offer free shipping anyway on the majority of their eBay listings:

"DSR fear has ruined the selling experience."

"I went back to just offering free shipping because it's easier. And who knows, maybe someday it'll actually make a difference in my sales."

"While I would like to say yes to this, the numbers don't prove it. We do it mainly because most of our items fall in the 1-3 ounce range and it makes it simpler for the buyer to see the total price. Oh, and, of course, because eBay says they will boost our visibility if we do so. But that's not showing up in sales either."

As sellers are quick to point out, eBay is not a one-size-fits-all environment. What works for one product or category may not work for another. So while the answers may vary depending on the business model of the individual seller, all sellers must abide by the same eBay policies.

We selected two sellers with differing opinions and asked them to expand on their comments in the survey outlining their experience with offering free shipping. In Friday's newsletter, we run the two articles. In the first ("Point") one seller explains why offering free shipping helps improve sales. In the second article, another seller explains why offering free shipping does NOT help improve sales ("Counterpoint"). Thanks to Craig Clark of PerfectCornersCollectibles.comand and T. Perkins, Jr. of Teliperk Technologies Inc. for participating!

Now have your say - does offering Free Shipping improve sales on eBay?




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Readers Comments

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by: The Danni App This user has validated their user name.
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Thu Apr 12 23:05:00 2012

While no one size fits all model works for everyone's business I have personally seen tremendous sales growth from offering free shipping - AND larger profit margins!  Also when getting the 20% FVF discount on sales price of an item - if shipping was included in the price then that discount is applying to the FVF charged on the shipping amount - not true if separated out.
Each seller must test this themselves - and remember you can't see the customers you lost because they went to a seller offering free shipping.

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by: moonmyst This user has validated their user name.

Thu Apr 12 23:29:32 2012

I experienced minimal sales going the "free shipping" route.  I have a small store on eBay, and find that offering a LOW shipping cost, as opposed to none, gets sales. That way you don't have to inflate the product price to offset the "free" shipping. I believe most buyers are savvy to that game.

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by: exdwh This user has validated their user name.

Thu Apr 12 23:34:33 2012

Why can't eBay just add the shipping cost and then advertise at the higher price with free shipping? That way, combined shipping would still work for the more savvy buyers.

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by: Steevo This user has validated their user name.

Thu Apr 12 23:57:57 2012

Really, if ebay puts the free shipping items at the top in search and after all them are listed then on the 5th or 6th page they list the rest how can free shipping not help sales? It has to!

But not because of the free shipping, only because the search results have been manipulated by ebay to favor them.

If ebay decided to favor yellow items and put all yellow items first in search and buried the rest or didn't show them at all, would that mean yellow items sell better? Puleez! Of course they would, you can't buy anything else.

It manipulation by ebay, nothing else.

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by: elystoys This user has validated their user name.
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Fri Apr 13 08:14:13 2012

Free shipping.  I have been using free only on items that I think will ship for less than $7.   Lionel locos are heavy and pricy, so they require heavy packaging and insurance.  Now I am converting to ebay labels.  The downside of this is that I can't charge the shipping to a credit card…they charge my PayPal account.  This cuts out the discount I get from the Credit Card.  Oh well, I guess we just go with the flow.  Dave

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by: elystoys This user has validated their user name.
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Fri Apr 13 08:22:58 2012

If we offer free shipping Ebay then charges commission on the total payment + plus it drives additional revenue to PayPal.  Seems like a revenue enhancement for ebay paid for by sellers.  Dave

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by: Theresa This user has validated their user name.

Fri Apr 13 08:31:10 2012

Dave, ebay charges commission on the total cost already, whether shipping is included or not, that total is charged a final value fee too.

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This user has validated their user name. by: Al G

Fri Apr 13 09:29:19 2012

Fine analysis!

Yes, it is up to the individual seller.

One question though, for unique collectibles, doesn't it depend on how the search is performed as to where your item would show up? E.G. railroad timetable vs Santa Fe 1951 timetable?

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This user has validated their user name. by: Anonymous Annie

Fri Apr 13 09:47:58 2012

The only way that free shipping ''helps'' me is due to the fact that eBay will not PUNISH ME (and hide my listings on page-20).

The only cause-and-effect that one can associate with ''free'' shipping is actually caused BY EBAY.

It is EBAY who helps to fulfill their own ''analysis'' about what buyers ''expect''. ~~ Buyers don't ''expect'' free shipping... they are simply more likely to buy items that appear at the top of the search results.

There is no magic here! No silver bullet!

CONSIDER THIS... If eBay were to suddenly start giving preference to listings that included an exclamation point in the title... and having an exclamation point was a requirement for being on page-1 of the search results... COULD WE ALSO ASSUME THAT BUYERS ''EXPECT'' EXCLAMATION POINTS?!

Of course not! My absurd example is just as absurd as eBay's claim that ''buyers expect'' free shipping.

Nonsense, eBay!



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by: eBay Ron This user has validated their user name.

Fri Apr 13 11:26:56 2012

Good Job Ina, did you really think your ''survey'' would show any thing different? 95% of the 83% of the people that said Free Shipping does not improve their sales are on here saying ...Oh my God eBay is killing my business. Help me! Help Me! I cannot charge free shipping! Its ridiculous. eBay is out to run off the small sellers. My margins are too low! I cannot offer free shipping. Free Shipping does not improve my sales. I sell small items I cannot offer tracking numbers. OMG I dont know how I am going to survive!

And then there is Ming.....  

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This user has validated their user name. by: Anonymous Annie

Fri Apr 13 11:30:33 2012

Oh, how charming. (Stay classy, Ron.)

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This user has validated their user name. by: Tula

Fri Apr 13 11:56:23 2012

Free Shipping works for me. Your mileage may vary :-)

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by: Eagle This user has validated their user name.

Fri Apr 13 12:04:28 2012

As a buyer, I do look at the free shipping items first (can't help that since they are the first items listed), but also look at items with shipping and then determine the ''best deal'' as a total out-the-door or out-of-pocket cost. As a seller, I only offer free shipping as an incentive to customers that call in asking for a discount. We ship all items USPS priority insured and only mark up the actual shipping cost 50 cents for handling to help cover expense of transaction fees and gift box (which really doesn't make much of a dent in those costs). Packing material (i.e. bubble wrap, tape, foam popcorn, etc), employee wages to package item(s), transportation to and from post office every day, and the major part of transaction fees/gift boxes are paid from actual mark up of items. You can only mark an item up so much to stay competitive! We do use all new packing material and gift boxes. I have received many items as a buyer from Ebay sellers where they have re-used old bubble wrap that looks like it had been trappled in the mud with all bubbles busted, boxes and bubble wrap envelopes that have been re-used many times and taped back together in multiple places, and other packing items that should have been disposed of years ago. When I receive my purchase packed with that kind of material I loose respect for the seller. I firmly believe the customer deserves a professionally packaged purchase and understands there is a cost related to new packing materials.

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by: eBay Ron This user has validated their user name.

Fri Apr 13 12:10:24 2012

Hey Tula thanks for chiming in! Hope your sales are thru the roof!

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

Fri Apr 13 15:16:40 2012

It looks as if the pre school teachers were looking the other way this morning, and one The Ho's junior lackeys in training scribbled something predictably silly on the posting board.

Always, always, always delighted to see when I'm getting under some of the thin skins in San Jose.

Thank you, EBAY Ron, for making my day.

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by: PerfectCorners This user has validated their user name.
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Fri Apr 13 15:56:18 2012

Good comments. I probably should have made the fact that eBay is making most (but not all) of the free shipping "magic" happen by manipulating what sellers do more clear. Even so, that does not matter! We can complain all we want about how eBay is or is not doing things the way we think they should, and there say we are not going to play into their game and not see good sales results. In reality, offering free shipping is playing the game to best ability I can so that I will have exposure.

Having said that, there is without a doubt a buyer psychological element to it. I am very surprised at the number of customers that specifically mention free shipping in comments. While not everyone, there are enough comments to know that customers look for free shipping, even if, in reality, they are not really be benefited by it. Customers are definitely buying from me (or other free shipping sellers) just because shipping is free.

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by: Patricia This user has validated their user name.

Fri Apr 13 19:08:33 2012

I have found prices on Ebay to be much higher then on Amazon.  I don't know if that has to do with free shipping but I generally look both on Ebay and Amazon then usually end up buying on Amazon whether it is direct from them or a 3rd party seller.

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by: Digmen1 This user has validated their user name.
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Fri Apr 13 19:32:54 2012

I think most people think that free shipping does not help the small seller.

And as regards Amazon, the thing with Amazon is that sellers are competing with other sellers of exactly the same item, so the lowest price should win (or lose)

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

Sun Apr 15 00:37:06 2012

After months of heavy handed "free shipping" coercion, I presume most sellers have either run tests and/or crunched the numbers and already know whether "free shipping" works for them or not.

For me, "free shipping" has become a moot point.

What IS relevant and NOT a moot point is that ebafia and Devin Wenig continue with the LIES, THIEVERY, and deliberate DECEPTION in the face of clear and convincing evidence that disprove their statements.

Through their for hire reputation defenders, their lame official spokespersons, and ebafia employees who failed to register here as ebafia employees, Ebafia lies to its customers -- both buyers and sellers. They lie to shareholders. They lie to the media. The lie to Wall Street.

THAT'S WHAT RELEVANT! NOT "FREE SHIPPING" which isn't free, never has been free, and never will be free.

This is both The Point AND The Counterpoint. Ebafia LIES and it's past time the entire ebafia universe knew it.

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by: GrandmaJoey This user has validated their user name.

Sun Apr 15 13:35:13 2012

I love free shipping.  It makes my life so much easier because cuts down on all the time spent on shipping questions and invoicing calculations.  I changed all my listings to free shipping last year when ebay "suggested" we do so and rewarded us with an automatic 5 star rating.  I increased my price per widget by adding actual shipping, the FVF and 6 cents for the cost of the envelope. A very modest price increase and very competitive with other sellers. Taking price + shipping into consideration, my price was lower than 80% of my competitors.  On paper it was brilliant, as I can ship 1-2 widgets first class, and 3-7 in a flat rate envelope.  I should have seen my profits increase when more than 1 widget was purchased.  

My results?  Sales were dismal.  I rarely sold more than 1 widget at a time.  Yes I had a few customers that thought the free shipping was fantastic and left glowing feedback.  I started another account, this one with regular prices plus shipping to compare results.  Sales were great even though I didn't have much feedback and am not a TRS on that account!  And I did give it a good test, I would list the exact same item at the exact same time with the exact same price (where the item with free shipping on one account = the price + shipping on the other).  Without fail the item WITH the shipping charge would sell, and the "free shipping" item would not.  And don't forget, the "free shipping" item is getting the top placement.  

I tried.  I really tried.  I finally dropped the "free shipping" a couple months ago and have seen my sales increase.  My items are still well placed in search results, but I do work on my titles to ensure all the keywords are included so maybe that helps.  

I'm disappointed to report that free shipping did not improve sales in my category.  

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