Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Thu Sept 19 2013 12:38:08

Shipping Costs and Alternate Realities

By: Ina Steiner

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The rising cost of shipping is one of the most important but least discussed problems facing ecommerce. At the same time, large retailers and marketplaces are promoting the idea of same-day delivery, which is more costly. This move sets the bar higher for all sellers to meet rising expectations from customers who will expect near-instant delivery, just as large retailers have already reset expectations around free shipping.

Where buyers had always expected to pay for shipping for online orders, that's changing as retailers hungry for sales increasingly make some form of free shipping standard on their websites. Yet shipping costs increase each January - FedEx just announced it will increase shipping rates for FedEx Express by an average of 3.9% for U.S. domestic, U.S. export and U.S. import services effective January 6, 2014, and UPS and the USPS will follow.

Experian came out with a report today that shows 70% of the 212 national marketing executives at major retailers whom it surveyed plan to use some sort of promotional offer this holiday shopping season, and 39% will offer free shipping.

It's clear how Amazon.com is moving toward fast and even same-day delivery - it's building warehouses all over the country to be closer to the customer. And it has the scale to negotiate favorable shipping rates with a host of carriers.

eBay's strategy is to have brick-and-mortar stores fulfill orders for customers wanting same-day delivery, but for that, customers (or retailers) will have to foot the bill for delivery. Some suspect eBay is already giving a boost in its search results to items from online sellers who are located near shoppers in an attempt to offer speedier delivery and lower shipping costs on its marketplace.

Just as they've done with free shipping expectations, the major players in ecommerce are resetting customer expectations around delivery speed. Compounding matters is Congress' failure to act on postal reform, impacting the smallest sellers who rely on the USPS as one of the most affordable options for low-volume shippers.

In what alternate realities can retailers cope with rising shipping costs while having to absorb more of those costs themselves, and how are you coping with changing buyer expectations?




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by: LAbay This user has validated their user name.

Thu Sep 19 13:53:52 2013

The new internet sales tax along with higher shipping costs will make internet shopping less appealing for many. As usual, policy makers are not in touch with reality.

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This user has validated their user name. by: Basset

Thu Sep 19 14:12:28 2013

Being a former customer of LL Bean, their prices are significantly higher than when I shopped there, before they went to the ''free'' format. I'm guessing their prices will just keep going up while they bank on the brand?

Most ''free'' shipping out there is dependent on the buyer reaching a certain total. The places I look at, that total ranges from $35 at drugstore.com to $150 for a clothing retailer. I think Amazon has something similar.

IMO  that is probably a better business model than the all ''free'' all the time at LL Bean. Have the customer commit to a dollar amount to get ''free'' or pay separated shipping.


I sell mostly pre-owned, so I'm at a different price point than the retail outlets that offer ''free'' shipping. So whether I offer ''free'' or not, is based on what works for me & the customers. Last time I tried ''free'' sales went down so I'm guessing my customers were not thrilled.

Most of my stuff is first class shipping costs, so we are not talking significant costs whether shipping is added in or separated. IMO, ''free'' shipping items look higher in price on search results, compared to separated ship items. Only until you look closer can you compare.

Buyer-wise, ''free'' or separated, I just look at the total. Whether on eBay or online retail. If I'm near the magic number for ''free'' on drugstore.com, I'll buy a chapstick to put myself over it.


Re Fast Shipping: the new improved USPS Priority Mail effort is worrisome. I'm dealing with a package that disappeared off the radar after it was mis-shipped across the country. It made it there fast, just wrong address, wrong state, wrong coast & now has disappeared after the last scan. I'm wondering if they are putting too much pressure on themselves. Priority worked just fine before!

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by: Digmen1 This user has validated their user name.
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Thu Sep 19 18:13:12 2013

Yes higher postage costs are not helping online sellers large or small.

If there is no cost advantage compared to bricks and mortar there is not so much incentive to buy online.

A lot depends on the value and weight of what you are selling.

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This user has validated their user name. by: WOODJUNGLE! ON EBAY

Thu Sep 19 19:50:57 2013

I try not to deal with buyers that don't under stand 'free shipping' is just another marketing gimmick.
It's merely a different form of a discount or discounted price.  

I think most educated buyers can see how there is a trade off for paying shipping costs instead of physically  going to buy something which takes more time, gas etc.

There is no need to make it any more complicated.  

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This user has validated their user name. by: Marie

Thu Sep 19 21:12:04 2013

We still have some advantages over B&M stores.  People get to shop from the comfort of their own home or at the coffee shop or in the park, wherever they have internet.  That has value.  For some it is greater than for others.

Certainly these rising costs are of great concern and we have to stay on top of them.  But even with that, we are an advantage over B&M in many cases.

Yes most buyers to know that when offering free shipping that cost is getting into the price of the product somehow.  But trying to fight or refuse to use free shipping as a method of getting more sales may not be in one's best interest.

It is great to stand on principal.  But it isn't always the right move to make.  There is NOTHING wrong with using FS if it works for the type of products you sell.  I know that some Ebay seller are completely against it and see this as something wrong that Ebay is trying to get us to do.  When in fact it isn't Ebay but the customer pool at large.

Buyers like it.  They like just looking at that one number.  Plenty of polls have been done that shows buyers like it.  So it is just up to each seller to decide if it works for the products they sell.

Because of the enormous increases in postal rates for international shipments, that has almost completely killed off my international sales.  I still get some, especially to Canada, but no where near what I use to get.

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by: Bloggo This user has validated their user name.

Thu Sep 19 23:02:10 2013

Of course polls show that people like Free Shipping, if it's actually free. As soon as someone understands that the shipping cost has been rolled into the item and that buying multiple items with this "free shipping" is MORE expensive you get a different poll result.

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by: Gina This user has validated their user name.

Thu Sep 19 23:21:25 2013

My solution?  Drop-shipping!  I also have the added problem of memory loss due to an accident...I used to lose stock at home all the time.  With drop-shipping, I have no losses at home, no postage hassles, no UPS line ups, no stamps to lick, no tracking worriees!
When I am shopping I look ONLY at sellers giving free shipping!  99% of my shopping is for products to sell, products on which I must give free shipping to all countries!  If a seller has differring postage rates for different countries, or worse, eliminate some countries entirely, I walk away!

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by: fab1959 This user has validated their user name.

Thu Sep 19 23:21:49 2013

I'm with you on the drop in international sales. I'm averaging about 1 a month now. I did just notice today though on my etsy store analytics that I am getting viewers from Canada, China, UK and Australia (in that order). So will make sure to add promo copy to the listings targeting those folks.

I am going to try free shipping on a few next week to see if there's an increase in interest. Isn't there a break on Greedbay fees and better visibility if I do that? I have been against free ship, and have of course upped the opening bid prices to accommodate the shipping fees on those I'm selling.  

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by: auctionguy This user has validated their user name.

Thu Sep 19 23:29:43 2013

I find it odd that, when I list an item for sale on ebay, they want me to check the "free shipping" box. However, when I sell an item and go to print the shipping label, that option no longer exists.

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by: FREDDY This user has validated their user name.

Thu Sep 19 23:34:14 2013

Small sellers unable to compete with the large stores. Shipping is a large factor. You cannot compete with someone who has next to nothing to pay in shipping due to volume.

Profit margins and unrealistic goals from Amazon, ebay etc are making it impossible for casual or small business seller to sell online anymore.
That is reality folks.

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This user has validated their user name. by: elpereles
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Thu Sep 19 23:50:24 2013

It is become a little problem all the shipping raises. Last month, I was searching for an item that I just needed. Nothing related to trading card or any hobby. I was searching in eBay for the item. After some days I gave up the search and buy the item in the local WMart. The problem was the shipping charges. The total sum was more than buying it locally and paying taxes.

As seller. I noted a drop in International sales. In eBay, now is rare. Anyway sales in 2013 are poor compare to 2012.  

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by: Bloggo This user has validated their user name.

Thu Sep 19 23:52:04 2013

Amazon offers Free Shipping if your order is $25 or over. eBay coerces sellers to offer Free Shipping no matter the size of the order. Amazon does this with it's own merchandise. Ebay has no merchandise for sale.

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

Fri Sep 20 00:45:12 2013

I tried adding shipping costs into my items and it does not work for me. Sales dropped 80% or more. I now have started putting in my ads that I don't offer free shipping because my buyers who buy multiple items save money and my California buyers do not have to pay sales taxes on shipping costs that have been added into the price of the item. Paying taxes on shipping can easily add a $1.00 or more into the price of the item that a buyer has to pay.

I do get irritated at women and men who are naive (I am being polite by using that word, instead of a more appropriate term) enough to believe shipping is free. I am glad to hear them tout how they avoid those sellers who charge shipping, because I do not want them buying from me and then childishly dinging my DSRs.

Amazon probably pays a third of what I pay to ship items. They get huge discounts from UPS and Fedex and so do the department stores. Small sellers have to pay the highest rates out there to get their merchandise delivered. I have said it once here and I will say it again. I doubt if it is Ebay that puts me out of business, but instead, the U.S. Post Office. I lost most of my International sales with their double and even triple rate increases in January. Anymore rate increases like that and it will be cheaper for folks to go down town and buy it.  

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This user has validated their user name. by: Marie

Fri Sep 20 02:41:28 2013

@GINA

WHAT?  Free shipping to all countries.  Are you familiar with the rate increases of January this year?  No way unless it is an extremely expensive item.

@auctionguy

What option no longer exist?  You can't print a label or you are expecting to be able to print it for free?  Ebay has never said or implied that they would pay a seller's shipping costs.  Anymore than Amazon does.  

@bloggo

Amazon does not only do free shipping with their own merchandise.

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This user has validated their user name. by: Basset

Fri Sep 20 06:25:18 2013

Uh Oh. USPS in news again yesterday. Tone of article was they are on the brink of disaster and may need an emergency rate increase. Stamps only?

Elimination of Saturday delivery in one year brought up again.


On expectations of ''free'' shipping and ''fast'' delivery - who is doing this without additional requirements? The only ''all free (or fast), all the time'' I know of is LL Bean, Zappos and some eBay sellers. Are there more big-time outfits doing it without any additional requirements?

I consider Walmart, Drugstore-Beauty.com, Sephora, J.Jill, the large cookware sites, etc…. all big players to name a few. But you have to meet purchase requirements, join a club, or wait for a special offer to get ''free''  or ''2-day ship'' or other perks.

Even Amazon - don't you have to pay an annual fee for Prime (does that include free ship)? What does Macys, Neiman Marcus, Nordstroms, etc… do. Any of them all ''free'' or ''fast'' ship all the time without requirements attached.  

I may be in my own alternate reality, but it seems to me that many of the big players are NOT all ''free'' or all ''fast'' ship all the time. But sellers keep being told the line ''everyone's doing it''. Is everyone?


This is not meant to be for or against ''free'' or ''fast'' shipping - just FOR truth. It would be nice to see a ''larger font'' for the fine print on the requirements buyers must meet  to get F&F at the large retailers that all sellers large & small are pressured to pattern their business after.  

I buy a lot online and my own experience does NOT reflect the storyline that big retail is all ''free'' or ''fast'' all the time with no requirements. Unless I buy mass quantities or expensive items - I usually pay shipping & wait a week while being grateful that I did not have to leave home to shop.

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This user has validated their user name. by: Vintage Touch
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Fri Sep 20 08:04:26 2013

I hate all the shipping cost increases as well.  You never know for sure how the customer views the advantages over the disadvantages of online shopping.  I guess I'm happy that I offer both options by selling in a shop as well as my online store.  

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by: Ed This user has validated their user name.

Fri Sep 20 08:27:41 2013

I find all this nothing but a joke. ebay will not work with the sellers at all. When ask if we could pick states that we could compete in they told us all or none.
When we reduced the shipping cost 75% for the buyer we still received 1 DSR's and lost search.

There is no way that all sellers on ebay can compete with free shipping with 8 shipping zones.

ebay needs to at least allow sellers to pick what time zones they want to sell. Very soon buyers are not going to need ebay at all, and the sellers sales will drop so bad that the only one making money will be ebay.

We have changed our marking to sell wholesale only and it is growing very well with out needing ebay at all.

Who needs a company that just wants to punish sellers and won't do a thing to allow their sellers to compete.  

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by: Moonwishes This user has validated their user name.
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Fri Sep 20 09:33:58 2013

I had been looking at Amazons webstore to see if it would be a good fit for us, and noticed that they kept stating how wegbstores could sell the Prime free shipping to buyers. What I couldn't find anywhere, was how would you be able to compensate your buyer with free shipping. Does Amazon keep the $70 or do you get it on account for the buyer or what? They want you to sell it, but never tell you what happens on the back end. If I can sell a customer on a Prime membership, I don't expect to be subsidizing their 'free' shipping while Amazon pockets the Prime money and uses it themselves and then expects me to give away the free shipping. As I said, I don't know how it works as I couldn't find anything that said how it works, but I sure wouldn't sign up for something like that until I knew. I shop a lot on amazon and always try to have my shipping be free if possible unless I have to buy from a third party seller, and that depends highly on the item and why I am buying it.

I don't give 'free' shipping at my ecrater store. I can't afford to as it would mean increasing my prices around $2 and with sales slow currently, I don't think this is a good time to 'give' free shipping unless I actually dropped the price of my goods as well as gave out free shipping.

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by: lemonsandlemonade This user has validated their user name.

Fri Sep 20 10:20:25 2013

Amazon Prime is a yearly $79 fee.  The 'free shipping' is rolled into the price of the product.  The perks to the program is the 2 day shipping and all of the electronic content you get with books and movies.

I do Amazon Prime, but their ''Prime Price'' is not always the best that can be found (sometimes it is).  You have to take a bit of time to look around at other sites, but if you want the best price, Amazon prime is not always the case.

What I find Amazon Prime to be good for is when I need something quickly- you can pretty much rely on getting it in 2 days.  As far as the price goes, you can usually always find the ''Amazon Prime Price'' anywhere for the price of the item plus the shipping.  The question then is- how quickly do you need it?  Many times I buy other places because they have a special going on, things are on sale less than the Amazon price, and I can meet the MINIMUM ORDER AMOUNT to receive the 'free shipping'.

I think Amazon relies alot on people to be too busy to comparison shop, people who need things quickly and Amazon is quite reliable in getting things to you quickly, and maybe people who think that the 'Prime' price IS the cost of the item without knowing/realizing/questioning that the shipping cost is rolled in to that price.

Amazon does have the A-Z guarantee.  Frankly, for the honest person doing business with an honest and reputable company, do we REALLY need this?  I have NEVER had any problem with the VERY FEW issues I have ever had with online purchases.  Of course you need to business with reputable companies, but I think the Amazon A-Z and ebay buyer protection service the less than honest person more, the scammer more, the person trying to get everything for nothing, the deadbeats, etc, etc, etc......, which then raises prices for everyone else because of the dishonesty of these online shoplifters.

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This user has validated their user name. by: Rexford

Fri Sep 20 10:55:56 2013

Basset, I heard that news as well.  And mark my word, it won't just be stamps, but that is all the media will talk about. Like always, they'll only talk about the stamps increase.

I wish they would own up to how much international shipping revenue they lost after raising those prices earlier in the year.  Seems like that should be public information.

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