Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Tue Aug 11 2015 09:55:05

Should eBay and Amazon Take a Piece of Sellers' Shipping Costs?

By: Ina Steiner

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Shipping is a challenge for online sellers of all sizes. Every year costs go up, and this year, UPS and FedEx instituted Dim Weight pricing, making large, lightweight items more expensive to ship.

It's standard practice to charge buyers for shipping and handling costs, but sellers who do so on eBay and Amazon must still pay a cost out of their own pocket. As we describe in more detail in today's Newsflash, Amazon doesn't pass along the full amount of what buyers pay for shipping, and eBay take a commission on the S&H portion of sellers' invoices.

Amazon, which is a retailer itself, is managing its costs (while investing in its fulfillment network) while at the same time earning shipping revenue in several ways. GeekWire took a look at Amazon's second-quarter earnings and noted that Amazon's revenue from shipping rose to cover nearly 60 percent its shipping costs for the quarter - a new high up from a low of 36.2 percent in the fourth quarter of 2011, it said.

We'd like to hear from readers on how you manage shipping costs and how you deal with marketplace shipping policies. And what do you think of building shipping costs into your selling price and offering free shipping - is that a viable strategy, or does that hurt when shoppers are comparing prices in search results?




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Readers Comments

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

Tue Aug 11 10:16:26 2015

There is no such thing as a free lunch.

ALL costs are rolled into the final price. If you, as a seller, are not doing that, you'll be out of business eventually.

Personally, some of my sales are "free shipping", some aren't. Since I'm not in the mass-marketing area, I feel I have some latitude in whether to include shipping in the price or separate it out.

For international buyers, unfortunately, shipping is extra.

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by: Bidonmine This user has validated their user name.

Tue Aug 11 10:17:12 2015

I believe that Ebay charging a percent of shipping has helped to erode the variety of items available on Ebay.
Before I purchase any item for resale I do a quick calculation in my head on what S&H will cost me. Since the customer has been conditioned to expect free-shipping, I have to automatically eliminate low price, unique items.
There is no such thing as free shipping since the cost of shipping has to be built into the price of the item. This results in low-priced-unique items having a starting price that is perceived as to high by the buyers.
Buyers once looked at the price of an item and, if it was a reasonable price, they would buy it after checking the shipping cost, understanding that shipping is not really free. This allowed lower prices on items so that a buyer would at least look at the item.
Now, with 'free' shipping, buyers see only the price of the item and do not think about what the seller may have to pay to ship the item. Since they do not factor in shipping costs to the 'free-shipping-price', The perception is that the price is to High! This results in less looks at your items and less sales (all of this has a proven psychological basis).

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This user has validated their user name. by: toolguy

Tue Aug 11 10:17:38 2015

This is a subject that really gets me going!

It's an unfair policy that's bias against overweight items.

Let's say you sell a $25 item that weighs 13 oz. the shipping is under $3 so eBay collects about .30 cents extra on the shipping FVF

If I sell a $25 item that weighs 10 lbs and can fit in a medium flat rate box at $10 I have to pay about $1 in shipping FVF fees.

Both items sold for $25 yet the HEAVY item has to pay more.

IT'S WEIGHT DISCRIMINATION and it pisses me off!

I've been waiting years for a class action on this subject.

I charged shipping on all items the 1st year but have been moving to the free shipping model so I can get a discount on my shipping cost by rolling it into the price of the item.

It's about the only thing I HATE eBay for doing!!!

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by: brokentoys19 This user has validated their user name.

Tue Aug 11 10:29:01 2015

amazing, now in hindsight that eBay couldn't make a bot to detect shipping fees gougers, eh?

One quick search yielded this from days long past. Some of the comments still ring true

Seller Complains to FTC over eBay Fees"

http://www.ecommercebytes.com/C/letters/blog.pl?/pl/2012/
1/1325419916.html

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by: Randy This user has validated their user name.

Tue Aug 11 10:50:39 2015

I never much cared for the FVF on shipping and still don't, but it did take care of the shipping gougers.  

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This user has validated their user name. by: Rexford

Tue Aug 11 10:58:37 2015

Randy says "I never much cared for the FVF on shipping and still don't, but it did take care of the shipping gougers."

Yes, now only eBay is gouging. And I have seen plenty of evidence of those who were giving fair shipping in the first place having to raise their shipping due to eBay's actions.  You haven't seen any cracking down on excessive shipping now that eBay makes money from it.

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by: queenfloraday This user has validated their user name.

Tue Aug 11 11:28:57 2015

eBay and Paypal take a cut of the shipping fees and eBay penalizes sellers if customers complain about high shipping costs with a defect. This is a lose-lose for sellers, confusing for buyers and more work for eBay CS. When will they hire someone with consumer selling experience and cut out these horrible policies. I don't think they want to be successful. So far, only upper management and the BOD is gaining anything at all.  

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This user has validated their user name. by: iheartjacksparrow

Tue Aug 11 11:30:53 2015

@Randy - Sorry to say, but the shipping gougers are alive and thriving. I guess you don't search for items in the same categories I do, but I recently purchased a group of items (totaling $350.00) which cost the seller a little over $2 to ship. I was charged $9.99 for postage and the seller didn't obtain tracking, insurance or signature confirmation. If I was a scammer, I could have claimed INR. And I agree with Rexford; why should eBay care what someone is charging for shipping now since eBay gets its percentage. eBay has zero incentive to fix anything that's going to cut into the fees they receive.

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by: ebay refugee camp This user has validated their user name.

Tue Aug 11 12:05:51 2015

Sellers passed the fee cost on shipping, onto buyers. If online shopping venue's continue down this path with fee hikes for everything under the sun consumers will head back to brick and mortar.
Ebay and Amazon should not be charging fees on shipping charges. Sellers do not profit from shipping charges.
Why has there not been a lawsuit challenging this and a lawsuit won by sellers about this?

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This user has validated their user name. by: IDKwhoIare

Tue Aug 11 12:29:02 2015

Free shipping - no such thing. What the Buyers are getting is less math to do, ALL fees, shipping & overhead is rolled into one number for them.

Maybe that is what they really want since they are so happy with it.  Can't tell you how many times I am thanked for offering it.  They don't want to read so it stands to reason they don't want to do math. I consider it a viable strategy to give them what they want.

On the other hand, most people I hear from say eBay is too expensive now. So is it a viable strategy for eBay to drive off Buyers due to their fee structure going beyond what the market can bear? No. Smart consumers vote with their wallets - it is their opinion that counts.

As Sellers, we spend 40-50% of our time managing inventory and supplies, most of that is trying to find deals to reduce the costs so we can stay competitive. If the venue is not doing the same, then they are going to get voted out by those Buyer wallets.

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by: smallstuff This user has validated their user name.

Tue Aug 11 12:37:45 2015

One benefit of this policy is that it has eliminated many sellers who charge unreasonably high shipping charges to avoid eBay fees.  

I have bought a number of used oriental rugs and, in that category, many sellers used to charge $65 or more for shipping and start the auctions at 99 cents.  After the policy change to impose final value fees on shipping, some of the sellers I followed changed their auction listings to a true starting value with a more accurate shipping (not free) charge.  

I haven't checked recently, and it is possible that they went back to their old ways.

The items I sell require new listings for each one (little opportunity for repeat sales).  Each listing takes some me 30 minutes or more to create.  Offering free shipping for US buyers simplifies my listing process.  I don't like to rely on eBay's shipping calculator.  For international sales, I estimate the cost of shipping and share the cost.  That makes my listings more attractive to foreign buyers.    
 

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by: JustTheFacts This user has validated their user name.

Tue Aug 11 12:41:16 2015

This is because none of these venues give 2 cents on the costs sellers are forced to endure. They only care about their bottom line and how much PROFIT they can make on everything, even at the actual EXPENSE of it's own sellers.

These venues are not sellers "friends, partners, business associates" etc, they are really their competitors (Amazon) and foe (ebay).

Enough is never enough for these venues, the more they take the more they want.

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by: shut1968 This user has validated their user name.

Tue Aug 11 13:54:45 2015

They've both been ripping off sellers for years. There's no excuse for either one to charge fee's on shipping, especially Amazon since they force sellers to accept the shipping rates Amazon sees fit for each category. Just another ploy to rid the marketplace of 3p sellers in select categories where they are in direct competition. I've noticed more and more over the past year they are even hiding the links to marketplace listings, putting them on the product page where they are least noticeable. Free Shipping is never free, someone gets it in the end, usually the sellers.

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This user has validated their user name. by: Basset

Tue Aug 11 14:03:09 2015


I have always thought the fee on shipping was unfair. If they wanted to crack down on the sellers charging .99 for a clothing item with $25 shipping to avoid fees - don't they just have to set their bots on the trail?  Category by category there has to be an average shipping cost.  Go over that average - bot can flag it, human can eyeball it.  Give go-ahead or zap the listing for avoiding fees.


WHEN SELLING:  ''free'' shipping did not work well for me when I tried it because of how it looks in search results - can't see any other reason.  I separate shipping and price - doing that has always had the best results for me.  On ''Fit'' or ''changed mind'' returns the shipping is already separate so the original price is easily refunded.  


WHEN BUYING  -   I notice most clothing purchases, and most other purchases have separated shipping and price.  Been buying across a wide spectrum of categories but most times these days shipping has been separated.

Don't know if that is a trend but I prefer it that way - seems more transparent and  I also can glance at shipping cost field and get a fairly accurate guess on ship method based on the charge.

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by: maxmad This user has validated their user name.

Tue Aug 11 14:33:14 2015


It's really a shock, I agreed to this, for so many years.
   
I'm actually surprised how well ebay weaseled it thru, there was some upset in the beginning, but it went away quite quickly and became the norm, to this very day

''blame it on the gougers''  too funny, it's really ebay that is the gouger,  


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

Tue Aug 11 14:51:15 2015

I too wish that Amazon made it clear to buyers of 3P seller's goods, that the seller's don't get all of the shipping charge. I've had buyers buy 2-3 items for me, so that the buyer has to pay 2-3 times the shipping fees. At times I return some of the 'excess' if it is completely ridiculous, but for the most part I have never had a buyer come back and thank me. Did they not notice or did they think it was their due? At times, depending on the weight of the goods, I've had a seller come back and complain about the shipping cost and wanted a refund which I couldn't give since the actual shipping and shipping supplies plus Amazons fee were so much that I was within around a $1 of making a 'profit' from it. When it is that close, I do not refund buyers. If they bought something out of the Sears catalog/website and were charged shipping would they come back and ask for a refund? I seriously doubt it. Yet for some reason they look at small sellers as being able to handle the costs of 'excess' shipping, refunds, etc. As a seller, I try to have sympathy for the seller if I buy something from them. I don't expect anything other than what they said. If something is SNAD I don't tolerate that real well though.

Amazon is going to take a fee from somewhere so in the long run I don't care where they take it from. I knew this was how they worked when I signed up for Amazon many years ago.  

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This user has validated their user name. by: The End

Tue Aug 11 15:13:59 2015

"Should eBay and Amazon Take a Piece of Sellers' Shipping Costs?"
ABSOLUTELY NOT !
That actually is a crime. They are stealing money through software manipulation.
If I pay rent to a landlord in a brick and mortar store, he would be committing a crime (mafia) in taking ANY money other than just the rent.

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

Tue Aug 11 15:23:33 2015

The word FREE in shipping is a four letter word as far as I am concerned. The problem is Amazon and Ebay, like Walmart, operate on percentages and quantity. So if they clear five to ten cents per item, they are happy. They expect sellers who sell as little as ten to even thousands of items to do the same and be happy for the extra income, the losses due to mandatory free returns, and the hard work.

This small percentage per item works for large companies; look at their overall earnings. In the meantime, Americans are getting poorer while corporations get richer.

I don't place the blame on the corporations, I place the blame on sellers who think they can undermine other sellers and get the advantage by going along with such practices and cutting the opposition down by a penny. In the meantime, they are blind to the fact their sales and profits are spiraling downward, while their costs of selling are spiraling upwards.

Added to all the above problems, is the Asian influx of flooding any selling venue they get on. They can live on ten cents a day and are happy to get the work. Why not, they get free postage. But, it is not China that is paying for the postage. It is Americans. The Post Office loses $1.72 for every small (3 ounce or less) packet they deliver from China. And the loss goes up as the ounces and pounds increase.

The myth that China is paying postage for Chinese sellers is a good one and has worked well for Chinese sellers. However, Congress is now taking a look. Get your emails and letters going to your Congressman and tell him or her to pass legislation that prohibits the USPS from charging any country less than it charges American citizens to deliver mail or packages. Also campaign for a tax similar to what Canada and the UK charge on imports that are delivered by their postal departments.

Leveling the playing field will help American sales and American sellers which is good for the economy. It will also bring more revenue to the Post Office which would help to keep postage costs down in this country. It would give more tax money for Washington, which in turn, should make legislators happy.  

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by: ajeweler This user has validated their user name.

Tue Aug 11 16:23:42 2015

I think that is a not fair policy, they did this to offset the people who list heavy items at 99 cents with 100.00 shipping, so fleabay in all its wisdom makes all sellers pay for these clowns, and this is also how the "free shipping gets better search results" come into being horse crap!!

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by: comments This user has validated their user name.

Tue Aug 11 16:24:40 2015

Yes they should. Because the amount they take is so small that it can be easily offset. For that tiny price we no longer have to worry about getting dinged for 1 star DSR's. To me that trade off was plenty worth it.

I hope one day they stop giving returned item credits in exchange for return defects in the same way. I would rather be financially punched then risk a ban punishment to be honest.

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