Catch-22: as shipping costs rise, customers want discounts

Sue @ TameBayOn 06.24.2008 at 10:57 am Said:

I know a lot of eBay sellers don’t like to offer free shipping, because they don’t like having to pay FVFs on the shipping portion of the item price: they argue quite rightly that it puts up overall prices.

However, I’ve done some testing of free shipping vs. not-free shipping all over eBay France recently and I am happy that (in my categories at least) it really does pull in the buyers. It seems to be particularly effective if you sell in a niche where free shipping is quite an unusual offer. If the buyers like it, who am I to argue!

MechelleOn 06.24.2008 at 11:17 am Said:

I can’t afford to offer free shipping! I have nlo intention of raising the cost of all of my products to account for the single item purchases resulting in much higher costs for my customers over all. The cost wouldn’t make a difference for single item purchases, but because I do not charge additional fees for multiple purchases the increased price would decrease the likelihood for multiple item purchases and significantly increase the cost to my customers that do buy multiple items.

Example:
Currently a customer can purchase say 10 cosmetic items and pay 4.60 for the total purchase. If I offer free shipping (whatever that is supposed to mean) I can’t afford to assume the shipping fee for a single item purchase amounting to 9.99. So, to protect my self for this loss (which the frequency of a single item is higher but more and more lately I have had an increase in multiple item orders)I would have to raise the cost of every product by the cost of postage. So that 9.99 item would then be 14.59 no price change to the single item customer. On the other hand if a multiple item customer bought 10 items at 14.59 their cost increases by $41.40 - that is not me providing a better buying experience and without a doubt will cause me to lose customers and potential customers.

I really don’t understand why eBay does not recognize the negative impact this will have for many buying members.

MechelleOn 06.24.2008 at 11:28 am Said:

The credibility of this study/survey is questionable at best considering paypal conducted the survey. That is equivalent to taking the absolute reliability of the claim of positive outcomes from a trial performed by the manufacture of the medication. This isn’t acceptable practice.

Also, unknown shipping costs are not really an issue on eBay, because shipping is always disclosed if not in the shipping fee box it is in the listing. So their should be no surprise to the customer when they checkout. So this is irrelevant to eBay.

TheBrewsNewsOn 06.24.2008 at 11:31 am Said:

Paypal surveyed those that did NOT complete the transaction (added items to the shopping cart but did not proceed to checkout). That is an important distinction.

Suppose for a minute that 100 potential buyers visited various websites. Out of those 100, a total of 80 were able to easily determine BEFORE adding items to the cart what the shipping cost would be because the website owner had done an outstanding job of making it clear and known in advance. So, of those 80 people who knew the shipping cost in advance, perhaps 8 would think the shipping costs as stated was too high and they would not buy thus never entering any items into the cart. Perhaps a total of another 8 decided that, for whatever reason (but something other than shipping), they also did not want to buy and they did not add items to the cart. So that would mean 10% did not buy because shipping was too high and 10% did not buy for various other reasons.

Now, the remaining 20 potential buyers (from the original 100) could not find information on the site to determine in advance what the shipping cost would be for their potential purchase. Therefore, they add items to the shipping cart in an effort to gather information. Of those 20 potential buyers who are seeking shipping cost information, it does seem likely then that close to half (43%) might abandon the shopping carts because shipping was too high. It is likely that website owners who do NOT do a good job of clearly labelling shipping costs in advance would be more likely to overcharge on shipping. Did anyone ask the potential buyers who abandoned the shopping carts and thought that shipping was too high this important question — Before you added items to the shopping cart, did you know in advance what to expect the shipping costs to be? (ie Was the website clear about telling you the shipping costs?)

Buyers who added items to the shopping cart and then abandoned the shopping cart because the shipping costs were too high may very well have been visiting sites that were poorly designed and in which the shipping was not clearly labelled in advance (thus the potential buyer was going on a fact-finding mission when they added items to the shopping cart).

And, again, those that thought shipping costs were too high — what was the relation of the shipping cost to the cost of the item(s)? Someone purchasing a $100 item is more likely to pay $15 shipping with no qualms but someone purchasing a $9 item is probably going to think that $15 is an outrageous amount, even if both items weigh exactly the same.

Again, it is important to interpret the data correctly. It is one thing to simply gather the data. It is entirely another thing to interpret the meaning of the data.

TheBrewsNewsOn 06.24.2008 at 11:46 am Said:

And, of course, if there were any potential eBay Express shoppers in the survey then that would be very easy to explain the high number of potential buyers who abandoned shopping carts. As I have pointed out a number of items, eBay Express is broken. Shipping is not calculated correctly because most sellers do not use the system in the proper manner so that checkout can be accomplished. Therefore, it makes perfect sense that potential eBay Express shoppers would abandon the carts because the shipping was too high — shipping was too high because the checkout system incorrectly calculated combined shipping.

I wonder why eBay never attempted to fix eBay Express (perhaps they didn’t know why it was broken?) but instead commissioned this study so that they could use the “data interpretation” to justify their iron-fisted approach to lowering the shipping cost that eBay sellers are charging.

Buyers on Amazon who buy my items do not have a problem paying shipping. Yesterday I sold $315 worth of items on Amazon to somone who paid $26 shipping. I had attempted to sell the VERY SAME items on eBay with a 25% markdown manager sale and free shipping and I had no takers.

These studies and surveys that eBay conducts are really a sad excuse for spending money to gather data that is meaningless. If eBay REALLY REALLY wanted the truth they could get it. But then that might mean that they would actually have to take some tough action… tough action INTERNALLY instead of tough action on those that they blame for all the problems (ie sellers).

TheBrewsNewsOn 06.24.2008 at 12:02 pm Said:

I think Mechelle makes an EXCELLENT point.

If the items a seller offers are likely to be something that someone purchases only ONE of then the free shipping model may work quite well.

For many of us, the items we sell are such that buyers often purchase MANY similiar items at one time and they often buy multiples to save on shipping (combined shipping savings discounts are a great motivator!)

eBay’s push to get all sellers to offer free shipping shows how they completely misundestand the fact that there are huge variety of sellers on eBay and that no one business model (free shipping, for example) works well for every seller. Mechelle’s combined shipping offer seems like a great idea to me and gives buyers a perfect incentive to buy multiples from Mechelle’s store.

This is a PERFECT example of Pierre and eBay claiming to know what is best for Mechelle’s business (free shipping makes everyone happier according to eBay!) when eBay is completely wrong in this particular example.

MechelleOn 06.24.2008 at 12:15 pm Said:

another flaw in this survey and its relevancy to eBay is the focus on shopping cart abandonment - there isn’t a shopping cart on eBay.com, so this survey focus is not relevant to our problem with shipping.

Richard shipping cost may be the lowest however to neglect the DSR communication - 4 = reasonable as it relates to the average DSR score for shipping fee and the suggestion that the fees are overwhelmingly viewed as outrageous is a flaw in logic. Currently the average across eBay is 4.63- when you take into account that the 4 is reasonable/fair by eBay’s definition that they communicate to the buyer, and 5 is very reasonable/fair- the 30 day average at 4.63 is really really good. The 12 month ave is 4.59 again normal people would view this as very good shipping fees over all among all sellers within the eBay marketplace. Really a hotel with a 4 and half + star rating is viewed as pretty darn good every where else. eBay is the only entity that views 4.63 and 4.59 stars as terrible service.

TonyOn 06.24.2008 at 12:24 pm Said:

There are a couple of problems with free shipping, as Sue points out the FVF’s and secondly, some buyers are confused as to which DSR rating to leave on free shipping.

I’ve tried free shipping in the past and it worked for me. However it’s not going to work for everyone and from a consumer point of view, reduced costs for combined shipping will never happen if a seller offers free shipping only.

It’s an area whereby ebay sellers can’t win.

The issue with shipping costs basically boils down to consumers being able to see the price it cost the seller. If sellers included an invoice of their wholesale costs of the items they sold, you can bet your bottom dollar that buyers would complain like crazy about that too.

MechelleOn 06.24.2008 at 12:35 pm Said:

The kicker is that I have not changed my prices to reflect the new postage rates so I pay 15 cents of their shipping fees and of course the 3 percent I have to pay out to paypal for it. For 2 months I have been displaying the postage and highlighting it so they know they were not over charged for shipping, but I don’t have 5 stars shipping- I right now on 30 have 4.75- 12 month 4.74- so there simply is no winning with eBay’s insane expectations.

DaveyOn 06.24.2008 at 12:35 pm Said:

Ditto to other posters on the interpretation of cart abandonment data. This is elementary, dear Watson.

Here’s one more point why free shipping does not work:

eBay has been encouraging international sales. My international sales, which I welcome, take much more of my time and also cost more to process and ship. I cannot offer blanket free shipping, as I cannot show a different item price for the same item both domestically and internationally.

As others have said, since the Postal Service doesn’t seem to buy into the concept of Free Shipping– someone has to pay for it. That someone is the buyer, ultimately, and if offered bundled into the item price, they pay the additional FVF fee on shipping as well. The buyer loses in the end, as eBay lines their pockets even more.

One last thought–Why doesn’t the DSR system give you an automatic 5 on the S/H Cost DSR if you offer Free Shipping? It should.

Patricia1On 06.24.2008 at 1:32 pm Said:

I wouldn’t mind offering some free shipping on smaller items I sell - BUT only if Ebay meets me halfway and either discounts my fees because I offer free shipping OR at least doesn’t charge a fee on the shipping portion - AND DROPS THE DSR RATING FOR SHIPPING COST ON FREE SHIPMENTS!. Is time for some give and take here. Up till now its been benefiting Ebay and benefiting buyers BUT sellers are coughing up their profits! It has to STOP someplace! If we each give a little perhaps we can make more sales. I, for one, cannot afford to give totally free shipping on everything - I am better off NOT selling at all! Don’t put your sellers into this predicament - it benefits no one and sellers soon reach the point where it simply is not worthwhile to sell on Ebay!

permacrisisOn 06.24.2008 at 2:42 pm Said:

RBH

“yet, even though buyers know exactly what they’re paying for shipping BEFORE making their purchase, shipping cost still accounts for the lowest rating on average. They knew what they were getting into when they purchased…”

I find myself thanking you again for bringing up a frustrating stumbling block.

Formerly Known As MarikaBooksOn 06.24.2008 at 5:32 pm Said:

Had Ebay put a stop a long time ago to the sellers who have been gouging on shipping for years this would not even be an issue. Those are the sellers that buyers are ticked off at not ALL sellers who don’t offer free shipping.

And frankly, at least some of the sellers who charge more than actual costs did so because Ebay ate them alive with fees and they felt they had to make it up somewhere. I am not saying if that is right or wrong just stating a fact.

So this issue that buyers purportedly have with shipping costs all falls on Ebay shoulders, if you ask me. Ebay created the problem, then allowed it to continue.

Now they want to punish all sellers for their own mistakes. Even that they are fumbling. In the end, they are giving those buyers that they want so badly a very cockeyed picture of Ebay sellers in general. You are scaring off the buyers yourselves by making legitimate sellers look like scammers, crooks, and thieves.

Formerly Known As MarikaBooksOn 06.24.2008 at 5:35 pm Said:

Hmmm. Is ebayinkblog as glitch-ridden as Ebay itself or are certain commenters not welcome?

A 3-paragraph-long post just vanished into cyberspace. I’ll not waste my time repeating it.

HenriettaOn 06.24.2008 at 6:15 pm Said:

The key word here is shopping cart. I have abandoned at least three shopping carts on websites in the last week due to extortionate shipping charges.

I could write 500 words on the problems we are having with powdery mildew on the lemons this year but that did not have any bearing on why I just increased the price of my organic eggs by 18%.

Shopping cart abandonment by would-be shoppers who go into sticker shock at proposed s&h charges on WEBSITES has absolutely no more to do with shopping on eBay than my mildewed lemons had on the price of corn for my chickens.

Obviously cart abandonment is of interest to PayPal who miss out on their website merchant processing fees but the only other link there is eBay who thinks sellers can’t add 2 + 2 and come up with 4 twice in a row.

Its the chewbacca defence!