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

Sue @ TameBayOn June 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 June 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 June 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 June 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 June 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 June 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 June 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 June 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 June 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 June 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 June 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 June 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 June 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 June 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 June 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!

HenriettaOn June 24, 2008 at 6:18 pm Said:

@ FormerlyMarikabooks

I have formed the habit of copying my posts to clipboard. If they go pfft, which they mostly do not (to be fair) I paste to my blog and really go to town.

HenriettaOn June 24, 2008 at 6:25 pm Said:

@ Mechelle, you are ALREADY offering free shipping on multiple item purchases, as I did when I sold on eBay. Didn’t do me much good on the shipping cost DSRs either. I would like to point out when I invoiced I always expressed the free shipping as a discount on the listed shipping charge so there is no question my buyers didn’t know how much they were saving.

When I used to buy on European eBay sites I was apalled at shipping charges, but you know what, their shipping costs are much higher than ours. In fact I can and do ship to the UK for less than your UK seller can ship domestic mail.

Patricia1On June 24, 2008 at 6:37 pm Said:

Henrietta – you’re right. When we give combined shipping – that, too, constitutes free shipping. I’m presently selling some prints with shipping at 3.00 each. Customers are buying more then one – I’ve shipped up to 5 prints on that same 3.00 and even with breaks like that – they just love to play around with that shipping cost star. Its just a toy to them…might as well deal with it. I might add you almost never get a thank you for combining shipping like that. Sometimes I feel so unloved :-(

DavidOn June 24, 2008 at 7:21 pm Said:

I thought the research showed that buyers were not coming back do to receiving retalitory Negative feedback. This story does not fly with what they were telling us before.

Not all of a sudden it is about “FREE” shipping? Give me a break, it is just another way for ebay to make more money, not to give a better buying esperience.

AmberOn June 24, 2008 at 10:08 pm Said:

Free shipping on websites has nothing to do with free shipping on eBay.

Notice that even Amazon and BN have minimum purchase requirements despite receiving MASSIVE UPS discounts. Amazon also CHARGES for shipping for it’s Marketplace sellers. My initial and combined shipping charges are LESS than Amazon’s charges for Marketplace sellers.

And re: the DSRs, so many who offer free shipping are getting dinged unknowingly by buyers who think a 3 is the same as N/A. There’s no such thing as free shipping–it is shipping included, as the price of the items are nearly always raised to cover it.

No way am I going to offer free shipping internationally. Books are heavy!

SunOn June 24, 2008 at 10:35 pm Said:

Do an A/B test. Create another ID that sells the same stuff but offer free shipping to a limited region (48 states, 50 states & APO/FPO, whatever). The free shipping would have to factor in higher listing fees & FVF, but if free shipping is that of a strong pull, then convenience shoppers may not care enough about the price difference. I know in my category, margins are made on the penny so free shipping is impossible on eBay. (Your own web store is a different story). Of course, eBay wants to push the free shipping idea to increase revenue for them, but accept any marketing advice carefully as it may or may not apply to your business.

Concerned ebayerOn June 25, 2008 at 1:31 am Said:

Maybe ebay should lower their fees to help sellers offset the margin crunch.

Oh wait, JD said they lowered their take rate already I forgot.

That’s right they gave BUY free insertion fees!!

haha

What a bunch of liars.

Patricia1On June 25, 2008 at 9:05 am Said:

Please don’t ask ebay to lower their fees again. We’re still staggering after the last fee “decrease”. JD said “we listened” – well, unfortunately it wasn’t to us….maybe to their own number crunchers but certainly not to us. ;-) Talking about fees – I can’t believe what they’ve done to stores. LOL Glad mine is closed and gone.

AmberOn June 25, 2008 at 9:18 am Said:

Patricia,

My store fees have actually decreased overall.

Of course, my sales are so dismal thanks to the buy-flooded category that they are taking a larger % of my gross sales.

Received my first neutral in 5 years of selling the other day. Clearly a case of a buyer not reading the description, but I can now safely say that the Are You Sure? page with the little checkmarks doesn’t do anything. The buyer never contacted me until the little gray 1 appeared on my feedback page. And, as ebay corporate is realizing, I’m completely disinclined to work with the buyer now. No reason to, as the item was as described and the feedback is permanent.

As for blaming the websites, Brews, that’s not always the case. Amazon does not show you shipping charges unless you hunt for them or you are in the middle of checkout. It’s important to keep in mind that Amazon does not offer Free Shipping on every item or purchase. Only those shipped by Amazon with Amazon’s deep UPS discounts. And let’s not forget the 3-5 BUSINESS day delay in processing should you choose free shipping. No way would that fly in the DSR world of eBay.

(P.S. Looks like I can post again–wahoo)

MechelleOn June 25, 2008 at 10:25 am Said:

The store Subscription fees, Picture Manager fees Listing fees, and FVFs seem to be excessive charging to me. I think a store subscription should cover the store listing fees and picture manager- really why pay 50, 10 and .03 for each listing each month and the picture service.

I was very shocked to see how much they increased store fees.- 2 cent listing discount 2% FVF increase – I don’t see how this fee change decreased eBay’s take as they said it would. they gave me 2 cents, but took an additional 20 cents for every 9.99 purchase- they gained 18 cents. This is how they treated their sure thing sellers- people who have a store (prior to this debacle) pretty much guaranteed products listed on the site. Rather than demonstrate appreciation by decreasing fees(getting rid of picture, gallery, and listing fees) they insult us by decreasing our fees 2 cents and increasing them by 2% of the sold price-p 18 cents for 9.99.

Really eBay you take to much- 50 dollar store, 3c cent store listings (for low priced items) 12% sold price, 3 to 4+% + .30 paypal, and picture manager. Do you see how greedy you are being. To see this and to want us to consume the cost of shipping (because as Norrington said we own the inventory so we can afford to assume to loss – interesting) for our customers.

It really is as though you guys think we, our money, and our products are your products. You actually believe eBay sellers means eBay’s Sellers.

MechelleOn June 25, 2008 at 11:14 am Said:

Yes- scaring off buyers

I know eBay “leaders” think they are gaining favor with the buying only members with their little pop up feature communicating they no longer need to worry about those big bad criminal thieving sellers because eBay took care of you and no longer lets them leave you negative or neutral feedback, but this looks so bad!!!

One of my customers told me she found the message DISTURBING and she only buys on eBay. So a buying only member finds the message DISTURBING- that’s a pretty strong word. Not annoying, stupid, bothersome- DISTURBING.

You may want to think about how many other buying only members find your message DISTURBING and are turned off by the DISTURBING message so much that they don’t return.

I read some where that eBay acknowledged that they looked at the data in the changes but didn’t consider the emotions- this is another example of not considering emotion.

You can not send the message that you are their protector from the big bad seller and expect them to come and shop from the big bad seller. You must remember you don’t have a product to offer these people. If they are not comfortable shopping at our stores because of your DISTURBING message then what is the point.

I find it interesting that all of the policy changes that take place are not effectively communicated to all eBay sellers- no pop up reminders – or messages for us we learn about the new rules with policy violation sanctions. We don’t even get a mass DISTURBING message.

The reality that some buyers (and I’m sure it is more than 1) find your message DISTURBING should DISTURB you.

MechelleOn June 25, 2008 at 12:15 pm Said:

My fees have decreased as well, but not my store fees. I am one of the low str people who did benefit from the gallery free change. My comment specifically is directed toward store fees. I simply feel as though I should be charged less because I have a store- listing fees and picture subscription fees seem like over kill to me.

sandiOn June 25, 2008 at 12:50 pm Said:

I am not sure why my post was deleted. It was simply data from the latest survey on ecommerce trends?? Granted it contradicted eBay’s free shipping propaganda.

Ebay needs to get it; free shipping is so last year. All data from other retailers supports this – free shipping is NOT the direction ecommerce is going. I posted the trends report from Feb 2008 that clearly states that previous. The report that was deleted showed the large leaps in growth ecommerce has experienced so far this year (it has disappeared since I posted it last night) the data also shows sales are up across the board (well except ebay).

If ebay was truly concerned about free shipping, truly believed that is why sales are down because of shipping costs – they would in fact find a programming method that would enable sellers to offer free shipping, yet not charge said sellers FVF on the shipping amount.

Until they do that, the push for free shipping will be seen for exactly what it is, yet another way for ebay to make more money with no regard to either the buyer or seller. They continually place all burdens on the seller, Here is an opportunity for them to “show” everyone really is in this together.

EricOn June 25, 2008 at 1:24 pm Said:

I know free shipping pulls in buyers from the categories I have listed and sold items in eBay. However eBay is “taxing” free shipping more by their own policies. Most sellers will increase the price of products with free shipping a bit to make up the increasing cost of shipping and thus reduce the risk exposure of increasing shipping costs. eBay decreased the price on the listing fees and increased the price on the FVF fee. This increases the fees eBay receives for the increased price in the product due to increasing shipping costs.

If eBay is serious about increasing conversion through free shipping, eBay should offer FVF discounts for all listings with free shipping. Otherwise eBay is expecting to reap the benefits of free shipping while doing nothing to mitigate the extra risk of free shipping for sellers.

Patricia1On June 25, 2008 at 2:08 pm Said:

I don’t feel ebay knows or cares to know what little profit they are leaving their sellers – the only thing they can see is their own bottom line and how to make it fatter. They fail to see that a seller’s bottom line has to be fed as well or they can’t sell on Ebay. Yes, get with it Ebay – you’re not the only one in this business venture. Sellers realize you need to make a profit but if you keep running roughshod over them they have no choice but to leave! Nobody lists on Ebay for the “fun” of it!….and you no longer are so hot about bringing buyers and sellers together. Believe it or not!

YES! Heaven forbid they come out with another “decrease” in fees!