News out today that L.L. Bean and Zappos are leading a new “free shipping revolution”…
Steve Fuller, the chief marketing officer at L.L. Bean, said his company came to the decision after examining “research after research after research” showing shoppers prefer to not pay for shipping.
Last week, eBay announced an increased push to drive sellers to offer Free Shipping on everything. “Buyers have told us they want free shipping.”
Here we go again. Of course consumers are going to say they prefer free shipping. Haven’t we all wished at some point that we could get something for nothing?
But the reality of “free shipping” is this – There is NO such thing as FREE Shipping.
USPS, FEDEx & UPS still have rate charts last I checked. They are not offering free shipping.
The Realities of “Free Shipping”
1. There is no such thing as “Free Shipping” UNLESS the company is truly paying the cost of shipping out of their pocket.
2. UPS/USPS/FEDEX do not ship for free. There is a cost, a very expensive cost, to ship goods from point A (online merchant) to point B (consumer).
3. Unless the merchant is paying for shipping COMPLETELY out of pocket (which will soon drive them out of business) they are raising the price of the item to cover their shipping costs. Are we as consumers that gullible to believe that companies are “gifting” us with free shipping?
4. In some cases a company will subsidize free shipping with some other source of revenue . Amazon charges for their Prime Program.
5. Big companies like Amazon or Zappos get deeply discounted shipping rates from the carriers. Smaller merchants do not enjoy those rates. Big companies are better positioned to offer Free Shipping and mark up their products with a smaller increase.
6. Smaller online merchants don’t get the big shipping discounts and “free shipping” often takes a bigger bite out of their bottom line. While this model does work for some of their products, it does not work as a model across the board. If small merchants are forced to offer free shipping as part of this “free-shipping revolution” they will end up working on thinner margins to remain competitive.
Mr. and Ms. Consumer… Is this really what we want to happen to our small independent online retailers?
Excessive Shipping Charges are Wrong
I wholeheartedly agree that companies who charge excessive shipping are wrong.
But the flip side of this is that more and more American consumers want to get something for nothing.
We want great selection AND dedicated customer service AND we want the best price AND we want free shipping AND we wanted delivered now.
Ok – Economics 101 broken down in plain English. Stuff costs money. You need to make money in order to have something to spend.
If one group of people is getting stuff for free that they should be paying for, then somewhere, another group of people are not getting paid what they should be.
Small business is the fiber of this economy. We need to look at this picture holistically for the sake of our economy.
And I blame BOTH the consumer and the big online retailers for perpetuating this “free shipping” myth.
Stores want to make sales. Consumers want to save money. Fair enough. But within reason.
But this “me, me, me” “How can I get everything for dirt cheap at all costs?’ is driving our country and our economy into the ground. Do you really need 43 pairs of shoes from Zappos, just because they offer low prices and free shipping?”
Now I suppose some of you are thinking “Well, Lisa have you ever taken advantage of a free shipping offer? Yes, I have. But it is not the driving factor in my decision to buy online. And no, I don’t have a boatload of money stashed somewhere to fund copious amounts of online shopping. 🙂
In fact, I’m one of those people who, when shopping at a local store and receiving great help from a salesperson with my potential purchase will buy from that store. If they’ve provided a service to me, I won’t steal their service and go online to get it cheaper and save a few bucks.
It’s not that I’m rich. It’s that I’m not short sighted. Because I know that my local enconomy needs that local store. And if they are providing value, I want to support them. Even if it means that I pay a little more out of my pocket.
Which brings me back to the free shipping revolution.
Let’s get back to the model of “a product sold and delivered at a fair price”.
Yes people’s budgets are squeezed. But the answer is not in driving American owned online businesses out of business, by demanding an ecommerce model that is not sustainable for millions of sellers. How does that benefit us as consumers in the long run?
From the early days of mail order catalogs, Free Shipping was designed to be used as a PROMOTION not as a standard price model.
- It costs money to get in the car and drive to the mall and buy a pair of shoes.
- It costs money for an online retailer to ship a pair of shoes.
- Gas is expensive.
- It costs more money to fill your tank.
- Carriers are charging retailer fuel surcharges.
- Shipping is NOT free
Ecommerce is one of the strongest growth industries in our country. Let’s not ruin the model because we want something for free that is not free.
I’m all for free shipping promotions. They are a great way to excite your customers, give them something special and generate more sales.
But when Free Shipping (which BTW is the #1 preferred online PROMOTION) becomes the norm, then what do etailers offer as a promotion?
With the free shipping promotion gone and stores already running sales to attract more buyers… what more is there to offer as a buying incentive? There is no MARGIN left to offer incentives.
And ultimately, I think what consumers really want at the end of the day is a fair price for a good product delivered for a reasonable amount.
-Lisa
So true and nicely said.
Well said, Lisa! I’m like you – if I’ve gotten good service from a local retailer I don’t go online to get the bargain. But I have to confess – I DO like free shipping. But as you say – someone pays for that. I do like Amazon’s model of free shipping when your order hits a certain size and I have found myself increasing my order to hit that free shipping limit. But in that case, you’re right. Essentially I’m paying for it with the additional amount I’m paying for the product.
Your point about this squeezing out the smaller merchants is exactly right on. As a seller of digital products, I don’t worry much about shipping. In fact, that’s one of the reasons I prefer selling digital instead of physical products – I don’t have to hassle with the shipping. But when I sell a physical product, I have to charge shipping.
As an example, a customer bought a close-out book I was selling for a dollar the other day – but I had to charge her $8 in shipping! If I don’t I am taking that $8 out of my pocket. Could I have given her “free shipping”? Yes, but then the price of the book would have had to be $9 – just for me to break even. If I were competing against an Amazon who could afford to sell it for $1 and ship it for 0, then I would be out of business.
Excellent post – and very thought-provoking. Thanks for your great ideas!
I compare prices for the cost of the item and the shipping when buying on eBay or any online store. I enter in the cost and the shipping to see the total $ amount. 9 times out of 10, I will buy the item that does NOT offer Free Shipping because the total $ amount is lower.
Wow, finally someone with clout telling it like it is! Thank you Lisa!
I guess if consumers said they wanted every third item they purchased for free they would get that too? Give me a break.
As an ebay TA & REDOL consignment seller I sell many items by auction. Kind of hard to build in a ship cost when I dont even know the final sale price in advance. And now I will be penalized for it!
VERY FRUSTRATING!
Lisa, I wish America cared about Mom & Pop Businesses… If they did Walmart wouldn’t be taking over towns coast to coast running mom & pop into BK court.
Time to Boycott big box stores?
The end result will be to squeeze out the smaller, one of a kind seller, for many products that give sites their variety.
“Free shipping revolution” is akin to big bank tactics.
Yesterday I passed on a beautiful stoneware pitcher, handcrafted in the USA, because it weighs at least 4 pounds all by itself. You cannot buy that from the original company. It’s discontinued. Nor does the big replacement company have ANY stock of any piece in that pattern.
I can only afford to offer such things to buyers who get that breakable items have to be packed well to arrive in proper condition, and that costs something.
Clothes and shoes …have you seen how these are shipped by the big guys?
No one seems to notice that they literally can ship for a few dollars, due to their big discounts. Everyone likes the big “W” too, then then are unhappy that jobs went overseas. (Once they’ve beat out the competition, interesting how the prices start to creep up…)
Thanks for your excellent analysis!
I just want a valid way to compare items off eBay. If it requires that the shipping is included in the price of the item then so be it. This will eliminate the discussion about combining shipping, the price is the price. So as a seller sharpen your pencil and give me your best price. One price, period.
Well put, Lisa, but a lot of people are missing another HUGE point.
If I have a small item that sells for $10 and 2.50 shipping, people search by price+shipping.. okay, fair enough. I can list it for 12.50. BUT I’M STILL GOING TO SEE MY FEES GO UP. Currently, I pay 12% on the $10. Under the new plan, I will pay 11% on the 12.50 … that is an 18 cent increase on a VERY LOW priced shipping item. Under the new plan, ALL SHIPPING even those included in price, will be paying the 11%. You can’t get out of the fee by offering so called FREE shipping. The difference here is only the 20% TRS discount that doesn’t apply to the shipping end……. AND this is all on top of the paypal fees too.
WHAT about the heavy items? cast iron. dinnerware that costs almost as much to ship as the price. Will customers think twice about the “disney mug for $18.00” instead of $12 + 6 s&h.
Dear Chuck:
As a Top-Rated Power Seller let me provide you with a course I like to call Buyer 101. If you want to know your best price, you should be searching using price + shipping on eBay. This will show you your best priced items for comparision.
What you need to understand is that shipping is NEVER free. It is either added to the price of the item or shown separately. Since shipping is based on weight and distance by all carriers, it is not possible to list an item at a fair price for everyone. Your cost will be cheapest when buying closer to home. If it isn’t then the seller is ripping you off. The difference for me to ship an item weighing 1-2 pounds to a local customer on the west coast versus shipping to a customer on the east coast is $3.00. This variance would not be fair to be incorporated in the standard price of an item.
Buyers need to be realistic and educated in the buying process.
For example, when you see a seller offering an item at a very low price and the shipping is very high, you can assume that they are attempting to avoid the fees that eBay charges for selling that item by hiding the true cost of the item behind that false cost of shipping. If they were to stop these culprits, the changes they are making would not be necessary. It is these thieves that are ruining the eBay platform for buyers and sellers alike. We are all now going to pay for their wrongdoings. What eBay is doing, and those that agree with their changes are doing, is driving up your prices and running small retailers out of business. They want to charge fees to sellers on your shipping cost regardless of rather they are included in the acutal price of the item or shown separately. This will ultimately have to be passed on to the buyer.
As for combining shipping, this is something that only the seller can give you an accurate amount for. Your items have to be packed in order to determine the true cost of shipping. The eBay calculator is not smart enough to know what size box will be needed when items are combined. The box and packing materials need to be figured in to the total order. It would be nice if we could just combine the items weight, however the shipping materials weight must be included, as it is the packages final weight that will determine the true cost of shipment.
So as a buyer, please give thought to these issues before concluding that a “one price fits all” would benefit the customer or allow for a level playing field when it comes to a sellers cost of doing business.
If we all allow eBay to makes these changes it will directly affect the consumer with either higher prices or less product to choose from as small sellers close their doors to eBay business.
So as a buyer, wake up and take notice of what this will do to you before it’s too late, or you will get exactly what you are asking for. One price, period! One HIGH PRICE! Ask yourself, is this what you really want?
Hi Lisa,
I completely agree with you. I have been selling on eBay for 12 years and it is getting more difficult. I am getting more frustrated. I will offer free shipping on items that will cost a couple of dollars to ship. But when it comes to items that are going to cost $10.00 or more to ship, I would lose money if I offered free shipping. When I buy something online, I look at the bottom line of what it is going to cost me. If free shipping is offered, but the price is much higher, I will pay the shipping cost to get the item for less. I don’t think consumers realize that big businesses can ship for less. I don’t think eBay cares about the sellers anymore. They should because without us, they don’t have a business. EBay keeps raising their costs, but expects us to drop ours.
Jane Parker
Dear Lisa. Very well said. You made all the important points. It is the “HOW” to get the bigg guys stop, listen and most importantly re-group and change back. That is always the hardest, if not, never going to happen point. I tried with wind and solar and building new electric grids as the right thing to do as an end to our dependency to the alternatives, back in and through the fall of 2008. As we see greed often outways commonsense. Having said that, I do applaud your strength and outspoken voice on this, yet another very important challenge before us all. I will support you in this. What or how may I help. Thanks Lisa.
A fan of your writing for a long time.
Karen
This is the e-mail that I *attempted* to send in response to an e-mail from eBay government relations dealing with freedom of internet sales. I say attempted because the e-mail was kicked back and I have no idea how to actually get an e-mail to a real person at eBay. I completely agree with what eBay was saying, but don’t think that they care anything about small sellers.
*******
TO: eBay Government Relations.
While I certainly share your sentiment regarding minimal government intrusion into internet sales, I don’t believe for a minute that eBay is concerned with true small sellers. At one time, I made a full-time living on eBay, but you have shown time and again that you protect the buyer while antagonizing sellers. By chipping away a little at a time, you have made sellers very frustrated. It is next to impossible to “contact” eBay regarding problems (as a small seller). You removed the ability for a seller to leave negative feedback (believe it or not, there are manipulative, bad buyers out there), continually raise fees (like recent fees on shipping), while putting a spin on it (to make it appear that you’re actually lowering fees). You may think that we’re too stupid to notice, but we’re not. eBay is concerned about eBay – and huge profits. You are NOT concerned about the small seller trying to make a little money on the side to make ends meet. Don’t pretend like you are. Nothing wrong with making loads of money, just don’t exalt yourself as a company that’s looking out for the little guy…you’re not.
Tim Hoover
hooverhouse
Thank you Lisa. I can fully appreciate big companies like Zappos and Amazon giving free or deeply discounted shipping. In fact, when it comes to the big companies who I know get sweet deals from shippers, I do rather expect either free or super low shipping. But when I buy from small micro sized vendors on Ebay or Amazon marketplace, I expect to pay for the shipping plus a small packing fee.
By pushing so aggressively for free shipping, Ebay is forcing small vendors to raise prices and remove incentives for making multiple purchases. Ebay is not Zappos nor is it Amazon. I wish Ebay executives would understand that.
TRUE… with free ship, customers won’t be asking what the benefit is to purchase multiples at one time as there would be no shipping discounts. You can’t discount Free.
In case no one has noticed, we are in the middle of an anti-business (anti-capitalism)”storm” of sorts.
More and more, anyone who is trying to earn an honest dollar is looked at as evil, and well, a little slimy.
Somehow, making an honest living is no longer a virtue in and of itself, it must be supplemented with loads of charity.
“We must give to the less fortunate, pay it forward, etc. etc. etc. Shame on you if you don’t offer things for free, like free shipping. In fact, all the companies that REALLY care are the ones that “give back” to the community. Earning a profit should be second place. You really have your priorities mixed up, man.”
I’m all for helping others, and being peaceable, but where did this stuff come from? Just look back to the ’60s at Haight-Ashbury, the hippies that gathered there wanted everything to be “free.” Now that that generation is in charge of some powerful entities, the same philosophy is re-emerging strongly. “Your stuff is our stuff. You need to share man. Why do you need more money?”
It didn’t work then. It ain’t gonna work now.
FREE SHIPPING = HIGHER PRICES
Unfortunately it doesn’t really matter how we feel about Free Shipping (on eBay) as long as eBay is favoring the free shippers in search, giving them a “free” pass on their shipping DSRs, and charging the same FVF (coming soon) to sellers who list shipping separately.
The only way to get the message across to eBay is to stop selling there. How many of us can do that right now without hurting our bottom line? Not many, but I predict that more of us (myself included) will be working harder in that direction (if we weren’t already doing so – I was.) In the meantime, I’ll finally crack and list my auctions with FREE SHIPPING since my search will be better, my shipping DSRs will stay the same or go up, and I’ll pay the same FVF as I would have with a ship price. I’m not happy about it either but it’s eBay’s site. They can do what they want.
eBay will keep changing, most of the small business sellers will be pushed out (over the past 16 months I have seldom sold on eBay) – and along will come another old-eBay-type site that will be hugely successful. I can’t wait!
I’m with you on that one Gerry. I can’t wait!
RIGHT – ON SISTER!
ebay doesn’t care what any of our comments are ~ they will do what they will do…
This will cause sellers to stop selling items that cost a lot to ship like the dinnerware replacements that I sell. I’m already looking to change what I sell, and I’ll just take my heavy items off ebay an put them in my local flea market booth. Does ebay care? No.
I would agree if ebay were to charge FVF’s on shipping and handling charges IN EXCESS OF actual shipping costs. If we use online shipping, they will see actual cost and anything above that would be fair game. That would keep the excessive shipping in check.
Customers aren’t stupid. I say a cell phone for 99 cents with $399.99 shipping. Okay.. ebay was losing FVF on that one. I thought they make a rule a while ago about that sort of thing but you still see it.
What about the INTERNATIONAL sales thing? I love selling internationally but shipping is very very very expensive. Ebay wants to encourage us to ship internationally. Yippee! Helping my selling internationally is great!! BUT now, that super high shipping is going to be charged 11% more. I have to factor that in. (so is ebay $$$$)
I like your dose of reality. There is no free lunch. Some lunches cost regulars less.
Lets have meal equality so we can all enjoy our lunch.
Thanks Lisa
Just do the math…eBay gets a bigger cut on every sale when the shipping fee is added. Who wins…?
Intelligent Customers can usually tell at a glance whether an item with Free Shipping, versus one with Shipping charges is the better deal. Many times Free Shipping costs them more. The words FREE SHIPPING attached to any product alert me to check out the price closer.
We’ve always kept our prices and shipping as low as possible while extending the best service possible. 99% of our customers recognize this.
A customer said this to me the other day: “eBay is behaving like our government, mandating how we buy and sell.” This was volunteered, I had not mentioned anything about eBay or their policies. More and more of our customers are saying they don’t want anything to do with eBay or PayPal.
It’s such a shame that our Freedom to make our own business decisions is being stolen from us. We will comply with eBay’s free shipping on the products that we can, but heavy items are costly to ship. Whether we charge the shipping visibly or pack it into the price, it still isn’t FREE to the customer. I fear we will see many of the bigger and heavier items disappear from eBay.
The Antique and Collectibles market may revert to Physical store sales again, making it harder to find desired items and drive the prices back up. Who knows? That might be better in the long run for local sales and sellers, but it won’t be best for buyers.
Thanks Lisa, so stating it accurately! There is NO Such Thing as Free Shipping!
I have noticed that companies (Like Zappos) who offer free shipping, have built the shipping charges into their prices.
What you can do is take your shipping costs over the last 2 years, Divide that by the number of items that you shipped. This will give you a rough cost of shipping per item. You can add that number to the selling price of your products.
I would do this as a test. Run the free shipping offer for 6 months and check out the results.
Just a thought.
Kurt
Hi Kurt,
You bring up a very good strategy about cost-averaging your shipping costs. Because the cost for shipping a wide variety of items can vary significantly depending on what you sell, using cost-averaging is a way to get a good benchmark on what your average per-item shipping cost is over an extended period of time (and people can cost average for 2 years, 1 year etc.). This gives you a good starting point to test different options. If you have a big weight variance in the items you sell, you’ll still need to take that into account when folding shipping costs in the item- if you ship a very light weight item, there is only so much play in that shipping cost that the market will bear. But for items of a similar weight this is definitely an option. People can even cost-average by product category. Cost-averaging is definitely a strategy that people should explore to see if it works for their model.
-Lisa
Great article and completely true.
3-4 years ago, I created a 2 ebay account with exactly the same products but intead of the shipping calculator I offered free shipping – it was going like this?
Item 1: $9.99 + about $3 shipping For a total around $13
Item 2: $14.99 + Free Shipping
I sold back in those days 30% more items 2 than item 1 making $2 extra for each sales.
I did the same exercize with my website. I created on Free Shipping to compete with my site with Shipping calculator. I shut down the later as the sales generated were 10% of the free shipping one. They pay more than with a shipping calculator but they love the freebie
Thank you for a thoughtful analysis. My suggestion for eBay is if they want their sellers to offer free shipping, they should pass on the lowest possible shipping rates to all sellers who offer so-called free shipping. This is what Amazon does when you ship items to them via UPS for FBA; a big box full of books can be shipped for under $10.
Thanks, Lisa!! The funny thing is,or not so fun at all, Ebay promises to give you a boost in visibility, really???? My ebay store has been pretty much “free” and yep no sales , I DO NOT GET ANY VISIBILITY, my items are burried somewhere while other who charge the highest fee in shipping get seen first. Ebay sales rep could not find my stuff, you could not find it, either way, free shipping or not, Ebay is a big monopoly right now, charging fees for a service you do not provide, is there not as law about this??? It is what it is, just like in the “Wizzard of us” someone compared that the other day by saying, don”t pay any attention the voice behind the curtain!! There are options I guess to take your complaints to this one: http://sanjose.bbb.org/Business-Report/eBay-Inc-204015. Perhaps if we complain enough……
Brigitte I feel your pain! ..and agree!
The monopolists in this country, along with government assistance, are hell bent on driving small business & entrepreneurs further and further underground. feebay already nickel and dimes folks making it difficult to prosper for nearly every category in this market. Add to that – PayPal is now in cahoots with the IRS!
Lisa,
I so appreciate hearing the truth from your fingertips 😉
We all know that eBay was built on the backs of OOAK Vintage sales. That was the mainstay for the first, oh, say 5 years? People started selling new stuff, and then eBay Express was born. Now, eBay wants to push the OOAK Sellers out of its marketplace by raising fees so drastically.
I do not fall victim in this tactic, per se, in that my vintage jewelry ships easily for $4 or less most of the time and that pays for postage, box, materials – small profit or just break even – at best this raises my fees by 2% – which is survivable.
So, if I lower my rate to $2.00 to cover just postage, I save $.20 on the fees. But, I pay $2.00 out of pocket. If I raise my starting bid to cover that $4.00, I pay about $1.00 more, but then my customer may find that item less attractive with that $4.00 added.
PayPal already charges me a fee against that shipping charge, and now eBay wants to double dip and charge seller fees, also. Since eBay OWNS PayPal, that is a double dip into my pocket. Oh, but don’t forget, eBay is taking AWAY my 5% Discount for being a PowerSeller. So now it represents a 7% increase in fees + my store subscription costs.
But they are dangling a 25% Discount if I become a Top Rated Seller. Top Rate Seller Status has been something comes and goes, but by the whim of my customer. In the past, I’ve lost it for someone deciding the item was exactly as described, arrived fast and in good condition, but they just didn’t like it, after all. They even left Neutral Feedback on top of low stars! This is what stands between me & that Brass Ring, Top Rated Seller! Who can build a business model on that?
I do not believe that eBay has made these changes in order to stop the bad sellers from over charging on shipping. They already had an algorithm to seek out these sellers. This is just how they decided to GROW their business. After all, this was about SLOW eBay growth, right? Not LOSS of revenue, which might almost explain this shot in foot approach.
This is what happens when(we) the hand that feeds you is no longer your (eBay’s) biggest selling segment. Maybe we OOAK & Vintage sellers need to look for other venues who WANT our business. After all, don’t we still represent HUNDREDS OF MILLIONS of dollars in the Ecommerce world?
Any Genius Billionaires out there ready to create a platform to capture that biz?
Just a thought!
jz
Hi Janet,
Yes, there is a huge thriving market for OOAK items! And it is a marketplace that is unlike no other – and needs to be structured specifically for the unique challenges and the amazing rewards of OOAK items. Do you remember a few years ago when Randy Smythe (former owner of Glacier Bay DVD on eBay) was advocating for an eBay Classic site? A completely separate marketplaces built and structured to showcase the dynamic world of OOAK products. I’ve always thought there was real potential with that model.
I don’t think you can successfully combine the two marketplaces into one. (As we are seeing.)
-Lisa
Very well put Lisa. I’m putting my faith in capitalism and a free market to remedy this insanity in the long run. The current free shipping craze will be subject to the “invisible hand” of capitalism, just as with any other short term business strategy. Smaller sellers will be driven out initially, but as consumers inevitably lose product choices and grow tired of non-existent service, they will once again seek out vendors who can deliver unique products and provide personalized service (and who must charge reasonable shipping costs).
The situation seems similar to the big business outsourcing trend in years past. Labor was dirt cheap in developing countries, so they outsourced. But guess what? Standards in those countries have risen as a result and those workers are now demanding higher compensation and benefits. At some point, it will make economic sense for these companies to bring their operations back into the U.S.
It’s just too bad that so many smaller sellers (me included) have to suffer through the short-term, until the long-term market forces stabilize the situation. As painful as these business gyrations are for all of us, I would MUCH rather have my fate in the hands of a free market economy than a government rushing in with politically-motivated “solutions”.
For now, I will focus on differentiation through excellent customer service. Walmart, Zappos and L.L. Bean cannot compete with me on that! (They are great companies, but I guarantee I can “out-communicate” them when serving my customers and provide a level of attention to each order that they cannot.)
Thanks for providing this forum for a subject that is painful for many of us right now.
Hi Cheryl,
I agree with you 100%. Very well said! The reason I wrote this blog post was not about eBay specifically – it was about the “free shipping revolution” that is sweeping the ecommerce landscape. This issue is WAY bigger than eBay. eBay is just another participant in a disturbing trend that we are seeing with online sales.
Ecommerce is still in its infancy and like any immature market is experiencing growing pains and this is one of them. Everyone involved with selling online right now is a pioneer. And as you said, “as consumers inevitably lose product choices and grow tired of non-existent service, they will once again seek out vendors who can deliver unique products and provide personalized service (and who must charge reasonable shipping costs).”
I believe that just like the outsourcing market and the housing market that we will see this free shipping trend self-correct. And we are definitely in the middle of the firestorm right now.
And your approach to weather this storm “As painful as these business gyrations are for all of us, I would MUCH rather have my fate in the hands of a free market economy than a government rushing in with politically-motivated “solutions”. For now, I will focus on differentiation through excellent customer service. Walmart, Zappos and L.L. Bean cannot compete with me on that! (They are great companies, but I guarantee I can “out-communicate” them when serving my customers and provide a level of attention to each order that they cannot.) “ is the right one.
In many ways this the same as what local the mom and pop stores went through when the big-box stores moved in with their buying power and massive presence. People flocked to them for low-prices. But eventually people also realized that if they want customer service and personal attention, and a personal shopping experience, they weren’t going to get it from the big boxes.
I completely agree with you Lisa!
I am pretty upset by this news also. As a small business online retailer, we pay thousands of dollars a month on shipping costs. How are we supposed to make a living and keep the business going if we do free shipping? I have never agreed to do free shipping even when pushed that it was in our best interest. I feel like it is a big lie. We all have to pay for shipping when an item is shipped. I think it is a good incentive to do a sale with free shipping but only on occasion. If we all do free shipping, then we all have to raise our prices on our products to keep in business.
You are so right! Small businesses are getting hit everywhere. Government too. I sent Ebay an email response to their annoucement immediately! They never responded to me. I don’t know why I still sell on Ebay. I am not making money with the exception of a few items. People go there for bargains. I get emails from people every week trying to negotiate pricing. I buy new products wholesale and they what to purchase for less than wholesale. It is insulting!! I don’t mince words when I respond. I do much better on Amazon. Their fee structure is much better than Ebay. I get the prices I want for the products, so free shipping once in awhile as a promotion is not a problem.
The products I am moving to sell on Ebay now are old inventory items. I was a Power Seller at one point. Not anymore. When you list something for .99 and that’s what it happens to sell for, I’m suppose to give free shipping!!!! Not! Ebay needs to take a step back and reinvent their identity and educate Ebay buyers.
Great point. There is no such thing as free shipping unless the post office, UPS, etc. stop charging us. Are the executives at ebay based in reality? As you have stated, everybody would love something for free. Why doesn’t the “big wigs” at ebay not understand that “free shipping” will almost completely erode our margins; aren’t they business people? I got an idea, let the decision makers at ebay pay the shipping for us; lets see how well that suggestion goes over. Thanks for hearing me out.
Joe
This change really burns me up. I used to sell on eBay years ago & have been a constant buyer for at least 8 years. I’m just about to go back to eBay selling full time, and now this. I plan to sell vintage, mid-century collectibles that weigh at least a couple pounds, and the fvf on shipping will not leave much profit for me. I’ve thought about selling on other sites but eBay does get the traffic.
So my question is “what’s the solution?” Is there anything we can do to change this? If not, then we are all just wasting our breath and precious time.
Lisa…
Thanks for having the courage to SPEAK THE TRUTH about the problems associated with “FREE SHIPPING”……..An excellent examination and evaluation.
THERE IS NO SUCH THING AS FREE SHIPPING…..I’ve asked my manufacturers for Free Shipping credits and they said no…I’ve asked my Shipping Department to work for Free, and they said “F__k You” …..I’ve asked my warehouse supplies vendor to provide me with FREE tape, bubble wrap, boxes, mailers, B-flute etc, and they said it wasn’t possible…..I’ve asked my shipping clerk to work for free and you know what she said…..I’ve asked my local Post Master for Free Shipping and he said it couldn’t be done…..I’ve asked my UPS account executive for Free Shipping and he said it wasn’t possible……and I’ve asked my sales venue to reduce their Final Value Fees, so I could offer Free Shipping and do you know what they did? – THEY CAME UP WITH A POLICY TO CHARGE ME THE FVF ON MY SHIPPING COSTS!!……….Is this Consumer Fraud, Marketing Genious, Pure Idiocy or just plain Corporate Greed??
Thanks, Lisa, for saying it like it is. This may be the straw that breaks the camel’s back for me. No matter how I crunch the numbers, it just doesn’t work.
Lisa, Thanks for your down to earth analysis of this latest eBay travesty. And Rick Korsberg’s comments are right on! I have so many issues, but one I really can’t wrap my brain around is eBay’s pretense to encourage international sales. I offer and love international sales, and offer calculated shipping on all international and most domestic. I have sent a mint condition Cabbage Patch doll to Australia, won for $50 at auction, with almost another $50 for shipping. I had to double box it and take great care with packing and broke even on the shipping. With this new FVF charge on shipping, I can’t do that. How do I offset that charge? I can work it into the handling fee, but not knowing who will win, I’ll have to list with the highest country (Australia) and Canada will suffer. Same with domestic. I live in CA and shipping to MA is more than AZ. I’m getting a headache just typing it!
I currently have over 800 items listed at auction and in my eBay store, and come July I’ll have to have everything readjusted! Plus, I list through Auctiva (another monthly fee) and eBay is discontinuing third party checkout. What next!
Anyway, thanks for the blog and the opportunity to “rant.” eBay doesn’t seem to be listening, but I appreciate your efforts.
As I said to an ebay phone contact person a day or so ago, “Do customers of a big box store get paid for the gas they use to drive there to buy something? No “free shipping” at Wal-Mart! She (the rep) said that eBay was trying to stop excessively high shipping charges. Well, if that’s the case why not just throw out the slimes who charge $99 to ship a cell phone to the USA? They would be easy to find, I think, with the proper computer program. Don’t tell me eBay doesn’t have people who could write such a program, either. I think it (the fee changes) are mostly to give eBay a back door way to increase revenue. Right?
This will backfire if they stick to their plan, I predict. :o)
Jerry (over 10 years on eBay and a top rated seller- jherbsmith- I would hate to see it all end)
Lisa,
You have said a mouthful. This country was built by the hard work of the mom and pop businesses. My parents owned their own business, and now I own my business. People don’t understand all the expenses the that the little business owner is already absorbing. Nor do they understand what a pain all the compliance laws are to say nothing of all the taxes, workmans comp, insurance, and on, and on. It is getting harder all the time to make a profit. When all the little business owners go away, then where are all those jobs going as well.
You are right, we all need to wake up and support those good businesses and use common sense about our demands and expectations. If you don’t want to work for free, you might want to consider that the small business owner can’t afford to do that either.
Lisa, Thank you for covering this topic! eBay has long tried to push the “benefits” of offering free shipping to our buyers by telling us to bump up our price and add free shipping, yet has never given an incentive back to the seller by way of fee credits.., infact it is eBay who is the only benefactor..they are the ones who make additional revenue hands down!
I have long suspected eBay wanted to find an effective way to capture Sellers who abused paying fees, stating low purchase prices and high shipping prices (i.e., buy it now 3.00..shipping 59.99..) Well, guess this new structure will do it!…at all of our expenses.
I thought it was really cool one time when someone gave me a “free” cat. That was before the veterinarian operation, shots, a bunch of cat food, bags and bags of kitty litter, etc. I should have known better!
Free shipping is a similar animal.
First, I am wondering if a policy that allows a corporation to collect a fee on a service provided by a shipping carrier wouldn’t be eligible for a class action lawsuit to be filed against it?
Second, we get a very small fee break for buying postage online but the FVF that will be assessed will be on the cost of shipping on the eBay invoice without taking into consideration that small fee break. In essence, we are taking that small savings from the carrier and having to turn around and give it to eBay in the form of increased FVFs.
Third, the most honest and transparent thing we can do as sellers, from my perspective, is to continue to price the item, price the postage, and let our customers decide. Otherwise, there’s a whole lot of fuzziness to the situation.
It was telling (on either the eBay webinar or town hall) when someone inadvertently let the cat out of the bag… it’s really all about cutting off fraudulant, unethical, dishonest sellers at the jugular who combine exorbitant shipping with very low product prices in order to avoid FVFs. There has been a policy against this since the first big seller releases were rolled out a few years ago. Since eBay can’t police just the few who do that, they will police the entire seller community. The nature of eBay algorithms seems to be all or none.
eBay should put it’s programmers back to work and come up with an algorithm that compares/contrasts on a per sale basis (and ultimately a per seller basis) the actual shipping costs from carriers with what the seller-stated shipping costs would be. The algorithm should set a ‘standard’ for what would be considered excessive. THEN, and only then, would a fvf be charged on the seller’s shipping. Or better yet, eBay would alert the seller that shipping fees are excessive and start weeding the patch of sellers who practice this.
Kathryn
This is such an injustice, never will work for sellers, the rich get richer and the poor has all the work with very little returns. I’m ready to bail out.
Thank you, Lisa, for leading the charge! You are so right about how free shipping should be a promotion. I remember the days when sales at department stores were few and far between. Then when department stores started to have sales almost every week, consumers got so used to the lower prices, that many of them stopped shopping when there was no sale. This created a downward spiral effect for department stores. I can see this free shipping business going down the same path. I have to wonder if eBay has really thought about the effects of all this in the long term. Will they even be addressing this at eBay On Location? (Funny how they’re only having 2 this year, given all the changes)!
We have become the nation of fast food service. I want it my way, at my price, at my speed, and by the way, I’m too lazy to get out of the car and go in to get it. And of course impose a fee upon the seller regardless of whether he offers free shipping or not. Forget the fact that you received a quality item that you cannot get anywhere else, that it is delivered to your doorstep, and that it was shipped to you in less than 24 hours. Forget about the person who packed your items. You want it delivered free. Your way. It is all about me, me. Maybe we as a nation of consumers expect the person who packaged it to work for free as well while he is trying to feed his family, or pay for his dying wife’s medical care. Didn’t he deserve something for his time and effort if he is a small seller?
When all of us small sellers are squeezed out of business, then there will only be the big retail monopolies left to buy from. See what happens to your prices then.
Wow, Lisa, you really hit the nail on the head! When eBay first came out with their “incentives” for free shipping (search placement, etc.), we started offering free shipping on everything. But we couldn’t raise our prices to take up the slack because we are in a very competitive business. So we had to start charging for shipping again–on eBay. With fee increases and punitive seller policies, we simply could not stay in business without charging for shipping. We are still offering free shipping on our website, because we don’t have to pay FVF there. We absorb the cost of free shipping.
Small businesses are being squeezed out. What a tragedy!
We also lost our Top Rated Seller rating because of 1 unreasonable customer. There is no flex room in the new ratings for customers who simply cannot be made happy. So now, no 20% discount on FVF.
We are so very discouraged, and eBay simply will not listen.
I stayed away from the so called “Free Shipping” that Ebay has been promoting for a while becuase I knew I basically just had to bundle it in with the cost and it was going to cost me more. Why? Because Ebay charged your fees are the entire selling price…they have been doing this for a while and sellers fell for it. This was just a step twoards what they are doing now, charging fees on the entire amount, like Amazon does. Bad enough if you are going to do that, but don’t try to pressure people into doing “free shipping” and changing the entire selling foundation on Ebay. I do actual cost plus $1.00 per entire order. I do combined shipping, but now with a cart check-out or free shipping, it will NOT encourage people to buy more items from one seller. I have been selling on Ebay for 3 years, and am a Powerseller, but this may just be a good time to re-evaluate if Ebay fits into my business polan anymore. I need to make a living, not doing all the work for fun! Thanks Lisa for speaking out!
Here is what happens with free shipping:
This is not the cover of the book? I do not want this book. I already have it. It has a baby in blue for the cover. I only paid $19.99 for it in the store why are you charging $24.99. I want a refund. I haven’t received the book yet.
Thank you, Ebay!
For some reason the cover picture did not make it to show up with all the other picture, however of course it is ok for the buyer to complaint, Ebay loves that….I am way to mad right now, I need to come down or I am going to burst…..just horrible…somebody bring this company to its knees.. I can not take that abuse any longer, I am cutting the cord.
I agree with you 100%. I am one of the small retailers who recently initiated a FREE SHIPPING promotion to obtain repeat buyers and guess what? My monthly sales DOUBLED!! So with the pressure to provide free shipping to my customers AS THE NORM, it’s clear I’m heading OUT OF BUSINESS. As an online consumer as well as seller, I fully expect to pay REASONABLE SHIPPING. And that’s where the crux of this issue lies. Ebay and the other big businesses are being UNREASONABLE. From what I see on most sites, sellers that do charge for shipping have reduced the cost of shipping to the bare bone i.e., they charge for actual postage cost only and charge nothing for packing the item, or buying the packing materials or paying the bills to keep the business alive. I don’t know a lot about algorithms, but I do have common sense. Today’s online consumers need to understand that if I’m forced to offer free shipping, you can bet it will be reflected in the price of the item. So who wins? EBAY and ALL THE OTHER BIG OPERATORS that can subsidize this very real cost of doing business. Thank you Lisa for your diligent attention to this issue!!
Amen! Well said!
Hi Lisa-thank you for addressing the”free shipping”. I always knew it was a rip-off and wish consumers would wake up. When a buyer leaves a feedback and states they wished it had free shipping-I bite my tongue-I secretly wish they knew the whole story behind it. Well now maybe they should.
As another post stated it costs more to ship to the opposite coast. For me its East coast to West coast. If I had free shipping the east coast buyers would be paying more unnecessarily. Also the buyers in my state would pay more in sales tax.
Do the CEO’s of eBay sell & ship products themselves-ever????
Until they have walked the walked they shouldn’t be making rules. They cannot possibly know what the small business owners are going through until they have done it themselves.
Ann
ebay is completely ridiculous and is fueled by NOTHING but greed! Every time they want their way they figure out a way to force us sellers into it. “Give free shipping or we will hit your shipping costs with final value fees.” So now they ARE pushing out the small businesses! When I spoke to ebay on the phone today they told me point blank “We want ebay to be more like Target.com and other similar e-commerce sites, because that is who we are competing with.” I tried to educate them that Target was a billion dollar company and I (and other ebay sellers) are NOT! They really dont care what we think. They also told me “Everything we do here at ebay is for the buyers. The buyers are the bottom of the chain and that is who we want to make happy.” Point blank. They might as well said F#-you! to me. Ebay used to be fun years ago. Once the founder stepped down it all ended. Sad sad sad.
Amazon’s free shipping is marketing illusion. It only offers free shipping via mule train. If you want delivery in a reasonable time, you pay extra. I’d like to see how many buyers pay the up-charge for faster shipping. Bet it’s the majority. Zappos covers shipping by charging top retail price, plus — at least in my arena, which is dance shoes. These individual companies can create a shipping policy to the advantage of their business model. Ebay sellers have millions of different selling models. It speaks to Ebay corporate’s lack of business moxey that it would not understand this. (In fact, many Ebay staff don’t really know Ebay very well.) Trying to make entrepreneurs walk in lock-step kills the very spirit that has made Ebay successful. Rather than being afraid of sellers’ independence, energy, and passion — and what else can you conclude after they killed Ebay Live and issue such nonsense as this free shipping — the company should embrace, welcome, and make life easier for their sellers.
Great stuff you mentioned. I have been wracking my brain to figure out what I should do since ALL I sell are dishes, so weight and destination are a huge factor with this “free shipping” mess. So I was wondering…..
Do you know if eBay has ever thought of using their software to determine the shipping price for an item based on the weight that a seller provides and then having eBay’s software add the “free shipping” price into the listing price seamlessly. I know that sounds funny so I’ll try to explain.
They know that buyer A has zip code 78336.
So the lamp that buyer A looks at on eBay has the weight already figured out and incorportated into the price. For example $45.36
Buyer B might have zip code 97627 so the price they see is $58.96.
They both would see “free shipping”.
Do you think that is possible?
Very well said Lisa. What this is going to do in the end is force all of us to just raise our prices to equal out the additional shipping charges. The shame of it all is that eBay thinks it’s alright to control their sellers by constantly changing their rules and guidlines. Last I saw, eBay is still charging boat loads of money for us to list and sell our items. If eBay is so concerned with giving the customer what they want then why don’t they provide the free shipping. The little guy gets it again. I wish someone would come out with an auction site like eBay use to be when the model was a meeting place where seller and buyer could come together to find the fair price for an item. EBay has become just another capitalistic controlling company.
Amazon’s free shipping is marketing illusion. It only offers free shipping via mule train. If you want delivery in a reasonable time, you pay extra. I’d like to see how many buyers pay the up-charge for faster shipping. Bet it’s the majority. Zappos covers shipping by charging top retail price, plus — at least in my arena, which is dance shoes. These individual companies can create a shipping policy to the advantage of their business model. Ebay sellers have millions of different selling models. It speaks to Ebay corporate’s lack of business moxey that it would not understand this and issue across-the-board policy. (In fact, many Ebay staff don’t know Ebay very well.) Trying to make entrepreneurs walk in lock-step kills the very spirit that has made Ebay successful. Rather than being afraid of sellers’ independence, energy, and passion — and what else can you conclude after they killed Ebay Live and issue such nonsensical decrees as this free shipping — the company should embrace, welcome, and make life easier for their sellers. I’ve experimented with free shipping. My customers seem to like knowing how much shipping costs them because they picked free ship items far less frequently. Does Ebay make these decisions in a vacuum? I’m flabbergasted at the lack of understanding that it needs to help sellers be more successful.
Hi Lisa- I think charging a fvf on the shipping has to be unethical especially when PayPal is already doing it. There has to be some law against this.
I ship a lot internationally and have had some of those buyers buy the items that have free shipping-so not only are they paying the international cost they are paying the domestic price worked into the cost.
I also do a lot of combined shipping because of the type of products I sell .
It is more eco-friendly to combine shipping and use less packaging.
Today I was notified by the company that I sell the most products of that I can no longer sell on ebay, Amazon,etc.-third party sites, effective immediately. I know it was not only me they were notifying-but once again I am paying for someone else’s stupidity.
That I have to have a brick & mortor store or website.
Well the fvf and this last notice is pushing me to have a website.
What is going on?
Announcements this week were the last straw.
Actually pay pal getting a percentage isn’t illegal it probably should be but it’s not. They are providing a payment service on the entire amount. There would be no way for them to just charge a fee on the price we get for an item on ebay. They are providing a financial service so it’s not illegal just like credit card merchant accounts…they charge a percentage and flat rate of every transaction.
However Ebay is not a financial institution. So I do think it should be illegal for them to charge a final value fee on shipping monies. I’m sure they had lawyers look this over though. I’m sure they thought of every possible reprocussion there is with thier lawyers.
People think Ebay is doing this for thier customers and forgetting their sellers. Come-on really!!!???. You think ebay cares about either?? Ebay cares about one thing only and that is how to squeeze yet another cent out of a transaction. What is really insulting is they label it as a decrease. We know it’s not a decrease and to me that states right there what they think of thier sellers and thier buyers. They are saying this will mean cheaper shipping. No it won’t. The ship will be in the item amount somewhere and not only will that amount be there but so will the amount needed to cover the extra FVF fee on that total amount. I really think someone at Ebay is saying “Oh lets market it as a decrease, they aren’t smart enough to figure it out.”
If you gave one of your customers a choice. Ok we will sell the item for 9 and you pay 6 shipping. That is fifteen dollars…..Or….lets give free shipping but your going to pay 17 dollars for the item. Which would you prefer?? I myself prefer the 15 dollars but at the same time there are people out there that would buy something for 99 cents and pay 49 dollars shipping. The only thing I can say is maybe they didn’t look at the shipping or are new to ebay. I really can’t explain that! So not everyone on the planet has common sense but most of us do and especially in the past year or so with being in a recession. Even the people that didn’t bother with the small details are looking for the best deal.
They tried to force sellers by offering incentives to sellers to use free shipping and when that didn’t work they made it mandatory to pay because they want every cent to be made and then some. Same with making it so we all had to use pay pal. Everyone said that was illegal and guess what we had to do it and they got away with it. They will do this and there is only one thing that will change it. Affect ebay’s bottom line!
Once again the only thing you can do is leave. If people leave and stop selling on ebay it will force thier hand. I don’t mean don’t list on a certain day that never works because your going to make up for it at some pont. People have to leave….period and find another way to make money. People are resistant to change which is why people don’t leave but now I think it’s going to force thier hand. Me as an example. I don’t want to leave ebay. However you wouldn’t work for free would you let along work to give all your money to someone else. That is what is happening and will to the small sellers. I’m not working for ebay anymore. If this happens I have to leave.
Ebay is only going to get worse as people leave. The less items sold means less money for ebay and it will just keep going up and up with thier fees and the free incertion fees will end I will tell you that. They always end. It like a way to say well it’s not that bad right now but then a year or so from now they will take that away and we will pay to list again too weather the item sells or not. It’s like a snow ball and they themselves I believe are slitting thier own throats in the long run. It may not happen overnight but it’s happening slowly…they aren’t what they used to be by any means!
I have lots of ideas for a new site but unfortunately I don’t have the computer skills or the money to pay someone to make it real. I have no doubt if something new opened up comparable to ebay people that sell will leave. However you need capital and lots of it and I don’t have it and you need advertising….lots of that too! If I had the money I would do it and it would succeed and sellers would have a chance to buy into it, it would be thier company!!!
eBay has been taking a nose-dive ever since Meg Wittman “left” the helm (because of differences in opinion on company policies, no doubt)
Very well said Lisa.
This has not hit here in Australia yet, but it is only a matter of time (as we are usually a few months behind the USA) and eBay can expect a similar reaction as they received to the great forced ‘PayPal only’ uprising. We have an agency here called Fair Trading and I don’t think this one will get past them. It will, I imagine, be considered false advertising. At the very least the Free Shipping will have to be changed to Postage Included, which is in fact what it is.
Aussies are a fiesty lot and the majority of us demand fairness and will always stand up and be counted. It is unfortunate we are beginning to see the ‘something for nothing’ syndrome more and more and I agree it is being driven by multi nationals, big business as you say. Any of you that have had dealings with Australia will realise that postage and freight is not cheap in our country and it will be the final straw for many of our eBayers. Due to family reasons I have been watching from the sidelines for months and I am just ready to get back to eBaying. I am a small eBayer like many of us out there, considering getting bigger. Many of you built eBay and are now being kicked to the curb. I hate seeing that. I am certainly sitting back rethinking my options since this announcement.
It is not often I get really upset with a business and their decisions as I have been in retail for many years and I have to make decisions to survive and prosper. However, I have made them with my customers and staff in mind as they were the backbone of my business. I can see an attitude here with eBay, because it is an online company with the world for a customer base and not a local retailer with a limited customer base, that there will always be another to stand up and take the place of the seller who has fallen ( a bit like a battle in the old days) but I wonder just how long they can sustain that attitude with the smaller sellers. eBay has reached the place many of us have reached in business at some time. It is too big. This is a pivotal point where business will crash and burn or thrive. I think eBay has reached the point where it must divide into two very different businesses. The Donohoe Big Business Retail eBay and the Original eBay for the OOAK smaller sellers.
The postage scam problem that eBay say they are trying to overcome can be easily solved by the you beaut computer programmers by locking the weights into the postal service prices and allowing a small amount for postage and handling. I don’t think any genuine eBayer would be upset with that. The dishonest sellers amongst us would be right out of the ball game straight away. Or is it a dishonest eBay trying to make money out of the honest sellers!!!! If eBay continue with this MADNESS they are NO BETTER than the so called dishonest sellers they are supposedly trying to wipe out. In fact more so as they are scamming everybody not just the odd single eBayer that gets caught and should have done their homework first. eBay is giving no one the chance to do so if they continue with this.
I am feeling for you all and hope there is a positive outcome. I am glad to see you leading a charge Lisa and I wish you all much success. I tell my kids and grand kids “there is no such thing as a free meal” (there is always a price to be paid). Perhaps eBay should realise this. We are not stupid.
Kindest regards from down under and I will be thinking of you all.
I know people have already mentioned this, but I wanted to mention again….
I actually have to raise my prices MORE when I offer “free shipping” because then Ebay takes a bigger cut. So, to pay them, I have to raise it higher than it would be with just the item + shipping.
I see people in the article you quote saying they’d rather know the full price up front than to have to be disappointed when they see the shipping price. While I understand the logic in general, when it comes to Ebay, the logic fails for this very reason.
I actually recently (before Ebay’s big announcement) started switching my items over to “free shipping” as an experiment. I did indeed have to raise my prices higher than they formerly were as item + shipping by roughly 5% or so to cover the extra amount in fees I had to pay.
Then I also felt that my buyers that bought multiple items from me were actually getting gouged in a way because I can no longer offer “combined shipping.” So frankly, it hurts the buyer in the long run as well.
Because the folks at eBay kept telling us it would improve our sales, we have experimented with “free” shipping. We found that either an item sells or it doesn’t. If the customer wants what we are selling, they will buy it. If someone else has the exact same product at the exact same price but shipping is free, that might make a difference. That scenario doesn’t come up often enough for us to change our policy. Just today we got a ridiculously low offer on a product that we increased the price on in order to offer “free” shipping. Of course we cannot accept it. We aren’t in business to lose money. At least, not on purpose!
Hi Lisa, Thanks for your rant! As a part time seller, with the new policy, I am concerned that I will not make enough profit to continue; I have been looking at other ways to continue with online sales but ebay is the place that people go to first. And, I have not found another site that has the same buyer traffic. It appears to me that ebay is willing to push out the seller who is selling a lot of lower priced products. It is definately changing the way that I am doing business and may be the final straw for me.
No one is going to be happy with this post, so I recommend that you don’t read it. I know how tough it is for the small business to compete against the big businesses, and I know the cost of shipping is a major cost that makes serious inroads into your profit margins. However, speaking as an online consumer, I have often mailed the CEOs of online companies telling them that I disliked having the shipping costs tacked on to the bottom line of a transaction. I have specifically told them that I would prefer that the cost of their merchandise be increased to cover the cost of shipping charges. I am sure that there are many other online consumers like myself who would rather pay more for the merchandise to absorb the shipping cost than to have it tacked onto the final bill. I am also sure that a majority of online consumers understand that shipping is not free and expect an increase in the actual merchandise cost to cover shipping costs. More than once, I have purchased a used book selling for $7.00 knowing that shipping was included in that flat rate, instead of buying the same book for $2.00 with a $4.00 shipping charge-even though the overall cost to me was an extra $1.00.
When I purchase something online (with the exception of purchases from Amazon) my expectation is to pay more for that product than I would pay for a product purchased from Walmart, or Target or Sam’s Club because I am not looking for the cheapest vendor, but the vendor that has unique products, or high quality products, or products that are hard to obtain in brick and mortar stores.
Perhaps it is possible to use “free shipping” as a means to increase your overall sales. Many of the “big retailers” only offer free shipping if a minimum dollar amount is ordered. So far, I have yet to see Lands’ End or LL Bean offer free shipping if only one small item is ordered, and they do charge the customer for the shipping costs and the processing costs of returned items.
Perhaps if you follow the same process by offering free shipping only at a certain price break your order size may increase; even if your customers don’t order $150.00 worth of product the fact that the “free shipping option” is available makes it psychologically more acceptable to pay shipping when ordering less than the minimum.
Last but not least, it may be worth exploring creating “shipping groups’ where small businesses that are located closely together could also get discounts if they pooled their shipments. Most “big stores” make a five to seven day delivery commitment for their “free shipping.” If you make the same disclaimer it would allow you to pool your shipping for possible discounts.
So you rather pay $7.00 for a book w/ free shipping than $4.00 +2.00 shipping? Thats just DUMB!
Also, if you purchased 5 books with shipping cost padded into each item in advance you may have paid 5 times too much for shipping since you now avoided a combined shipping cost option.
Great for the seller, a BIG rip-off for the consumer. But at least you feel better about paying more than you should just to get free shipping!
Just sayin.
Thanks for understanding Lisa. Now con we get Ebay to understand?
About 2 weeks ago I got THE phone call from Ebay! They were pushing $0.99 auction sales with free shipping! Now lets be realalistic here. Not to many things will even ship for that! Let alone the fact that I make doll clothing. I put alot of time and energy into my items. Boughten clothing made overseas is alot like other things, it doesn’t hold up. So I have made things that I hope do better. But like anything else, if you want quality, you just can’t have quanity. I do alot of looking before I buy, whether it is fabric, closures, or embellishments. I have also started footwear, and just 1 yard of pleather is $10.99. But then the is insoles, soles, heals, velcro, thread, buckles, elastic, embelishments, and even interfacing in the footwear. With all of this, seling for $.99 makes me broke, even before I ship them. If you figure in the electric, (that just tripled in price here, my time, and my machines) I am more than broke.
Everyone that said Ebay is to big is right. They need to think of the people who make Ebay! If it was not for the sellers, where would they be? Now, let’s look clost at this problem with shipping. The shipping charge, when done right is for just that…SHIPPING…It is money we get paid to get our costumers items to them. It goes to the post office [not to our pockets]. I charge first class rates that go by weight. In order to cover that I would have to add 9% to my rates. It makes me angry to see people charging $5.00 and more to ship something they list at $.99, because it ony costs $1.60 to $3.00 to ship a pattern. I have been at this long enough to know. In my eyes the shipping should not have fees charged anywhere, because it is government money to go to the United States Post Office.
If Ebay continues like they are, I will have no choice, but to use other stores. There are still free stores out there, that are working quite well without big fees.
EBAY SHARPEN YOUR PENCIL.
Hi Lisa,
I get your point on this. But it’s ebay business they can do what they like. what ebay sellers will have to do is TEST.
Test #1 add shipping to you selling price and offer free shipping and then track it.
Test #2 drop the ground shipping and only offer 2 day and next day and track it.
maybe run each test up to a week sea which sells better and makes the most money for you.
Looks like ebay wants to follow this countries lead and wants to give everyone something for nothing, regardless of the ramifications. People go to the internet looking for a great deal. Now there will be little benefit for the consumer to shop online vs running down the street to the big box store.
Just seems like it is the opposite of what has made ebay so great in the past.
Hey
Yes we all agree they all love free shipping!
I have tried the same thing you did and came out with the same results.
I can charge more for the same item with free shipping.
I did it with my jewelers loupes and checked it out again and again with the same results……….BUT they are a new item with a set buying cost.
My antiques and collectibles vary in cost for shipping and I will continue to charge for shipping bigger items and do small items for free shipping.
My larger items are the type that there are only a few out there for the most part and the buyers understand the cost of shipping and seller fees.
Yep I don’t like the increase,***decrease(I will make more on my jewelers loupes with the new rates)**** in fees but I will stay where they sell!
I have tried other venues and don’t make any where near to eBay so I will still be here looking for the answers to keep making it work.
We all need to stop spending so much time complaining and find solutions!
I had hoped that in the past if we all boycotted and complained etc that eBay would change their minds on their changes but that rarely happened.
So I want to hear what we will do now to make us continue to be successful!
Ok off my soap box!
Thank you
Lois
Is anyone who may be attending Ebay on Location in Las Vegas going to mention how this is not “free shipping,” and the buyers will be paying more for their items? Totally unethical. I agree with our Aussie friends.
You said it so well Lisa and THANKS!
Smiles, Cyndi
Thank you, Lisa. Consumers especially need to understand that shipping can’t be “free” when the carriers (especially UPS) have been playing the ‘Let’s raise the rates every year’ game for the last three years.
Hi Roland,
Exactly. And this is the reason I wrote this post – to address the “free shipping revolution” that we are seeing based on what our consumer driven society says they want. It is a very short-sighted approach that impacts our economic stability as a whole.
I believe in keeping the customer happy, but there are limits to the economic feasibility of free shipping and also consequences that consumers will not like (reduced selection, hidden shipping costs, etc.)
eBay did not initiate the free shipping revolution- they are just among the latest to jump on the bandwagon.
Free Shipping is a great PROMOTIONAL TOOL. But as is true with most everything else in life – “Too much of a good thing is…too much!”
-Lisa
-Lisa
I don’t have a problem paying for shipping. I pay in on Amazon, I pay it on ebay if it is an item I want. As long as the item is priced fairly, I’m happy to pay shipping, but I may not be the norm. But if it’s one of a kind & what I want, then I’m getting it, and free shipping doesn’t even factor in the equation, which ebay has never gotten. It may work for brand new items, but I don’t buy that from ebay, I get it at Target. I want one of a kind items, and I’ll pay the shipping to get it.
I agree with Tracy, for years I have been paying shipping fees on ebay, amazon, Zappos etc, every one else should do the same , like she said if you want it and its a good deal then pay and be done with it.
I agree with you Rebecca, UPS, FedEX and USPS are not giving away shipping services for free! However, today’s online customer demands free shipping be offered, even if what is being offered is an illusion.
The shipping is either padded into the price of the product, or the company has another stream of revenue or dept that “pays” for the cost of the shipping.
Unfortunately, I don’t see this changing anytime in the future.
That being said, you can still charge shipping. But if it negatively impacts your sales, then you’ll be forced to take a look at offering free shipping, in order to remain a viable business.
-Lisa
I was just talking with a friend last night who plans to order many items to ship to his son who just purchased a new home. He was trying to convince his friends that buying online saves money and time because he can use Free Shipping and they will deliver right to his sons home. I said “you know there is no such thing as Free Shipping, they add on the price of shipping to the selling price”. He was well aware that he would pay a little more for the items online verses going to the store and purchasing them and then PAYING to ship the items to his son. In his mind, he can shop from the comfort of his home (saves him time & money in gas), and then have the items shipped for Free (saves him money on shipping). So he does not mind paying more for each item, as long as he saves money 🙂
As you stated so clearly, there is no thing as free shipping. It must be built into the sales price. It feels good to have ‘free shipping.’ Its not obvious, but if you order more than one item, the cost of free shipping is higher than if you were at a similarly discounted site that calculates shipping for you.
I have offered product in the past for $6 with free shipping, and they sell. I have offered the same for $4 with $2 shipping and those sold. With the $4 item, additional cost $0.50 to ship, so 2 items would be $10.50. What shocked me was the number of people that paid $12.00 for two free shipping items instead of the $10.50 for the two items purchased without ‘free shipping.’
As an online shoppper, I like to see the shipping charge up front. there are many retail venues that don’t disclose shipping until late into the purchase process. There have been times where I have run from a deal after seeing an excessive shipping charge. I think a better practice is to show the estimated shipping process up front, and the best practice to ask for a zip code early to process the shipping and total cost in real time within the shopping cart.
Thank you for a well thought through article, hopefully it raises some awareness of the realities of free shipping.
Matt
Hi Lisa
I can not believe that any company would tell one of their long time customers (sellers) if you don’t go along and over charge most of your Buyers we will not give you equal search. We have never cheated one of our customers on ebay and we don’t plan to do it in the future. We are having a hard time thinking of paying full fees for partial search. We charge free shipping on items under 13 ounces because of problems with their shipping calculator.
We are not so upset with ebay increasing the fees and charging on the total bill.
We agree that people want to see OUT THE DOOR PRICES. This is different than FREE SHIPPING. All you need to do is add your weight to each item including packing material example (2.4 pounds ) and let the calculator say what the shipping will be and add the item price and then add other (ebay/ PayPal / handling) and only let the buyer see the OUT THE DOOR PRICE. If the buyer buys several items the buyer would get an OUT THE DOOR total. West Coast buyers would be charged for shipping in their zones and East Coast buyer would be charged for shipping in their zones.
ebay needs to stop playing games with it’s sellers and come out with a honest set of fees set up for all sellers from the smallest to Power Sellers, Silver, Gold, Platinum, Titanium and Diamond. saving each level an additional 1/4% to a 1/2%. This would be fair for all seller and if they choose to give the highest levels an account rep there is no problems with that. They also have to clean up their search so it is equal for all buyers that are willing to pay them for the service they offer.
ebay needs to make their site seller and buyer friendly. Drop the feed back system that creates online fraud and punishes the seller some times for no just reason. I have been in upper management all my life and have never seen a company that has so many problems.
I am just slowly beginning to build a small internet business on eBay, but feel very reluctant due to this announcement. I intended to list everything on eBay, but am now more seriously looking at investing in my own website. It may be worth it to try to funnel business to the website and not put so much emphasis on eBay since it seems they are not looking at how to support and encourage small business growth. It feels like they are finding ways to make the small business pay more and in effect pushing us to find other options. I know I’m joining the eBay party late in the game, but with these types of changes I seriously wonder if it’s already a missed opportunity and it’s just too late to make money and prosper on eBay? It’s pretty obvious (even to a newbie) that I won’t be able to make money by being forced to offer free shipping on all my sales!
Hi Catherine,
When you are just starting a small online business I still recommend using a marketplace (eBay, Amazon) to get started. Even with the recent eBay announcement.
Here’s why –
Getting traffic to a new website for a new business owner, designing a site that converts, building credibility and most importantly, driving enough traffic to convert to sales is a tall order for beginning sellers. And it will take you much longer to get profitable. If you really want to start a business selling online, you need to get started in the cheapest and easiest way and decide if this is something you like to do.
Depending on what your long term goals are and whether or not you have a niche to sell in will determine how to advance in your business. But if you’re just getting started, you need inventory, need to put your operations in place, need to get experience with the process. It will be quite a learning curve for the first year – but there is no way around that learning curve but through it!
Ecommerce/online sales is an industry still in its infancy. You may not end up building a business on eBay. You may end up on Amazon or another marketplace. Or with the way things are going – even Facebook in a few years.
I’m not trying to talk you into/ out of selling on eBay. If it can be sold on Amazon, I recommend listing there. If it can’t be sold on Amazon and there is a market for the product on eBay. Start there.
And keep in mind that your success on eBay will depend in large part on what you sell there. There are more than 17,500 product categories to sell in. It’s not perfect that’s for sure. But from an entrepreneurial business standpoint, if there is a market for your products there, that is where you should start so that you can make some money to move forward.
-Lisa
Thanks for your reply!
Honestly, I’m feeling a bit overwhelmed and am trying to get my bearings on where to start and how to shorten the learning curve. I’ve sold several things in the past 8 months, but feel like I need some hands-on basics and find myself wishing I knew someone I could intern with for a couple of weeks to get that hands-on experience (you know, sort of a win-win if we both helped each other). Note that I’ve read four eBay books, but there seem to be “holes” in their shipping and inventory methods and I’m definitely struggling.
Shipping is a befuddling mystery/frustration. I recently sold a large bowl that (my bad) I way under-calculated the weight and thus shipping costs. I charged $8 for shipping, but it ended up costing me almost $19 and I basically paid the buyer for the transaction in the end! Yes, it was humbling ; – ( but I guess I had to make the mistake to learn from it. There must be a good way to accurately estimate shipping charges and lower shipping costs while finding just the right box, but I haven’t been able to figure it out yet. Clearly, I need a ‘Shipping 101’ class!
Anyway, now that I’ve discovered your blog I’ll keep reading and learning! Thanks very much!
Catherine
Hi Lisa,
Thank you for pointing this out. What you say is so true.
The system needs some revamping & tweaking.
Please keep your rants coming.
George
I ‘fell’ into thinking ‘free shipping’ was beneficial for myself as well as the customer! What a surprise to learn I was LOSING money! We need to do what we can to educate the public. We small business retailers are already struggling to make a small profit.
I agree with Sybal Janssen what she is saying that she wants to see OUT THE DOOR PRICES and that being said ebay could do that very easy. What ebay wants us to do is a price fits all shipping zones and then add the additional fees. Every buy we have will lose so much money because we will no longer be able to combine the shipping. I was told by ebay we could continue with the same pricing as we are using and calculate the shipping but we would not receive top search if we did not go along with FREE SHIPPING. OUT THE DOOR PRICING =Actual cost is all the prices combined so the buyer only see what they have to pay FREE SHIPPING = The highest shipping price plus the cost of the goods purchased. I think buyers want an honest transaction.
I experimented with Free Shipping and expected it to boost my sales but found just the opposite. I sale Advertising Art predominately ebay userid: (PRINTSNPAPER) , paper items and normally charge $9.99 for the item with 3.69 for shipping. I put in for several weeks all my items at $12.00 Free Shipping which is not only Free Shipping but a better deal for the customer and found my sales went down dramatically. I guess the psychological factor of the less than $10 price for the item outweighed the savings on shipping. GO Figure….
I think that people have just become tired of buying something for $9.99 and then being forced to pay $28.63 for shipping, when we all know that it only cost the company $2.63 to ship the 4 ounce item.
I believe that if we were all expected to pay actual shipping costs it never would have gotten out of control.
I’m going to eBay on Location in Vegas, and I’m sure FVF on shipping will be a hot topic. I hope eBay doesn’t present the same condescending attitude as the Town Hall after the announcement. I think that’s part of everyone’s frustration –the feeling that they (eBay) know what’s best for ALL of us sellers, so we should shut up and work it out. I have enjoyed selling on eBay for 7 years and always supported the changes, but I can’t wrap my brain around this and I’m angry. I’ve always offered calculated shipping with 3 choices, buyers pick for speed, not quality of packing. This change makes it impossible for me to “work in” the additional fees, so either I take it in the shorts or some buyers are forced to compensate for others farther away from Los Angeles. What a mess!
I think that Ebay hopes the changes it is making regarding free shipping will have the over all effect of increasing prices in general as compared to e commerce prices outside ebay, as sellers increase the price of goods to cover shipping! But this does not work, look at Amazon, you use to be able to count on selling goods at close to the MSRP , but it is becoming more ebay like everyday! And as a result wholesalers are refusing to sell to vendors who sell on both platforms now instead of just ebay sellers.
Most people come to ebay looking for the cheapest price, stuff that in most other venue’s sells for a higher (read realistically reasonable) price. They patronize the vendor who is selling at ridiculously low margins, or big box stores that are liquidating (read dumping) merchandise!
I think that until sellers band together like Gas Stations and stop the silly price wars, consumers will not stop the get something for nothing frenzy! I don’t even look at the price when its time to get gas anymore, who wants to stress over 10 cents a gallon and its only going to yield less than a half gallon more fuel per tank!
You are right.
Let’s not forget, Amazon only says it’s free if you purchase a certain amount. The psychology behind that is, people actually purchase more because hey, after all, I get free shipping.
Regardless of what industry we are in, it does cost someone. Inbound freight alone is in excess of 7% of your actual order. In the real world, that is 7% that is absorbed as a cost of goods sold. Then to pay for the shipping to the customer, well, that is 7% out of your pocket in shipping charges alone not to mention packaging fees, insurance fees, mileage and time.
Yes, sales is what keeps our doors open. Great customer service keeps the customer’s coming back. That being said, I believe customer’s although they would love to have it all, do settle for service over free shipping.
Many people including myself have left the ebay selling market due to the constant raising of fees. What many consumer’s do not understand is that every time ebay raises fees, seller’s have to also. It would be quite prudent for buyer’s to stop wanting everything and think about how much it really costs.
Hi Lisa-I offer shipping choices-usually first class (lowest cost)-then Priority (higher cost). When eBay sends the invoice-the switch the order and have Priority first. This upsets me because I’m sure the buyer thinks I put the higher cost first. If they aren’t paying attention-they would end up paying the higher price and with the FVF-more money for eBay’s deep pockets.
Also if I had free shipping on items weighing more than 13oz -I would have to charge the highest zone price ( so not to lose money)-once again more money off the total with the fvf.
It looks to me that there is a method to ebay’s madness-no matter what it will be more money in their deep pockets & less in our shallow pockets.
The sellers lose & so do the buyers. Only eBay wins.
I have sold antiques and primitives on eBay, with great success, for the past five years. I am a “Power Seller” and until yesterday, all my DSRs were 5s. (As of today, my shipping is a 4.9…probably someone didn’t like the fact that I did not offer free shipping. 🙂 Unfortunately, I am seeing “the writing on the wall”, thus starting to examine other selling venues, and selling more and more on a couple of smaller sites I presently use. It is clear that eBay does not value the business we smaller sellers bring to the market, and rather than be too upset by this, I will consider it the push I need to start to transition off the site. I do agree with Lisa that it is a wonderful venue for beginners, and I am sure I will continue to use it to some degree to market myself, sell low-end “odds and ends”, or just use a reserve for higher-end items, as the antique/collectible market is very unpredictable just now. Not to be mean spirited, but I did chuckle when I saw that eBay had lost considerable market share a few years ago. Of course, the reason given was the soft ecomony, and I am sure that accounted for some of the loss, but I would say poor business practices accounted for a larger degree of loss. I feel they are “grasping at straws” as they attempt to implement questionable policies to make up for lost revenue. My personal philosophy is “We all do better, when we all do better”. I would love to see this philosophy adopted at the eBay headquarters, but I am not counting on it.
As an independent handmade jewelry seller on Artfire and Etsy, and an avid online shopper, I realize that either you pay for the shipping or it’s built into the cost of the item. I charge $2.00 per pair of earrings and an additional $0.45 for each additional pair, that is at cost (and the extra $0.80 for delivery confirmation is on me). If I were to offer free shipping, I would have to up the price on each pair by $2.00 to not loose money when only one pair sold, but people who purchased more than one pair would be over paying by $1.55 per additional pair.
People who shop online need to realize that shipping is never free, also small business people need to realize that offering free shipping in order to attract sales can hurt their bottom line if they are not properly factoring shipping costs (and other fees we sellers pay) into the item cost.
Hi everyone,
One of the things I do in my store is offer fixed price items at a high price that I would like and than take offers. Most of what I sell is from offers. I have had most of my listings calculated shipping but now I will make them free shipping, except for international.
When they make an offer I can see where they are from and figure the cost of shipping into the offer. I than can mail it any way I want and international items will not have any fvf on shipping since if I understand correctly, their fvf is based on my domestic shipping which is free.
An example is I had a cup and saucer I sold today…listed at $50 accepted an offer of $30 with free shipping to WA. I spent $1 on the item and shipping will be $5 plus approx fvf & pp of $4. I will make $20 on the item, a nice profit. Now that is the joy of dealing with collectibles.
I find more and more people like make an offer and love it when I accept their offer of what they want to pay for it. You just have to list it high enough to start but not too high to scare them off.
It is always fun when someone pays you the full asking price instead of the make an offer!
I do know this is going to be hard on sellers that sell new items with competitors but you have to remember they are in the same boat and they are going to all have to pass their increase on to the buyer.
I listened to your telesiminar today and thought it was helpful to hear your opinion on all the new changes. EBay is not going to change their changes so we have to spend our energy to figure out ways to make it work and share those ideas with others in our groups.
Thanks for the links in the download.
Thanks
Lois
Hi
Just an added note to those that print shipping labels online.
Have you tried using the new regional boxes?
I can save almost half on shipping to the states near me.
Just me
Lois
A really good post. I’m glad you said it, and hope more consumers and other retailers read it. “There’s no such thing as free shipping” is what a lot of us small retail businesses have been saying to ourselves, but are loathe to say to our customers, because they clearly want free shipping from us. It’s already incredibly hard as a small, independent retailer to compete against the likes of Amazon, eBay and Zappos…but to have them turn “free shipping” from an incentive or promotion into a daily offering will be the final nail in the coffin for a lot of small business owners. If you value choice, small business, service and the American dream, be willing to pay for shipping. No one offers us retailers a discount to ship–neither in receiving our inventory nor shipping it out. So why do you demand it of us?
Good article. The people who own, operate and manage ebay are arrogant and greedy. For someone to stay in business, the fees have to “shift” from the shipping and handling side to the item actual-cost which gives ebay more money when listings are based on a final-price percentage. If they want to push and implement this marketing-games “free” “shipping” nonsense then they should AT LEAST be honest about it and post a NOTICEABLE disclaimer on all pages that tells people that in essence shipping is NOT FREE but ebay “execs” continue pretending about this and fifty other greed-annoyances. Did I mention they don’t listen either?
BRAVO.
Thank YOU!
(We REALLY NEEDED somebody to write this).
Scared to sign as ebay uses blogs to remove sellers- please do not share my email addy or ebay will get me- FACT.